Publications: All I Need to Know about Crisis Control I Learned in Kindergarten

A CRISIS can bring out the worst in people. For lawyers, the urgency, pressure and tension often results in a flurry of thoughts about litigation–motions, venue, defenses–and a blind eye to problem-solving skills. But the best crisis-management lessons were learned in kindergarten.

What follows are a few simple rules to keep in mind when the pressure’s on. While they may not hand you the solution to your crisis, they will promote the type of critical and creative thinking that is the key to effective crisis-management problem solving.

1. Clean Up Your Own Mess. There are many aspects to this simple rule that come into play in crisis. First and foremost, by acting to clean up your own mess, you are actively engaged in the process of solving your own problems. This action, as opposed to reaction, is the hallmark of effective crisis management. Regardless of how third parties act, your purposeful activity, with the intent of resolving your problem, can lead to several desirable consequences:

Mitigation of Damages: When Schwan’s Sales Enterprises Inc. first learned of the association made by the Minnesota Department of Health between Schwan’s ice cream and an unusually large number of reports of salmonellosis, Schwan’s immediately stopped production of ice cream, held on to further shipments and recalled the ice cream on the market. Schwan’s also publicized the information provided by the Minnesota Department of Health and made various attempts to alert its customers to the crews and to heed Schwan’s advice—DON’T EAT THE ICE CREAM.

These activities minimized the number of eventual injuries arising from Schwan’s crisis and maintained the loyalty of their customer base. Likewise, the makers of Tylenol were widely praised for their aggressiveness in handling that crisis by recall, among other responses.

Control Over the Solution: Many companies in crisis, and the lawyers who represent them, batten down the hatches and attempt to weather the storm. This bunker mentality can be counterproductive because it takes away the company’s opportunity to play an active role in the outcome.

Within days of the first knowledge of an association between their product and illness, Schwan’s had set up an 800 number to receive and record customer complaints, which later became the basis of Schwan’s solution–settle the claims and satisfy the customers. By the time the rapacious plaintiffs’ class action lawyers, who swooped in within days of the first news of the problem, could get organized and obtain a hearing on class-certification issues, Schwan’s had resolved, to their customers satisfaction, more than 80 percent of the claims made to the phone bank.

After making their best efforts to resolve claims outside of the litigation process, Schwan’s then resolved one of the class actions encompassing a national class of its customers, thereby precluding the need for any further large scale litigation.

There are a number of cases denying class certification, where the defendant has shown the ability to resolve the matter without litigation. See William Goldman Theaters, Inc. v. Paramount Film Distributing Corp., 49 F.R.D. 35, 42-43 (ED. Pa. 1969); Ingenito v. Bernier Corp., 376 F. Supp. 1154, 1171 (S.D. N.Y. 1974); Collins v. Safeway Stores, Inc., 187 Cal. App. 3d 62, 231 Cal. Rptr. 638 (1st Dist. 1986). Courts are reluctant to intervene where the parties appear able to resolve their own disputes. See, e.g. Berley v. Dreyfus & Co., 43 F.R.D. 397 (S.D. N.Y. 1967); Hunter v. Union Carbide Corp., 462 So.2d 28 (La. Cir.Ct. App. 1985)

Many class actions are being settled through use of coupons or credits against future services. What prevented the defendant from offering these deals to putative class members prior to paying class counsel’s fees? In Illinois, pre-certification contracts with class members are permitted between the filing of a class action certification of the class.  Jankousky v. Jewel Cos., 182 111. App. 3d 763, 538 N.E.2d 689 (1st Dist. 1989). Fast handling and resolution of claims promotes cost effectiveness and customer satisfaction.

2. Share with Others. This general rule applies most directly to the information and knowledge regarding the facts of the crisis developed in the course of your investigation. Companies that can provide helpful and knowledgeable information regarding developments in a crisis situation go a long way toward preserving their reputations as good corporate citizens and responsible corporate entities.

In addition, being the first to reveal facts puts your client in the best position to shape public response to the company as a whole, as well as to provide the context of your company’s stellar history of safety and the safety precautions already in place.

If you won’t comment, the only published response will be someone else’s view of the situation.

Sharing also means cooperating with federal, state or local governmental entities. Obviously, depending upon the situation and your interaction, health departments and other regulatory agencies can either help you and minimize negative effects of the incident (including publicity), or harm your operation by overreacting and making strong media statements, or by closing your plant. You should, therefore, strive to develop good relations with regulators. While you shouldn’t feel compelled to volunteer negative information, when the health department investigators come knocking, be cooperative, but cautious. Make appropriate records available for review and allow the investigators reasonable access to what they request to observe. Be frank and candid.

By getting the facts out before the health officials, you can stop rumors, provide reassurance to the public and demonstrate that your company is acting responsibly by taking every possible step to resolve the crisis, In general, the more responsive you are to the press, and the more you are the provider of information, the more positively your products should be perceived by the people in your marketing area, and the more likely your version of disputed facts will be accepted.

Finally, if your company has cooperated with the health department throughout the investigation, local officials may help you re-establish your reputation. Schwan’s ice cream social to celebrate the reopening of their plant was attended by, among others, the governor of Minnesota.

3. Honesty is the Best Policy. Obviously all statements must be truthful and accurate. Any spin that would create a misleading impression must be avoided. However, being the source of accurate information and being the first to publicize that information allows you to shape it to put your client in the best light and create the first impressions against which all other information will be interpreted. You will find that the public should be on your side if you have been frank and candid with them and if you have truly projected a sincere concern for the welfare of your customers.

4. Say You’re Sorry When You Hurt Someone. Acceptance of responsibility, without acceptance of liability, is possible. You need not admit liability when publicly pronouncing you are sorry your customers have been injured, you are doing everything to discover whether your company has a role in such an injury and, in such a case, you will do everything in your power to cure the problem. A well-timed apology and promise to get to the bottom of the matter can often defuse a potential crisis or lessen its intensity.

5. Don’t Hit Back. As tempting as it may be, launching into an immediate fight against those who have a role in initiating or magnifying the crisis can be the worst possible reaction. Ignoring the temptation to hit back and, instead, deciding on the appropriate course of action for your client (which may include working with your attackers) may lead to the best solution. Sometimes there is no choice but to fight. However, you cannot make an intelligent decision to fight until you have weighed all the possibilities of resolving the matter peacefully. This is similar to mom’s admonition to look both ways before crossing the street.

While the lessons learned at a tender age will not solve every crisis that crosses your desk, the rules do provide a blueprint for how to go about considering the alternatives to resolution and a decision tree to follow in deciding what the best course of action is for your client. Was anyone ever hurt by playing nice with others?

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