Managing a corporate reputation in the 21st century

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Dan Tench and Jack Gilbert provide a practical guide to preventing damage to a company's reputation, formulating strategies to deal with traditional and online media, and managing political engagement.

A company can face threats to its reputation for any number of reasons. For example:

• It may be the subject of allegations from regulators, competitors or the mainstream press.
• Its business practices or products may be criticised by customers or consumer groups.
• It may fall victim to a serious data or security breach.

It is no longer possible for companies to adopt a "one-size-fits-all" approach to dealing with these issues. Senior management, public relations (PR) advisors, lawyers and other key stakeholders should all be involved in determining how the company should approach the issue at hand, ensuring that any response is appropriate to the particular circumstances. For example, different strategies will be needed when dealing with an anonymous blogger or social media backlash than when dealing with the traditional print media.

In an increasingly fragmented media landscape, maintaining a co-ordinated strategy and message is vital. Although in many cases a company may consider using legal remedies, it should take care to ensure that this is consistent with a broader co-ordinated communications campaign. Where negative coverage has gone viral across the internet or is being disseminated via social media, companies should consider whether legal action is appropriate or if this will merely draw further unfavourable attention to the issue.

In the internet age, it is essential to act quickly and to be aware of any relevant issues as they develop. Companies that are prepared and have a procedure in place for handling a crisis will be better positioned to respond more effectively than those without one (see "Managing exposure and learning from past events").

Dealing with the traditional media

A company will often be made aware of forthcoming media coverage before it is published. This may either be because the company is at the centre of an event that is already public knowledge, or because the company has been approached by journalists to comment on allegations or respond to specific enquiries.

Consider taking the following steps when dealing with the traditional media:

• Establish a clear and consistent message from the outset.
• Identify key internal stakeholders (for example, PR, communications, legal) and establish clear roles and responsibilities.
• Agree on an internal strategy, appointing external advisors where necessary.
• Consider issuing a press release. Even where the company has not yet established the facts, it is often advisable to acknowledge the story and explain that the company intends to comment shortly, rather than make no comment at all.
• Identify a single spokesperson to make all public comments, and appoint a single person or small team to act as main point of contact with the media to ensure a consistent message.

Engaging with journalists

It will rarely be possible for a company to prevent lawful negative press coverage by legal means alone. However, legal engagement may be appropriate where it is necessary for the company to make its legal position clear and take preventative measures from the outset. For example, if a company becomes aware that a newspaper is intending to publish allegations about the company that are inaccurate or untrue, it may be appropriate to formally engage with the journalist by setting out the true position in writing and making clear that the allegations are defamatory.

In many cases, it will be advisable to maintain an open and constructive dialogue with journalists rather than resorting to formal or aggressive legal correspondence, which may be counter-productive. By engaging in this way at the outset, it is likely to be easier to find out how much information the journalist has and the intended angle of the proposed story.

Immediately escalating an issue to external counsel can send a strong message to the journalist that the company is concerned about protecting its position or that it is intending to adopt an aggressive approach. While this may be appropriate in some cases, where the intention is to play down the story, it can sometimes be counter-productive. If it is necessary to engage external counsel, consider whether it is more useful to seek advice behind the scenes and continue corresponding with the journalist directly, rather than on the advisors' legal letterhead.

When developing its legal strategy, a company should also consider the publication's:

• Reporting culture.
• Likely available resources.
• Appetite for legal risk.

While a strongly-worded legal letter may have the desired effect when dealing with a more risk-averse publication, more aggressive publications may be less willing to engage on this basis.

Should you co-operate?

Where publication cannot be stopped, it is tempting to try to stonewall the journalist or programme-maker with a "no comment" and refuse to give any interviews. Sometimes there is a benefit in denying everything and waiting to see if the story is published correctly, particularly where the proposed story is inaccurate and the company has already made the true position clear.

However, by choosing to avoid engaging with journalists you will lose the opportunity to influence the content of the piece and, perhaps even more importantly, the angle put on it. Maintaining an open dialogue with the journalist will also allow you to obtain as much information as possible about the proposed story. Similarly, it will be difficult for the company to complain or bring legal proceedings after publication if it has refused to engage with the journalist to provide its side of events.

Providing information

Before engaging with journalists, establish clear parameters setting out the information the company is willing to provide, and on what basis. When speaking to journalists, the following terminology is commonly used:

• "On the record". The information provided is attributable to a particular individual. This is typically used for specific comments or quotes.
• "Off the record". The information provided may be used for publication, but on an unattributed basis.
• Background information/"Not for publication". The information provided is for the journalist's benefit and should not be used in the publication itself.

