As former Secretary of Defense Donald Rumsfeld liked to say, “Stuff happens.” A much heralded law firm merger blows up in public, and partners start leaving. An angry associate lights up the Web with charges of anti-gay bias at his elite firm. A new administrative partner starts his job by confronting sexual harassment charges. A firm’s major client goes bankrupt, and investors accuse the lawyers of fraud. A prized partner gets caught forging clients’ signatures, fabricating fees and cheating at pro bono.
Bad stuff happens � even at successful, well-managed law firms. With an attentive press, a 24/7 Web and schadenfreude as a national sport, firms nowadays have no place to hide. “It used to be that you’d just pray that nobody hears or reads about it,” recalled Mark Beese, director of marketing at Denver’s Holland & Hart. “These days . . . it’s amazing how things can be amplified.”
According to the battle-scarred, firms can no longer afford to be caught in the headlights. When events take an unexpected, unfortunate turn, the speed with which managers address the issue and how they respond will have a direct effect on the firm’s reputation. “In today’s environment, how management communicates is as much a part of the picture as the corrective measures they’re taking to mitigate damage,” said William Keegan, an executive vice president and director at Edelman, a public relations firm. “I’m a big believer in talking to all stakeholders, and all constituencies, directly.”
Directly � and quickly. In January, New York’s Sullivan & Cromwell faced a serious public � and internal � embarrassment. A gay midlevel associate had posted on www.greedyassociates.com his complaint accusing the firm of discriminating on the basis of sexual orientation � before serving the firm with a lawsuit.
“Within about an hour” of learning about the suit (from a Sullivan associate), managing partner H. Rodgin Cohen said, he had e-mailed everyone at the firm. Aided by Sullivan’s internal communications team, Cohen issued a statement informing partners, associates and staff that two internal inquiries found nothing to support the disgruntled lawyer’s claim. The statement, which was soon posted on Sullivan’s Web site, also denied the associate’s allegations, and asserted that Sullivan had a solid record in hiring and promoting gay and lesbian lawyers.
In responding to questions from the press, Cohen e-mailed the firm’s statement, and partner David Braff served as second spokesman. Speaking to the New York Times, Braff noted that Sullivan & Cromwell has handled “landmark [pro bono] cases” expanding gay rights, and said that he’s been openly gay at the firm since 1984. “That was a terrific move,” said public relations consultant Keegan, who frequently works alongside law firms in client litigation.
At the firm, Cohen hosted what he calls “town hall meetings” for all lawyers and staff. He explained the procedures that management had followed, assured everyone of Sullivan’s commitment to people regardless of sexual orientation and invited their questions. “In these situations,” said Mozhgan Mizban, a partner at the Zeughauser Group consulting firm, “your internal communications have to be very strong, so people don’t feel like they’re standing in quicksand.”
There are limits to spin control. According to reports out of Sullivan & Cromwell, some associates thought that Cohen didn’t go far enough; they shuddered a bit when the firm fired and countersued the aggrieved lawyer. Still, management consultants, big-firm marketing officers, communications professionals and legal recruiters agreed that best practices dictate that firms must address the issues. “If you don’t connect the dots, someone else will do it for you,” warned the communications chief at an international firm. Consultants give Cohen high grades for moving fast, speaking clearly and reaching out to constituencies inside and outside the firm.
Danger in inaction
Often, big firms say too little, too late. Or the partners cloister behind closed doors, suggesting that something worrisome is in the works. Or, in a legitimate effort to gain consensus, they bog down rehashing the issues, then lose the strategic advantage of telling the firm’s side of the story first. Then there are those who deny they have a problem and do nothing.
“Avoidance is a real issue for lawyers,” said Ronda Muir, a former Davis Polk & Wardwell lawyer now with the legal management consulting firm Robin Rolfe Resources Inc. “They tend not to confront the problem, and this avoidance creates other problems for firms up and down the ladder . . . from recruiting to associate satisfaction to partner collegiality.”
Marketing and communications personnel can help partners avoid overlawyering their internal issues management. But “too often the communications experts, either internal or external, are not brought in early enough,” said Richard Levick of Levick Strategic Communications. (The half-dozen current and former law firm marketing directors interviewed for this article independently echoed Levick’s assertion.) “I’ve seen many instances where the lawyers say, ‘We’re not taking instruction from PR people,’ ” said Levick. “ You no more want your lawyers controlling your communications strategy than you would want PR people handling your legal strategy.”
