legal 911: effective response to the corporate crisis chris schaeper greg meece thompson &...

Legal 911: Effective Response to the Corporate Crisis

Chris Schaeper Greg MeeceThompson & Knight LLP

Jessica RoperShell Oil Company

March 11, 2014

2

Today’s Agenda

• Recognizing the Corporate Crisis

• Goals of Effective Crisis Management

• Planning for the Corporate Crisis

• Preserving the Privileges

• Document and Record Preservation

• PR, Communication and Reporting


3

Recognizing the Corporate Crisis

4


Types of Crises

• Something explodes

• People get hurt

• Product is recalled

• Government comes calling

• Adverse legal result

• Severe financial distress

• Security breach

5


The First Signs of Trouble

• The accident or injuries

• Unfavorable press

• Product recall

• Governmental investigations

• Whistleblower complaint

• The call in the middle of the night

6


Is it really a crisis?

• How many people are affected

• Magnitude of the problem

• How much is the potential liability

• How much revenue is at stake

• Could someone go to jail?

• Potential damage to the corporate brand

• Adverse Publicity

7


Common stress points at the beginning of the crisis

• Surprise – caught off guard

• Inadequate information

• Initial biases and assumptions

• Events seemingly beyond control/taking on a life of their own

• Intense scrutiny from outside the company

8


If not handled properly, the crisis can lead to . . .

• Siege Mentality

• Panic

• Decision-making paralysis

• External distrust

• Internal demoralization

9


Goals of Effective Crisis Management

10

Goals of EffectiveCrisis Management

Short-Term

• Stabilize the environment

• Addressing immediate needs

• Keep from saying/doing anything you’ll regret later

11

Goals of EffectiveCrisis Management

Long-Term

• Minimizing liability

• Mitigating damage to the brand

• Maintaining the corporate structure insofar as is possible

• Learning lessons

12


Planning for the Corporate Crisis

13


• Have a plan

• Have a team

• Have a strategy

• Clearly define roles and responsibilities

• Remain flexible

14


The Crisis Management Plan

• Is it in writing?

• Do people know about it? Do they know they’re on the team?

• Have you walked through how it will work?

15


The Crisis Management Team

• Management

• Legal

• Public Relations

• HR

• Risk Management

• The “face of the company”

• Finance

• Operations

• Technical

• IT

16

Planning for theCorporate Crisis

The Crisis Management Team

• Lines of Report

• External contact

• Plan “B”

• Secure, effective communication among the team

Planning for theCorporate Crisis

External to the Team

• Key or interested personnel

• Board Members

• Outside Legal Counsel

• PR Management

• Insurance

• Governmental Affairs

• Investor Relations

17

18

Preserving the Privileges


19

• When responding to a crisis, don’t forget the basic rules.

• Goal should be to preserve the privilege over as much of the investigative communications as can legitimately be claimed.


• Attorney–Client Privilege

• Work Product Doctrine

21

Attorney–Client Privilege

22

• Federal

– No Federal rule that sets forth the definition of the attorney–client privilege. Rather, Federal Rule of Evidence 501 provides that the common law, governs the claim of privilege unless provided otherwise by the U.S. Constitution, Federal Statute or rule prescribed by the Supreme Court.

– However, in a civil case in which state law governs the claim or defense, look to state law to define the privilege.


24

• Texas

– In Texas, the attorney–client privilege is governed by Texas Rule of Evidence (“TRE”) 503, which provides as follows:

TRE 503

(b) Rules of Privilege.

(1) General rule of privilege. A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client:

(A) between the client or a representative of the client and the client’s lawyer or a representative of the lawyer;

(B) between the lawyer and the lawyer’s representative;

(C) by the client or a representative of the client, or the client’s lawyer or a representative of the lawyer, to a lawyer or a representative of a lawyer representing another party in a pending action and concerning a matter of common interest therein;

(D) between representatives of the client or between the client and a representative of the client; or

(E) among lawyers and their representatives representing the same client.

