Big names have to be managed in any business

MEDIA coverage of the forthcoming general election announced yesterday is bound to focus as much on the personalities of the party leaders as their policies. Is Gordon Brown too dour and introspective to lead the country? Does David Cameron have the gravitas?

In business too, CEOs’ characters are more important and more publicised than ever. While that can help to humanise a business, it can also be problematic. Think of the cases of Sir Fred Goodwin. So what should companies and individual directors do to prepare for those times when a CEO or other top person’s personality suddenly becomes a problem rather than a benefit?

Companies should have a team to manage potential damage to reputation, which should include internal or external lawyers and PR advisers. It should prepare an audit of reputational risks, whether they are activities of the company which may attract publicity, or of its directors. Once these risks are identified, staff who are likely to be involved in dealing with them should be trained to know what to do when they find a journalist at the end of the phone.

The provision of the Companies Act 2006, which came into force from 1 October 2009, now provides that while a director must give a residential address and a service address, only his or her service address will appear on the company’s register of directors, the residential address going into a separate private register under the status of protected information. Companies should ensure that directors whose information may have previously been available now take advantage of this new law, although if their residential address remains the same, it will be a matter of public record and not possible to protect unless they change it.

Directors also should be aware of protection in the Data Protection Act and the Press Complaints Commission Code of Conduct. It is also helpful for directors to be aware of what constitutes private information. Even when a certain amount of information about them is in the public domain, there still remains a “zone of privacy” particularly involving areas of family life, medical conditions and sexuality. Directors must be aware of regulatory requirements and ensure that compliance activities are being properly undertaken.

Companies can also limit risks by ensuring that all intellectual property is protected, and that advertising and marketing activities are properly monitored and cleared to avoid any unwanted adverse publicity.

But if prevention does not work, what then? Whether a story is about the director’s personal life or corporate activities, journalists are unlikely to publish anything without contacting the director or an officer of the company in advance. Do not ignore them. You should immediately put in place your plan. If it is a corporate issue, then sometimes providing enough information to show that the story is not as interesting as it might appear can assist.
If it is a private matter, then you ought to consider whether an injunction to protect private information is necessary and, importantly, will succeed. As Lord Browne and John Terry learned to their cost, you must ensure that they are entirely honest with those you instruct and provide them with all the relevant information, and also that you are properly protecting “private” information, not financial interests. You must also be realistic. To apply for and fail to obtain a privacy injunction is far more damaging than managing the story in the first place. Directors and corporations must also be aware of media such as blogs and Twitter. If something is already in the public domain then it is very difficult to restrict it and better to try and manage the information.

If the worst comes to the worst and the preparation and prevention do not work, then companies should consider how best to restore their reputation. This may involve a claim for defamation if the allegations made are untrue, or working closely with advisers to right the damage caused.

As many a politician has learned the hard way, it is still the case that “sorry” and an acknowledgement of lessons learned can do a lot to restore a reputation.

Sarah Webb is Head of Media, Libel & Privacy at Russell Jones & Walker