Which is more important in litigation – reputation or winning? 

Despite the growing importance of reputation management, a survey reveals that businesses rarely involve their public affairs or communication teams in their legal strategies, reflecting a broader issue where companies are underutilising communication professionals, writes Tony Jaques.


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When business leaders develop a legal strategy, why are many now prioritising protecting brand and reputation rather than success in court or a negotiated settlement? And why are they still not making proper use of communication professionals?

At a time when litigation is increasingly regarded as a key strategic business risk, a survey of over 250 leaders in large companies reveals that reputation is the primary concern, beyond the outcome of the litigation itself. However, the study by FTI Consulting found only 24 per cent of businesses include their public affairs team in the organisation’s response to material litigation.

Six in ten UK business leaders surveyed had seen an increase in litigation compared to 2023, and the research found more than one in three large companies (35 per cent) are currently engaged in litigation, with the most common types of disputes relating to employment (45 per cent), contractual/commercial disputes (28 per cent), fraud (24 per cent), and tax (24 per cent).
 
The FTI said the increasing focus on reputation is: “Reflective of a boardroom perception of the disruptive impact of litigation,” with 69 per cent of respondents saying such cases: “gave serious concern” for damaging reputation, 63 per cent saying it risked increasing future regulatory scrutiny, and 60 per cent stating that it damaged investor confidence.

So, with litigation becoming more frequent and more costly, it’s disappointing, though not surprising, that only about one quarter of companies are making proper use of their communication professionals. “In order to successfully mitigate against reputational damage, Corporate Affairs should be included from the start so that they can adequately implement reputation protection strategies,” suggested the report.

This is hardly an original conclusion. In fact, it reflects the findings of my own earlier research in association with reputation and change management consultancy SenateSHJ and its PROI global network.

Our study asked experienced crisis lawyers in Australia, New Zealand, Canada, the USA, and the UK about communicators. While the lawyers believe the relationship with communicators is improving, most acknowledged that conflict between legal and communication advice is very real. 

Litigation was specifically identified as an area particularly prone to conflict because, as one lawyer put it: “There are certain things which will anger the judge yet may be important for your shareholders or the public.”

Broadly, the lawyers were concerned about the lack of legal awareness among communication professionals. In the main, the lawyers believe communicators’ tendency to communicate openly and transparently results in a possible conflict between disclosure and potential legal liability. Moreover, in a crisis situation, they think communicators are too willing to disclose information, which may lead to liability or future litigation.

Other areas seen as particularly challenging in this relationship are communicating during litigation, as well as issues of business ethics and professional privilege, and the vexed question of how and when to apologise. 

Although some lawyers said conflict with communicators is not common, many still don’t trust communicators to do the right thing when a crisis strikes.

Overall, however, better understanding and respect for each other’s roles was identified by the lawyers as the single most important factor in working better together, which makes it doubly disappointing that the new UK report about litigation exposes the continuing low level of participation by communication professionals in helping to manage corporate legal issues. While the lawyers might not be pleased, it also reinforces that reputation really is more important than winning.