Companies should always be cautious when engaging with and divulging information to the media. Never disclose information that the company wishes to remain confidential, even on a "not for publication" basis.

Right of reply

There is no legal right of reply under English law for print content. Therefore, when dealing with print or online media, it is impossible to force a journalist to publish a comment if they are not minded to do so. However, in most cases, a responsible journalist will want to hear both sides of the story and will actively seek comment. Not only will this contribute to a better story, but where a journalist fails to seek comment or provides a biased or unfair representation of events, it will be much harder for him to argue that the story has been published responsibly.

In contrast, broadcasters have an obligation to treat subjects fairly and to avoid unfair or unjust treatment of individuals or organisations in broadcast content under the Office of Communications (Ofcom) Broadcasting Code:

"Before broadcasting a factual programme, including programmes examining past events, broadcasters should take reasonable care to satisfy themselves that:

• material facts have not been presented, disregarded or omitted in a way that is unfair to an individual or organisation; and
• anyone whose omission could be unfair to an individual or organisation has been offered an opportunity to contribute."

(Section 7.9 Ofcom Broadcasting Code).

Similarly, broadcasters should make it clear where an individual or organisation has been approached for comment and has refused to provide one (section 7.12).

Can the publication be stopped?

Restraining publication is difficult in a society that values freedom of expression. The High Court's power to grant an injunction restraining publication is exercised relatively rarely. The unwillingness of the English courts to make an order for prior restraint, particularly when publishers say that they will justify their allegations, was historically based on the common law right of free speech. This now has statutory support in the Human Rights Act 1998 (HRA 1998) which implements the European Convention on Human Rights (ECHR). Section 12 HRA 1998 states that no relief is to be granted that might affect the ECHR right to freedom of expression, unless the court is satisfied that the applicant is likely to establish that publication should not be allowed. In practice, this means that injunctive relief will rarely be granted.

In defamation cases, the rule established in Bonnard v Perryman (1891) 2 Ch 269 provides that where a defendant states an intention to justify statements complained of, an injunction should not be granted. This rule was distinguished in Sunderland Housing Company and another v Baines and another [2006] EWHC 2359 (QB), where Eady J held that in circumstances in which the claimant alleged that statements were untrue, it was not enough for a defendant to merely assert an intention to justify without identifying the extent to which he proposes and intends to do so and supporting it with a statement of truth. However, in the majority of cases, particularly those involving the traditional media, injunctive relief will not be granted for defamation claims.

In breach of confidence and misuse of private information claims, public interest will often defeat an application for injunctive relief and, in any event, these will seldom be relevant in cases involving corporate entities. Where a company is commencing a breach of confidence action in respect of confidential information (as opposed to Article 8 privacy rights), the court may restrain the publication of material that has been leaked to the press in breach of an obligation of confidence. However, it may still allow the press to publish material imparted about relationships and activities that are not protected by confidence.

Generally speaking, the respondent publisher or broadcaster must be present in court for the hearing of any application for relief, unless:

• The applicant has taken all practicable steps to notify the respondent of the hearing.
• There are compelling reasons why the respondent should not be notified.

On an application relating to journalistic, artistic or literary material (which could include newspapers) the court must consider to what degree the respondent's behaviour complies with the Independent Press Standards Organisation (IPSO) Editors' Code of Practice (Section 12(4) HRA 1998).

Retraction or apology

Under English law, there is no obligation on publishers or broadcasters to offer an apology in the absence of court proceedings. However, a reputable publisher who has clearly got the story wrong may agree to do so, although most will attempt, at least at first, to confine themselves to a clarification or correction. A properly drafted, promptly published retraction and apology will satisfy most claimants, particularly if it is published with a prominence comparable to that given to the original allegation. The practical uses are obvious:

• A published apology is something that shareholders and customers can be referred to.
• It is likely to go into the clippings file of the publisher and be stored in its database. If a false charge has been connected with a published apology, journalists (who usually search the clippings file or database before going to print) are less likely to repeat it.

When agreeing the wording of the text that is to appear, a complainant will usually want a retraction of the original allegation. In some instances, a complainant may not want the original defamatory statement to be republished, but editors will rarely accede to requests for apologies that suggest that the entire story was misconceived.

