By Lauren P. Duncan
Chicago Lawyer correspondent
It’s the stuff of an in-house counsel’s nightmares.
A lawyer’s phone starts buzzing in the middle of the night. Her company is on the receiving end of a public backlash, and she’s responsible for helping prepare a response.
What about her legal training has prepped her to react to a PR fiasco?
Several in-house attorneys and general counsels said that their roles in representing companies today extend beyond handling legal matters to also helping manage their companies’ public perception.
“Public perception is something we think about day in, day out as we advise the Kraft Heinz business,” said general counsel, senior vice president and corporate secretary Jim Savina. “Our job is not all legal. It also deals with how decisions, acts or events would look if they were on the front page of the paper.”
It’s part of an overall broadening of the role of in-house counsel, said Derede McAlpin, chief communications officer and vice president of the Association of Corporate Counsel.
“They’re no longer just lawyers,” McAlpin said. “They’re no longer wearing the one hat where you go to an in-house counsel for legal advice.”
Their roles may not often involve handling major crises that lead to headlines or hashtags, but lawyers at some Illinois-based companies — ranging from startups to companies with around 100,000 employees — predict the in-house attorney’s role will expand to include more duties that put this traditionally hidden corporate figure in the public eye.
Mitigating risk
At agribusiness titan Archer Daniels Midland, general counsel, senior vice president and secretary D. Cameron Findlay isn’t involved directly in helping with the company’s public relations, but he’s had instances in his career as a GC in which he’s played a role in helping companies handle an impending crisis.
Once was in 2004, when Findlay, who was then general counsel at insurance brokerage firm Aon Corp., received a subpoena late one afternoon that indicated the company was being investigated for fraud by then-New York Attorney General Eliot Spitzer.
Findlay knew it would be newsworthy — and it was — so he consulted with Aon’s public affairs people and CEO about what to do. He vividly remembers drafting the news release, hunched over his computer, typing, with the company’s public affairs leader looking over his shoulder.
“We put out something that kept the company out of trouble and didn’t say anything that we would regret later, but also told the public that we were cooperating fully and it was something that we were taking very seriously,” he said.
Months later, a reporter with the Economist described the statement as one “that only a lawyer could find reassuring,” which still makes Findlay laugh.
“Lawyers tend not to be naturally good at public relations because they speak in legalistic terms and technical terms, and that is often exactly what you don’t want to do from a public relations standpoint,” he said.
When later working for medical device company Medtronic Inc. as its senior vice president, general counsel and secretary from 2009 to 2013, Findlay played a key role in tackling another PR issue.
The company had learned that a medical journal was going to publish an entire issue a few days later about a Medtronic product that had raised safety issues. Medtronic hired an outside crisis communication specialist to help its in-house PR team quickly put together materials that pointed out the report’s flaws, which were released simultaneously with the journal.
In that instance, Findlay credited working with other Medtronic departments as essential to getting ahead of the crisis.
Findlay said he “happily” hasn’t had to deal with similar occurrences at ADM, but its legal team does participate in media training and crisis simulations, which Findlay said can include hypothetical situations ranging from having to anticipate a food safety issue to the fake kidnapping of an executive.
While in those instances the legal team plays a part in helping to craft the company’s plan of response, when it comes to direct interaction with the public, such as issuing a statement, Findlay said it’s best for the company’s communications department to handle it.
A few reasons he cited as to why lawyers aren’t best suited for the task of being a spokesperson include that they aren’t always the best communicators, the company doesn’t want the lawyer to be subject to a deposition in litigation that could arise from the crisis and it could be risky to expose the general counsel, who has a lot of privileged information, to the media.
At Kraft Heinz, the corporate affairs team handles any direct contact with the media, which Savina said is aimed at keeping the food giant on message. Savina, however, said its legal team plays an important role in the company’s public appearance in addition to handling legal issues.
“Not all publicity is good publicity. The more we can help keep our companies out of the paper for the wrong reason, the better the public perception,” he said.
Savina said that it’s possible that lawyers can be too focused on legal risks, but he thinks a variety of in-house counsels’ qualities make them up to the challenge.
“Fortunately, in-house counsel serving as go-to crisis people are well-suited for the role. We’re used to dealing with and keeping calm under pressure, working under tight deadlines, analyzing many factors or angles at once and considering the optics of any situation. I think this is what has led to the dual role of PR and legal representation, which I welcome as another way for in-house counsel to add value to our companies.”