ATTORNEY–CLIENT PRIVILEGE

• Texas

– In Texas, the attorney–client privilege is governed by Texas Rule of Evidence (“TRE”) 503, which provides as follows:

TRE 503

(b) Rules of Privilege.

(1) General rule of privilege. A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client:

(A) between the client or a representative of the client and the client’s lawyer or a representative of the lawyer;

(B) between the lawyer and the lawyer’s representative;

(C) by the client or a representative of the client, or the client’s lawyer or a representative of the lawyer, to a lawyer or a representative of a lawyer representing another party in a pending action and concerning a matter of common interest therein;

(D) between representatives of the client or between the client and a representative of the client; or

(E) among lawyers and their representatives representing the same client.25


26

• TRE 503(a) provides the definitions that are relevant for determining the privilege.

TRE 503

(a) Definitions. As used in this rule:

(1) A “client” is a person, public officer, or corporation, association, or other organization or entity either public or private, who is rendered professional legal services by a lawyer, or who consults a lawyer with a view to obtaining professional legal services from that lawyer.

(2) A “representative of the client” is (i) a person having authority to obtain professional legal services, or to act on advice thereby rendered, on behalf of the client or (ii) any other person who, for the purpose of effectuating legal representation for the client, makes or receives a confidential communication while acting in the scope of employment for the client.

(3) A “lawyer” is a person authorized, or reasonably believed by the client to be authorized, to engage in the practice of law in any state or nation.

(4) A “representative of the lawyer” is:

(A) one employed by the lawyer to assist the lawyer in the rendition of professional legal services; or

(B) an accountant who is reasonably necessary for the lawyer’s rendition of professional legal services.

(5) A communication is “confidential” if not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.


a) TRE 503(a) provides the definitions that are relevant for determining the privilege.

TRE 503

(a) Definitions. As used in this rule:

(1) A “client” is a person, public officer, or corporation, association, or other organization or entity either public or private, who is rendered professional legal services by a lawyer, or who consults a lawyer with a view to obtaining professional legal services from that lawyer.

(2) A “representative of the client” is (i) a person having authority to obtain professional legal services, or to act on advice thereby rendered, on behalf of the client or (ii) any other person who, for the purpose of effectuating legal representation for the client, makes or receives a confidential communication while acting in the scope of employment for the client.

(3) A “lawyer” is a person authorized, or reasonably believed by the client to be authorized, to engage in the practice of law in any state or nation.

(4) A “representative of the lawyer” is:

(A) one employed by the lawyer to assist the lawyer in the rendition of professional legal services; or

(B) an accountant who is reasonably necessary for the lawyer’s rendition of professional legal services.

(5) A communication is “confidential” if not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.

ns. As used in t

27


28

• Communications between a client and outside counsel are generally presumed to be privileged.

• However, communications between a client and in–house counsel are not generally presumed to be privileged. Why? Because of the multiple roles that in–house counsel often occupy within their organization, not all of which involve the rendering of legal advice.

Work Product Doctrine

29

• Tex Rule Civ. Proc. 192.5(a) provides the current definition of work product, which replaced the old attorney work product and party communication exemptions.

192.5 Work Product.

(a) Work product defined. Work product comprises:

(1) material prepared or mental impressions developed in anticipation of litigation or for trial by or for a party or a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, insurers, employees, or agents; or

(2) a communication made in anticipation of litigation or for trial between a party and the party’s representatives or among a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, insurers, employees, or agents.


30

• Tex Rule Civ. Proc. 192.5(a) provides the current definition of work product, which replaced the old attorney work product and party communication exemptions.

192.5 Work Product.

(a) Work product defined. Work product comprises:

(1) material prepared or mental impressions developed in anticipation of litigation or for trial by or for a party or a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, insurers, employees, or agents; or

(2) a communication made in anticipation of litigation or for trial between a party and the party’s representatives or among a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, insurers, employees, or agents.