Methods of obtaining an apology in UK-issued proceedings

If proceedings are issued in the UK, there are several possible avenues for obtaining an apology:

• Summary disposal. The court may dismiss a defendant's defence and enter judgment for the claimant. This will include summary relief, comprising a declaration that the statement was false and defamatory of the claimant and/or an order that the defendant publish a suitable correction (sections 8-10, Defamation Act 1996) (DA 1996).
• A statement in open court. Once a defamation claim has been served in the UK and a settlement has been agreed, a claimant may also be able to secure a statement in open court. The statement will generally include:
  • an outline of the original libel;
  • confirmation that the publisher agrees that it was untrue; and
  • a retraction and an apology.
• A statement in open court can be a useful way of vindicating a claimant's reputation and can be copied to other media that may revisit the subject in the future.
• A summary of the judgment. Where a claimant has been successful in bringing an action for defamation, the court may also consider it appropriate to order the defendant to publish a summary of the judgment (section 12, Defamation Act 2013). This is likely to be exercised when a claimant has been the victim of a high-profile libel and may only be ordered at the end of a successful trial, and not where the court has given summary judgment.
• An offer of amends. The statutory offer of amends defence is designed to protect a publisher that has made an innocent mistake (section 2, DA 1996). An offer of amends must be made in writing before the service of a defence in the proceedings.

Regulatory complaints

When an organisation has been the subject of inaccurate or unjust reporting, even if it may not be possible to bring formal legal proceedings, it may still be able to make a complaint to the relevant regulator.

In September 2014, IPSO replaced the Press Complaints Commission (PCC) as the independent regulator for the newspaper and magazine industry. It was introduced in response to the recommendations made in Lord Justice Leveson's report into the culture, practices and ethics of the press. IPSO is responsible for enforcing the Editors' Code of Practice which prescribes a number a number of industry standards that should be met by all UK newspaper, magazine and electronic news publishers.

As an independent self-regulatory body, IPSO may conduct its own investigations into complaints relating to editorial content and has a range of powers to sanction publishers that contravene the Editors' Code of Practice, including:

• Requiring the publication of prominent corrections.
• Requiring the outcome of its adjudications to be published.
• Imposing fines in serious cases.

Prior to the introduction of IPSO, the PCC Board consisted of several editorial members representing the interests of major traditional news organisations and it was frequently criticised for being too strongly in favour of press interests when adjudicating complaints. It remains to be seen whether IPSO, whose Board consists of five members representing the newspaper industry and a majority of seven independent members, takes a more robust approach to these concerns.

An organisation may submit a complaint to Ofcom if it considers that a broadcast publication is in breach of the Ofcom Broadcasting Code. Ofcom has a specific duty to consider and adjudicate on complaints that relate to either:

• Unjust or unfair treatment in programmes.
• Unwarranted infringements of privacy in programmes (or in connection with the obtaining of material included in them).

Dealing with online publications

Increasingly, the biggest threat to a company's reputation will be through online channels. Most, if not all, major traditional news organisations publish stories online, in addition to print or broadcast media, and consumers are now growing reliant on online sources to access news content.

An organisation should not depart from the normal principles of media engagement simply because content has been published online. Indeed, in many cases, a story will be pursued by a single media organisation that intends to publish it online and in print or by broadcast. Similarly, there is a developing trend for online-only news websites that employ the same approach to responsible journalism as traditional outlets.

However, where a company finds itself to be the subject of damaging online content (such as a negative blog, defamatory statements in an online comments forum or on social media), engagement may not always be possible. Content published through these channels is often created by individuals or much smaller and less sophisticated organisations, and such commentators are far less likely to follow the procedures of responsible journalism that might be expected from traditional outlets. In many cases, the individual(s) responsible will be anonymous or unavailable and it may be necessary to consider alternative strategies to secure the removal of the content.

Golden rules of correspondence

Where it is possible to correspond with the individuals responsible for an online publication, take considerable care, particularly where the identity of the individual remains unknown or if they are based in another jurisdiction. The company will have no control over whether any correspondence sent to that individual will be published online or otherwise made available to the public. Where an individual has a particular axe to grind, this may be very likely.

It will often be appropriate to mark correspondence "private and confidential" and "not for publication" for this reason, however, this is unlikely to deter an individual from publishing the correspondence. As a general rule, each piece of correspondence should be drafted on the assumption that it may be made public. Companies should ensure that any such correspondence:

• Does not contain any confidential or embarrassing information that the company would not want to be made available for wider dissemination.
• Adopts a tone that is appropriate for the circumstances.
• Does not appear overly aggressive or suggests that the company is attempting to censure legitimate criticism.

