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Big business spends more than $41 billion a year on litigation costs, according to a recent study by the U.S. Chamber of Commerce. What’s going on here? One factor in high litigation costs is the weight of public opinion. In fact, the impact of public opinion on lawsuits has dramatically reshaped corporate litigation over the last two decades. On the one hand, corporations are now settling cases more readily; on the other hand, high-profile class actions initiated by the plaintiffs bar are driving up costs for companies. Why is public opinion so powerful? In part, it’s the result of the continuous media culture, which affects audiences and opinionshapers every day. The cable news networks in particular are filled with programming that aggressively mixes opinion with news. As a result, the public is reacting to issues without exposure to the full range of facts. Dominant industries that for decades seemed impervious to the pressures of public opinion have paid the price for failing to deal successfully with this phenomenon. The tobacco industry is a perfect example. For years, the tobacco industry fought off a variety of health claims and product liability suits, remaining confident in its aggressive litigation posture — and it worked. Tobacco continued to focus on its legal defense even in the face of growing investigative media interest. In the end, however, it was the media’s ability to arouse the interest of the American public in numbers greater than ever coupled with the automatic interest that regulators and state attorney generals take in high-profile events that toppled the industry. As a result, tobacco’s profitability has gone down, the cost of doing business has gone up, and the coffers of many states have been enriched by the settlements. It was the investigative media that found the “smoking gun” in the hidden addictive properties of cigarettes, and it was the media, and their unparalleled influence in molding opinion and mobilizing elected officials, that ultimately toppled tobacco, not the lawyers who fought against the tobacco companies. HIGH-PROFILE LITIGATION Tobacco is a dramatic illustration of the current state of high-profile, high-stakes litigation. American-style corporate litigation has become a multistakeholder proposition. Corporate litigation affects customers, employees, regulators, shareholders, opinion leaders, elected officials, and a variety of others, all of whom rely heavily on the media for their information. It is increasingly clear, therefore, that if companies want success in the courts, they’ll have to start by making a successful case in the “court of public opinion.” This new reality is backed up by a recent Hill & Knowlton survey of Fortune 1000 corporate counsel conducted by the polling firm Penn, Schoen, Berland and Associates. The survey proves that corporate counsel at the nation’s most powerful companies now realize the importance of public perception. In fact, 90 percent of the 78 respondents polled said that engaging in a strategy to protect their public reputation was a priority during highstakes or high-profile litigation. More than half of the corporate counsel said they thought that public opinion had a specific impact on the size of legal awards or settlements. Twenty-six percent felt that public opinion increases damage awards or settlements by 10 to 20 percent in the more-visible corporate cases, while 14 percent said they saw increases of 20 to 30 percent, and 16 percent cited increases of 30 percent or more. This impact is most strongly felt in the biggest companies, to judge from a companion survey by Hill & Knowlton of Fortune 150 general counsel. Of the 48 respondents to this survey, 46 percent concluded that public opinion increases dollar amounts in damage awards or settlements by 30 percent or more. Since corporate counsel understand the impact of public opinion, it seems obvious that counsel should be involved in developing litigation strategies that take public opinion into account. Yet, in practice, the opposite appears to be true. The majority of corporate counsel polled do not consider themselves principal contributors to litigation communications strategy. When asked which groups concern general counsel most during high-profile or high-stakes litigation, more respondents cited nonparty regulators or government bodies (36 percent) and industry analysts (26 percent) than the impact of the media (16 percent). But since the media can shape public opinion, corporate counsel seem to misunderstand their strategic role in litigation. In fact, many GCs candidly confided that they made their rankings based on their view that external communications and media relations belong to corporate communications — not to counsel. TRAINED TO BE ARCANE A deeper probing of these findings reveals something else. As lawyers, we are trained to be deliberate, cautious, circumspect, and even arcane. We believe we must preserve the integrity of evidence, protect the testimony of expert witnesses, and seek to avoid, at all costs, trying cases in the media. But these goals can sometimes undermine a successful and strategic litigation communications plan. So while we lawyers acknowledge the primacy of communications in high-profile litigation, we feel it is an alien craft. We’d rather let someone else deal with it. One more difficulty is that in-house counsel appear to have a fatalistic view of a corporation’s capacity to influence public opinion. In fact, 82 percent of Fortune 1000 corporate counsel believe that corporations are “guilty until proven innocent” in today’s litigation environment. Additionally, 76 percent concluded that media coverage of alleged corporate wrongdoing has made it substantially harder to secure a fair and impartial jury. This mind-set can lead to a self-fulfilling prophecy. This antagonism has serious implications for the corporate reputation generally and litigation success most specifically. An effective litigation communications strategy demands a fully integrated, deliberate communications strategy that proactively addresses essential corporate stakeholders. The general counsel’s office must be involved in this strategy. Ironically, the same companies that are icons of product innovation and growth often are muted by counsel during litigation. But increasingly, a number of corporate counsel are displaying an increasing sophistication and confidence when it comes to communicating during litigation. They are showing a burgeoning understanding of the fact that communicating through the media is only one facet of a comprehensive strategy. Little by little, companies are exporting lessons learned from the sales and services battlefield to the litigation battlefield and speaking directly to customers and other stakeholders on litigation matters. They are, in effect, cutting out the media by engaging directly with such corporate stakeholders as customers, employees, shareholders, regulators, opinion leaders, and the public. In other words, they are simultaneously speaking through the media and “over” the media, and are holding a direct and candid conversation with people who mean the most to the company. THE BAYER EXAMPLE A vivid example of such a calculated course is Bayer AG’s recent public articulation of its litigation strategy relating to alleged injuries resulting from the cholesterol-lowering drug Baycol. Using traditional media outlets and other communications tactics, Bayer announced to the public generally and plaintiffs lawyers specifically the company’s litigation posture. They described the company’s readiness to litigate aggressively. Essentially, Bayer ranked assumed and actual plaintiffs according to classifications of their injuries and specified compensation ranges for each category. This calculus was accompanied by a declaration that Bayer would litigate claims that did not fit into their category specifications. The unprecedented shot across the bow showed that Bayer was prepared to litigate aggressively and would not cave in to efforts by the plaintiffs bar to manipulate public opinion. In short order, Bayer shored up the support of a variety of critical stakeholders, including shareholders, employees, and even some regulatory bodies. Bayer’s stock price began to stabilize, and its efforts to communicate boldly on litigation matters caught the attention of the legal world. Other companies have tried integrating their communications and legal departments. For instance, Sheila Davidson, senior vice president and general counsel for New York Life, relates that she recently took over supervision of some aspects of the corporate communications department. And Kevin Sullivan of the Allstate Corp. recently moved from the office of corporate counsel to director of communications and field operations. Talking directly to policyholders and potential customers must be a priority for Allstate at all times, including times of litigation, Sullivan stresses. Both of these examples support the notion that connecting directly with important audience groups can work as effectively in litigation as it can in product sales. It’s very simple: A company must be willing to act on controversial and sensitive matters. According to a 2002 Hill & Knowlton poll of the American public, 81 percent of the respondents said they would remain open-minded about corporate litigation if the company involved provided a clear, timely, and detailed explanation of its behavior and position. The unguided imagination of the American public may be far more damaging to corporate interests than a clear and timely expression of the truth. Harlan A. Loeb is U.S. director of litigation services at Hill & Knowlton and an adjunct professor at Northwestern University Law School.

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