The Role of General Counsel in Crisis Management: Strategies for Businesses in Turbulent Times

In the context of a business, what is crisis management? As an example, do you remember or have you heard of the 1982 Tylenol crisis? That was the highly publicized crime where Tylenol, a highly trusted product, was tainted with cyanide and 7 people died. The manufacturer recalled all Tylenol products, putting the consumer first, and handled the crisis with skilled and open communication. Today, Johnson and Johnson’s response is considered to be the gold standard of corporate crisis management.

By contrast, the BP Deepwater Horizon oil spill in 2010 – the largest marine spill in history – stands out as one of the worst corporate responses to a crisis. The company’s communications to the public understated the environmental harm and overstated the company’s ability to solve the problem. This mismanagement created a public reaction that the company was incompetent and perhaps deceitful in its handling of the matter.

Accordingly, a business crisis occurs when a problem puts the stability or profitability of a company at risk. The crises that can arise in big corporations and small businesses include:

• Organizational crises that occur when a company has harmed its customers by lying or withholding material information
• Financial crises which can arise from a drop in reputation or quality of products or services
• Workplace violence crises such as an office shooting
• Natural crises, such as when a natural disaster or event such as COVID-19 or California wildfires affects the demand for goods or services provided by a business
• Confrontational crises where employees boycott their company or make certain demands
• Technological crises occur when social media or e-commerce websites crash or there are privacy breaches such that people’s proprietary information is shared

Ideally, companies should have crisis management plans in place before a crisis occurs so that they will have a step-by-step plan to move forward. But realistically, many small to medium-size companies don’t have the time or resources to prepare such plans in advance.

What Is the Role of a General Counsel in Crisis Management?

An effective General Counsel will evaluate how well a company is prepared to deal with a crisis, lead the team in the event that a crisis arises, and take steps to minimize the fallout. Some of these steps include:

• Evaluating how well a company is prepared to deal with a crisis involves investigating the status of a company’s policies and procedures, and determining their adequacy. At a minimum, there should be a company emergency response team as well as guidelines for communications with stakeholders and the general public.
• Leading the crisis involves activating the response team, monitoring the effectiveness of the response, mitigating risks, coordinating with senior management, and providing necessary support to all constituencies.
• Minimizing the fallout involves follow-up with all affected constituencies, including employees, customers, the local community, and the media, and taking note of what went well and what could be improved upon in the next crisis.

Contact One Oak Legal for Your General Counsel Needs

In a crisis, lack of preparedness, poor communication, lack of truthfulness, and/or withholding information can put your company out of business. The attorneys at One Oak Legal have the talent and experience to act as your General Counsel and help you before, during, and after a business crisis. Contact us for all your crisis management needs.