Liability of online intermediaries

Where unlawful content has been published by an individual on a third-party website (such as a blog platform, review website or online forum), an action may lie against both:

• The author of the defamatory material.
• In certain circumstances, the operator of the online platform (the intermediary).

In this situation, and particularly where the statement's author is anonymous, it is likely to be much easier to approach the intermediary to request the removal of the content, rather than approaching the author directly. Internet intermediaries may be able to rely on a number of intermediary defences in respect of unlawful defamatory material that has been created by third-parties.

The Electronic Commerce (EC Directive) Regulations 2002 provide a hosting defence to intermediaries where:

"the service provider (i) does not have actual knowledge of unlawful activity or information and, where a claim for damages is made, is not aware of facts or circumstances from which it would have been apparent to the service provider that the activity or information was unlawful; or (ii) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information".

(Regulation 19(a) Electronic Commerce (EC Directive) Regulations 2002).

Once the website operator has "actual knowledge of unlawful activity", it will lose the ability to rely on the defence and must therefore either act quickly to remove the material or take the risk of assuming liability for it. Providing a website operator with a takedown request making them aware of unlawful material, and thereby placing them on notice so that they can no longer rely on the Regulation 19 defence, can be an effective method of ensuring the removal of the material.

When putting an intermediary on notice of unlawful content for Regulation 19 purposes, it is not sufficient to merely state that content is defamatory. Reasons must be provided explaining why it is unlawful. In the case of a complaint for defamation, a notification should typically include:

• The exact URL(s) of the content in question.
• The words or statement complained of.
• The reasons why it is defamatory.
• The reasons why it is unlawful (for example, why it is untrue or why it cannot be considered honest opinion).

Identifying anonymous authors

Where content has been published online anonymously, it may be necessary to obtain a Norwich Pharmacal order to identify the individual(s) responsible, in addition to merely seeking the removal of the content. This can be a good idea where, for example:

• The company wishes to obtain an injunction in respect of continued and persistent negative or damaging content.
• The content is extremely damaging and necessitates further action to seek damages.
• The company suspects it is the work of a competitor, employee or other specific person.

A Norwich Pharmacal order requires a respondent to disclose certain documents or information to the applicant. In Totalise plc v Motley Fool Ltd and another [2001] EWCA Civ 1897, the Court of Appeal held that a Norwich Pharmacal order was available for use against the operator of an internet bulletin board to require the operator to reveal the personal details of a subscriber who posted statements alleged to be defamatory. Following this case, Norwich Pharmacal orders have become a common form of relief to identify anonymous individuals online by requiring respondent website operators to disclose information that may lead to the identification of the intended defendant, such as subscriber information and IP login data.

However, there can be practical problems with the use of Norwich Pharmacal orders in this type of situation. For example, the subscriber in question may have used a false address when registering and, therefore, unless there are changes to the current legislation to prohibit providing false details when registering, applicants will face the risk of bearing the costs of such an application with no useful result.

In addition to Norwich Pharmacal relief, the courts are also increasingly prepared to order so-called "unmasking" orders against "person(s) unknown", which require anonymous individuals to identify themselves to the applicant within a short period of time, failing which they will be in contempt of court. This form of relief, coupled with a Norwich Pharmacal order against the intermediary website operator, can provide a further effective method to help identify perpetrators. However, these orders can pose practical problems with regard to service.

Service and jurisdictional issues

Once a Norwich Pharmacal order has been obtained, it will be necessary to serve it on the respondent website operator. In many cases, the operator will be based outside of the jurisdiction (typically in the USA), in which case it will be necessary when seeking the order to obtain the permission of the court for service out of the jurisdiction.

Many US-based website operators insist, as a matter of policy, that they will only comply with such requests pursuant to valid US legal process and/or when served with a US subpoena. While an order of the English court that has been properly served outside of the jurisdiction will be binding on that party without the need for a subpoena, in practical terms this can be difficult to enforce if the website operator insists on one. Once an order has been obtained from the English courts, obtaining a subpoena to give it parallel effect under US law is relatively straight-forward and can usually be carried out by an appropriately qualified attorney without the need for a further court application. This can often be the most effective method of obtaining prompt disclosure.

Similarly, where an unmasking order has been obtained it will also be necessary to serve this on the respondent. This will clearly pose a practical problem where the identity of the respondent is unknown. The court will permit alternative service if it considers it to be necessary in the circumstances, and has previously permitted service of an order via Twitter and Facebook to avoid this problem.