Levick and others experienced in high-stakes damage control suggest that firms consider some of the same strategies that their corporate clients embrace. Some chief executives keep insiders up to speed through daily blogs and internal Webcasts, the latter permitting video e-mail attachments from the chief executive officer. In anticipation of civil suits challenging corporate business practices, companies have ramped up so-called dark sites � inactive Web pages loaded with information, including names and numbers of people designated to handle calls � that are ready to go online with one click. Given the resources and the trust of the partners for whom they work, law firm marketing and communications officers interviewed for this article said that they could deploy similar tactics on behalf of law firms. As one big-firm marketing chief put it: “Firms need these days to be more proactive, transparent and collaborative.”
And consistent. In this climate, hypocrisy can be a mortal sin. If partners make decisions that don’t mesh with their firms’ stated values, or if rainmakers enjoy “a different standard of treatment” from others at the firm, “you’ll get a lot of resentments and mistrust,” said Mark Thompson, a former general counsel at Brother International Corp. who now runs a Chicago consulting firm, mc1 Legal.
Two years ago, the Tampa, Fla., office of Holland & Knight learned this lesson the hard way. Since the mid-1990s, Holland & Knight has marketed itself as a firm that promotes women and women’s issues. That position was called into question in March 2005, when the firm named as its chief operating partner a man who had been accused of sexual harassment by women lawyers at the firm. Reportedly, the firm had reprimanded the partner for commenting on women’s sex lives, and asking women to squeeze his biceps.
Management’s promotion of this partner apparently sent the wrong message. Someone leaked the story to the St. Petersburg Times, which subsequently excoriated Holland & Knight for being “gender deaf.” In short order, the operating chief stepped down from his management post (he is still with the firm), but the public rebuke still stung. Through a spokesperson, Holland & Knight provided this statement: “Our firm handles all communications issues on a case-by-case basis, using our best judgment based on the facts as we know them. We dealt with this situation when it happened, and now we’ve moved on. It isn’t an issue for us.”
Explaining to clients
Communicating with clients during a crisis has its own set of issues. They don’t need to have every embarrassing episode explained, experts said, unless they’re directly affected, or the future of the firm seems jeopardized. In late 2005, Wilmer Cutler Pickering Hale and Dorr discovered that several of its clients had been affected by the misdeeds of a one-time rising-star partner, William DiSalvatore. “It started off with a question from a client,” recalled William Perlstein, Wilmer’s co-managing partner. “That actually led us to a broader review of [the partner's] files, and to the conclusion that this was a much bigger problem.”
Wilmer management, including its general counsel and two assistant general counsel, learned that the partner had forged client signatures, fabricated fees, misrepresented the status of litigation and assigned associates to work pro bono for personal causes. As these facts became known to the firm, the general counsel reviewed the findings with affected clients, face-to-face, Perlstein said, “in a private way, making sure that we were as complete as possible.” He said that Wilmer did not lose any work as a result of the episode.
Several experts pointed to Houston’s Vinson & Elkins as an example of how dogged communication helped preserve lawyer loyalty and client trust. Vinson & Elkins was widely known as the main outside corporate counsel to Enron Corp. When the once high-flying energy company crashed in 2001, Vinson & Elkins was among the first to be blamed. In and out of court, the firm was accused of enabling fraud, masterminding crooked accounting tricks and hiding from shareholders all sorts of skulduggery.
Enron’s bankruptcy coincided with the end of Harry Reasoner’s 10-year term as managing partner, and his succession by Joseph Dilg, who had overseen the firm’s Enron relationship. Faced with mounting public criticism and worries within the firm, the management committee put Reasoner, a trial lawyer, in charge of coordinating an aggressive defense. “We weren’t interested in winning the battle of the litigation, but losing the war over what our reputation was in the country,” Reasoner said. “It was my view that we should talk candidly with anyone who had questions or concerns.”
Early on, Reasoner spoke with everyone at Vinson & Elkins � from the most senior partners to the most junior staff. He regularly sent firmwide voicemails. And he sent letters to all clients and business associates, “outlining what we believed to be our role in [Enron's collapse], telling them what we believed would be shown, and offering to talk with any of them at any time,” Reasoner said. With advice from outside counsel at Washington’s Williams & Connolly, and in consultation with in-house senior communications counsel Mark Curriden (an author and former newspaper reporter), Reasoner sought in all his communications to refute arguments maligning the firm.
