Donald Trump. (Photo: Evan El Amin/Shutterstock.com)
Since his election, President Donald Trump has not let go of his personal Twitter account—or his penchant for lashing out against companies on social media.
That practice, unprecedented for a president in the internet age, has put companies on edge. And law firms are being called on to help corporate executives prepare for the fallout from drawing Trump’s ire on Twitter.
In one of the first—if not the first—clients alerts on the subject, the law firm Cleary Gottlieb Steen & Hamilton employed an acronym to describe the president’s conduct: “SMA,” for “social media attack.”
“Many companies should carefully consider the appropriate response to a SMA in advance,” the alert advised.
Cleary Gottlieb partner Arthur Kohn, who co-wrote the advisory, said in an interview that the firm prepared the alert after hearing several clients were planning to discuss response plans for social media attacks at upcoming board meetings. He didn’t name the companies.
“One of the first things you have to think about is who needs to be informed, who needs to be in the loop, who’s going to be making decisions,” Kohn said. “It’s easy to imagine circumstances in which, just because of the high-profile nature of the situation, that board members would want to be consulted, would want to be involved, would want to have their views taken into account.”
Coming a week after Trump denounced Nordstrom for dropping his daughter Ivanka Trump’s fashion line, Cleary Gottlieb’s alert does not profess that it is a recent phenomenon for politicians to use their status to influence the conduct of a company. The rhetorical tactic even has a name—“jawboning.”
But, in a testament to how @realDonaldTrump has created a new risk for companies, Cleary Gottlieb’s alert did assert that today’s jawboning is different.
“The nature and frequency of jawboning in the current environment makes this a serious issue for boards and the management at a wide variety of public companies, in a way that it has not been in the recent past,” the firm said.
Covington & Burling’s James Garland told NLJ recently that “it would be hard to overstate the degree of anxiety that our corporate clients have about finding themselves in the crosshairs of a Trump tweet outburst.”
Garland, a Covington partner in Washington, said the firm was receiving “tons of questions and requests for guidance about how to prepare and whether you can prepare” for a slam on social media.
“It’s something that American businesses are going to grapple with as long as Trump is the president,” Garland said.
Kohn said companies’ concerns around the president’s social media activity revved up during the transition, when Carrier, the air-conditioning company, announced it would keep in Indiana about one-third of the 2,100 jobs it had planned to move to Mexico.
Trump had criticized Carrier during the campaign, and after the company agreed to keep some of the jobs in Indiana, he attacked a union leader on Twitter for his claims that the president overstated the number of jobs saved.
Kohn said lawyers and companies were waiting to see whether Trump’s social media activity would level off once he took office. “That doesn’t seem to have happened,” he said.
As companies prepare for any unwanted Twitter attention from the president, Kohn said they need to be mindful not only of the risk of alienating customers—including, for some, the federal government—but also the risk of running afoul of securities laws.
The alert advises companies to have a response plan in place for social media criticism from the president or “another very senior public official.” It also address a question on the minds of corporate communications teams: To tweet or not to tweet back?
“In some circumstances, the best response to a SMA will be no response at all,” Cleary Gottlieb said in its advisory. “That approach will probably be premised on a conclusion that the initial criticism is unlikely to have much impact, and the risk of extending the conversation exceeds the potential benefits of a defense of the criticized conduct.”
While Trump’s attacks have focused on unfavorable media criticism, the cost of the new Air Force One and Nordstrom’s decision to drop his daughter’s products, the alert envisioned the 45th president eventually taking on executives in a more personal way: their pay.
“Few if any SMAs so far have focused in a personal way on the compensation of corporate CEOs relative to performance,” the firm’s memo said. “However, those kinds of attacks seem likely to arrive.”
