Today, companies of all sizes must be ready for the unimaginable crisis and its inevitable aftermath: high-stakes litigation.

Recent studies show bet-the-company cases are on the rise because crises are no longer rare occurrences and we all know there is no such thing as a small catastrophe. These suits create multiple sub-crises that must be managed at the same time: public relations for the outside world (the public, clients, vendors, insurance carriers, financial lenders); internal relations (management, in-house legal departments, board members, employees, shareholders); legal matters (lawsuits, damages, costs); and potential government investigations (regulatory agencies and authorities).

Proper coordination is particularly important because, with omnipresent social media, the events will likely unfold at breakneck speeds in real time, and under the watchful eyes of conflicting groups. The sub-crises create unique challenges and there is little margin for error. One small misstep could lead to financial ruin as a crisis evolves into an existential threat in which the very survival of the company is at stake.

A successful response depends on a centralized and cohesive approach, with a focused strategy executed by a highly professional team. This team should be composed of senior management, lawyers (in-house and outside), and public relations and consulting experts who are in constant communication with other necessary parties, including insurance carriers, to ensure that everyone is on the same page at all times.

WHAT IS A BET-THE COMPANY CASE?

Bet-the-company litigation (BTC.) can be any legal action that threatens the existence of a company or major line of business, whether or not the case goes to trial. BTCL is especially prevalent in commercial cases involving banking, financial services, health care, and telecom. However, there is a wide variety of casualty events such as natural disasters, mass shootings, or terrorist attacks that could put any company's existence at risk without warning.

For many companies, bringing and/or defending civil suits is a part of doing business, and it is usually handled without any severe impact on the company's model or ability to succeed. However, some lawsuits are potentially catastrophic and can cause irreparable damage to the company's structure and reputation.

Early resolution of a BTCI. can be a win, hut how do you get there? Successful BTCL defense requires a strong team in place, coordination and frequent communication, and positioning the litigation for resolution.

CREATE A DEFENSE TEAM

Immediately after a major event occurs, if a strategic plan is not already in place, then a cohesive crisis management team must be assembled as events will be moving very quickly.

The team should be tailor-made to handle all sub-crises spawned from a catastrophic event. Specifically, it should comprise:

  • Selected company management
  • The company's in-house legal department, a lead outside law firm, and possibly local counsel in the geographic location of the event.
  • A public relations firm.
  • Consulting experts in the fields required to assist in an investigation of the cause and origin of the crisis and to provide guidance on next steps.

The law firm, public relations firm, and retained experts should all have the depth of experience to handle high-exposure catastrophic events and litigation.

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Originally published by CLM Magazine.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.