Political engagement

Parliamentary Select Committees

One aspect of handling a major media crisis that has become increasingly important for businesses in recent years is the attention that politicians can bring to such matters. Parliamentary Select Committees appear to have granted themselves the role of inquisitor general on any significant matter of the day and appearances by leading business people before Select Committees can often add fuel to the media coverage of a business crisis.

Select Committees have, in theory, unfettered powers to summon individuals to appear before them and call for documents to be provided to them. This could, theoretically, include legally privileged material, although if requests for the disclosure of such material are resisted, the Select Committee is unlikely to press for it. The failure to comply with either request can constitute contempt of Parliament, the sanctions for which are rather uncertain as no-one has been arraigned for contempt of Parliament in modern times. However, no significant business is likely to wish to put itself in that position and incur, at the very least, significant reputational damage. For that reason alone, requests from Select Committees for assistance from businesses are usually complied with in full (save for matters that may be covered by legal privilege).

Nevertheless, when dealing with a request from a Select Committee it can be worth reviewing its terms of reference, which are available in the relevant Parliamentary Standing Orders. These are usually more limited than the members of the Select Committee themselves may imagine.

The conduct of Select Committee hearings is usually highly unconventional. The proceedings are televised and may garner significant public and media attention. Even basic concerns for fairness that would exist for a witness in any court or tribunal process may simply not be present. For example, there is no privilege against self-incrimination and a Select Committee can make determinations against individuals without ever seeking to put the allegation in question to them and giving them a chance to respond.

For these reasons, damage limitation is usually the best that can be hoped for from an appearance before a Select Committee. Careful preparation is vital. Witnesses should remember that the standard of questioning tends to be low (counsel so far has not been used) but the public exposure can be very high. While witnesses should be as helpful as possible, they should not be deterred from saying when matters are beyond their knowledge and instead supplement their oral evidence with correspondence covering outstanding matters. It is also prudent for companies to plan their media engagement surrounding any Select Committee appearance.

Managing exposure and learning from past events

Maintaining key policies

Companies should establish appropriate internal policies so that they can respond to media attention quickly when required. These can include the following:

• Communications policy.
• Media handling policy.
• Social media policy.
• Crisis management policy.
• Data retention policy.
• Data security policy.

Ensure that these policies are drafted consistently so that they can be used in conjunction with one another and are easy for employees to follow. It can also be helpful to draft easy-to-read guidelines in addition to a formal internal policy, which serve to give advice and suggestions to employees on how to apply the relevant policy. Employees should also be made aware of the policies and guidelines and given appropriate training to ensure effective ongoing compliance.

Adopting a crisis response plan

By adopting a crisis response plan from the outset and ensuring that it is consistently maintained, individuals will be able to switch into "crisis management" mode much more effectively when the time comes. In a media crisis, stress can restrict an individual's ability to make clear and rational decisions and can lead to inaction, which can be damaging. Having a plan in place will enable those individuals to refer to a familiar framework that should allow them to retain focus and control.

A dedicated crisis management team should be established. It should incorporate:

• Members of the executive management team.
• The general counsel.
• Representatives from support departments (for example, PR and finance).
• Relevant technical teams.

When the crisis hits, the team may be expanded to include any other department heads whose departments have been directly affected. Appointing an individual point of contact to deal with the media will ensure that a consistent message can be maintained while the necessary internal steps are taken.

Maintaining pro-active PR and political engagement strategies

Very often, when the issues that lead to a major media crisis arise, it may already be too late for the business involved. That is because the crisis will reflect as much the general reputation and standing of the business as the specific matters in question. Businesses that maintain positive relations with the public and engage effectively with politicians are usually better able to withstand a media crisis than those that do not.

For these reasons, an energetic social media policy, as part of a broader public engagement, each consistent with a business's identifiable core values, can be extremely worthwhile. Political engagement along the same lines can also reap great benefits. However, there are dangers with this approach. If the crisis in any way suggests that the business is being disingenuous in expounding its core values, such engagement can be counter-productive and may simply increase the media attention once the crisis hits.

Conducting post-incident reviews

Once an incident has been managed or brought to an end, it can be useful to conduct a comprehensive recovery strategy and review of the situation to assess what aspects were well-handled and what needs further attention. A frank assessment of the company's shortcomings is the most effective way to address the problem and prepare for any future crisis scenarios. Once the assessment of what went well and what could be improved has been conducted, any additional, previously unforeseen, areas of risk can be considered and the risk management process applied to them.

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com or call 020 7542 6664.