Addressing claims that Vinson & Elkins had been Enron’s de facto general counsel, for example, Reasoner pointed to the company’s 250-lawyer in-house department and a strict policy that outside firms could deal with Enron only through its own lawyers. While acknowledging that Enron had at one point accounted for close to 7% of Vinson & Elkins’ annual revenue, he argued that Wall Street deal firms had received fees equal to or exceeding those Enron had paid to his firm. And he made it clear to everyone that the firm was cooperating with the bankruptcy trustee, the U.S. Securities and Exchange Commission and the U.S. Department of Justice.
Whenever a contact partner sensed that a client had Enron-related concerns, that partner would meet with the client, with Reasoner on hand to answer any questions. Even in meeting with recruiters, Vinson & Elkins went out of its way to state its Enron case, said Brian Davis, a managing director in the New York office of legal recruiter Major, Lindsey & Africa: “They took the right approach.”
In the end, Vinson & Elkins paid $19.5 million to settle malpractice claims related to the bankruptcy. But a special committee of the Enron board and the Enron bankruptcy examiner concluded that the firm was not responsible for any accounting fraud or disclosure problems. And in January � six years after Reasoner took on a job with zero billable hours � plaintiffs’ lawyers dismissed the firm from a shareholders’ class action, wiping out the last set of claims against it. Through it all, Reasoner said, the firm suffered nothing more than the usual amount of partner turnover: “We always gave our partners the straight story,” he said. “I’m proud of them for seeing the firm through this.”
How the chairmen at Orrick, Herrington & Sutcliffe and Dewey Ballantine tell their firms’ stories will shape how things sort out in the aftermath of the collapse of their much-publicized merger plans in January. For Orrick’s Ralph Baxter, who has expanded his firm largely through acquisitions, the unraveling of the Dewey deal marked the third time that a New York merger had been aborted. For Dewey’s Morton Pierce, who has admitted that some of his partners learned of the proposed deal through press reports, the experience was fresh and the consequences more dire. During the final two months that the deal was in the works, a tenth of Dewey’s equity partners left for other firms.
“It can be embarrassing when something doesn’t turn out as you expect,” said Zeughauser partner Mizban. “But if firms have a positive standing, good profits and a good reputation � and Dewey and Orrick are in that category � then they will bounce back.”
At Orrick, it’s been a quick rebound. “Of course we were disappointed,” Baxter said. “But we have no regrets.” (Two executives at Orrick are members of Law Firm Inc.‘s editorial advisory board.)
Twice during the merger discussions, Baxter had spoken about the deal with all of his constituencies. Appearing live in one office and via a simulcast feed in all of the firm’s other locations (except Asia, which received it on a delay), Baxter addressed first his partners, then all the other lawyers and then the staff. In every session, Baxter said, he opened the floor for questions and discussions. He also gave partners periodic updates via e-mail.
“In the end, [those discussions] made it a lot easier, because the issues had already been out there in front of everyone,” said Baxter, who delivered another firmwide video address within 24 hours of Dewey ending the talks. “Everyone felt that they’d had a say.”
For his part, as soon as Dewey’s team decided to quit the talks, Pierce sent an e-mail notifying all partners. Later that day, he gathered all of the partners in the New York home office for a talk; other offices were patched in to a videoconference. According to a management source who was at the meeting, Pierce said he’d received inquiries from several firms about merging, but that Dewey’s executive committee had decided the firm’s brand would be best protected and most valuable by staying independent. During that meeting, all attorneys and staff received an e-mail with the same message.
Within a month, Pierce instituted changes in Dewey’s management: He expanded the firm’s management board, created an oversight committee for Europe and formed a finance committee. He put Dewey out front in raising associate salaries in the United Kingdom.
And, in a nod to the demands of today’s market, he’s aiming to make Dewey’s internal communications more transparent. “Good communication has to be frequent and pervasive, and it’s a skill that you can always improve upon,” Pierce said. “I’m working hard to ensure that I’m in the group of people always striving to improve, and not taking anything for granted.”
There is, as the consultants like to say politely, upside potential.
D.M. Osborne is a freelance writer in Los Angeles.