31

• Tex. Rule Civ. Proc. 192.5(b) provides that core work product is never discoverable, but other work product may be discoverable upon a showing that the party seeking discovery has a “substantial need” for the information and that the party is unable to obtain the material by other means without undue hardship.

• Core work product is the attorney’s mental impressions, opinions, conclusions or legal theories.

• Non core work product is everything else.


• Thus, potentially, the work product privilege can protect information not otherwise protected by the attorney–client privilege.

• However, the vast majority of that information will fall into the parameter of non–core work product, and, thus, is potentially discoverable under Rule 192.5(b).

32

What Can Be Done to Protect the Privileges?

33

• Clients should make a clear request for legal advice.

• Avoid sending mixed purpose e–mails.

• Mark communications as privileged and confidential.

• When clients are sending e–mails to in–house counsel, only have the lawyers listed in the “To” field, and the non–lawyers as “cc’s.”

• In–house counsel’s advice should not be broadly disseminated.

35

DOCUMENT AND RECORD

PRESERVATION

Document and Record Preservation

36

• Why is it important to make sure that any policies regarding preservation of documents, including electronic documents, are followed?

– In addition to other reasons, to avoid the dread spoliation of evidence allegation in any subsequent litigation


37

• What is spoliation of evidence?

– Spoliation is defined as “the improper destruction of evidence” relevant to a case. Clements v. Conrad, 21 S.W.3d 514 (Tex. App. Amarillo 2000)


38

• In Texas, there are three elements which courts look at to determine whether a spoliation presumption can be used.

– Whether the accused party had a duty to preserve the evidence;

– Whether the accused party negligently or intentionally spoliated the evidence; and

– Whether the spoliation prejudiced the other party’s ability to present its case or defense.


39

• The duty to preserve evidence may arise from a statutory, regulatory or ethical duty to preserve evidence.

• “While a litigant is under no duty to keep or retain every document in its possession . . . it is under a duty to preserve what it knows, or reasonable should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery [or] is the subject of the pending discovery sanction.” Trevino v. Ortega, 969 S.W.2d 950, 958 (Tex. 1998)(Baker, J. concurring).


40

• In Texas, the presumption is raised only when evidence has been intentionally or negligently destroyed, not merely lost.

– Note, however, that you generally will not be able to use as an excuse a document destruction policy that calls for the deletion of electronic information after a certain period of time if the court determines that the company should have suspended such automatic deletion after it knew or reasonably should have known that there is a substantial chance that a claim will be filed and that such evidence would be material.


41

What should in–house counsel do?

• Issue a hold letter whenever litigation is reasonably anticipated. The hold should be reissued periodically, so that new employees are aware of it and all employees are reminded of their duties.

• In–house counsel should communicate directly with key players to make sure that all relevant evidence is maintained.

• In–house counsel should make sure that all back–up media which the party has a duty to retain is identified and stored in a safe place.


42

Remedies for Spoliation

• Sanctions

• Presumption read to the jury that the jury may presume that the missing evidence would have been unfavorable to the destroying party.

44

PR, COMMUNICATION AND REPORTING

PR, Communication and Reporting

Who’s Listening?

• The Press

• The Government

• Plaintiff’s Bar

• Watchdog groups

• Employees

45


Guidelines for all communications

• Speak with one voice

• Consistent message

• Say what you know, don’t speculate

• Admit what you don’t know (just yet)

• Fix it, don’t apologize

• Never ever fudge the facts

46


Talking to the Press

• Avoid the “No Comment”

• Avoid “Being unavailable for comment”

• The reporter: Friend or Foe?

• Deadlines, deadlines, deadlines

• Correcting the record (on p. 26, Section B, in small print)

• Press Releases

47


Internal Communications

• Employees

• Customers/vendors

• Crisis management team

• Outside advisors (legal, accounting, PR)

• Key persons relevant to the crisis

48


Social Media?

• Pushing out the message

• Monitoring

• Responding

49


Government Reporting

• SEC (public companies)

• Other governmental constituencies

50


51

legal 911: effective response to the corporate crisis chris schaeper greg meece thompson &...

Documents