Lawyer and strategist
Like ADM and Kraft Heinz, snack company Mondelez International Inc., is among the Fortune 500 companies headquartered in Illinois that, as expected, have public relations and communications teams trained at putting out fires whenever they might flare up.
But some might argue that it takes a village to extinguish a fire.
Gerhard Pleuhs, executive vice president and general counsel at Mondelez, is involved in overseeing both the company’s corporate and legal affairs, which involves working closely with the company’s global internal and external communications department.
Pleuhs said having the communications and legal teams under one umbrella makes sense when it comes to reacting quickly in a crisis.
“You are very efficient, effective and fast,” he said. “Lawyers in many ways are not necessarily the best communicators when it comes to really talking in public, because we have a certain way of how to express ourselves that does not necessarily resonate with the public, so what you have to do is at the right time, step back, use people like [the communications leader] to talk on behalf of the company, because that’s what he has been trained to do.”
“The contents, the way you react and how you mitigate risk, is a team effort and team work where we ultimately decide about this, and I think the combination of these two disciplines, at least in our case, has proven to be extremely helpful,” he said.
Pleuhs said he hasn’t had to deal with any major crises in the five years he’s been the GC at Mondelez, which spun out from Kraft Foods in 2012. He said the company has a “strictly defined process” for how to manage a crisis. In that instance, it’s Pleuhs’ responsibility to devise a strategy with the company’s CEO on how to handle a situation.
“I’m the one who is ultimately responsible with how we’re executing the thing, which is something that I think the first and foremost role is really leading this team,” he said.
Pleuhs does not serve as a spokesman, but his role in serving alongside the CEO as strategist is something the ACC’s McAlpin has found is becoming more prevalent among in-house lawyers.
In a 2013 report on the role of the general counsel, the ACC surveyed around 800 current and former general counsels, board members, corporate directors, chief legal officers and other company leaders on how the responsibilities of general counsels are changing.
The study found that one of the emerging roles GCs play in large companies is that of the strategist, which the ACC predicted would become more common in the following five to 10 years.
The survey found general counsels are often responsible for managing the law department, serving as the counsel-in-chief for the company’s executive ranks and playing a central role in developing a company’s strategy, which can encompass anything from solving business problems to having a say in the company’s public communications process.
“[General counsels] play a part in the overall strategy of a company and they’re no longer the afterthought in cleaning up an issue because there’s a problem,” McAlpin said. “Instead it’s more proactive, they tend to work with the C-suite in executing the strategy for their particular companies.”
“If you look at this particular trend, then there’s no surprise that in some instances, some companies might find it beneficial for the general counsel to oversee communications,” she said.
With the added responsibility comes added risk, as McAlpin pointed out that strategy for public relations can sometimes be just as important as legal strategy.
“When there are legal issues on the table there’s usually court of law and the court of public opinion and sometimes the court of public opinion can do more damage on a company’s brand than the outcome of a legal case,” she said.
McAlpin, who previously worked as a crisis communication specialist, a role in which she would help companies with their communications strategies, said that the best thing a company can do to mitigate potential PR risks is to anticipate issues they might face and develop a plan to respond to them, which Pleuhs, Savina and Findlay each said their respective companies have in place.
But in some instances, there’s just no way to predict a crisis, McAlpin said.
“Sometimes there are issues that you might not anticipate. Usually the big crisis issues are the ones that are unique or raise novel issues that are unprecedented,” she said. “All companies are unique. Good companies sometimes run into bad problems, so it’s not really a reflection of a particular person or role, it just might be the circumstances a company faces at a particular time.”
Keeping a close watch
The change in the way in-house legal leaders now have greater responsibility for their companies’ public perception has shifted in tandem with the way people consume news.
McAlpin said the 24/7 news cycle and bombardment of online content has required in-house counsels to keep up with what’s being said about their companies and be prepared to react quickly.
Pleuhs said that there’s no one recipe for how to react in a social media crisis, but sometimes it can include not reacting at all.
“Social media is one way to react but it’s more so a way to listen, because what you have to do is you have to be far more alert than before and you need to have insight into what people are really talking about. Is there anything of relevance that might involve you or involve your product? Is there anything that might turn into a crisis? That’s one piece,” he said.
“And once it hits, I think you just have to obviously manage the social media in a way that it just doesn’t turn entirely against you. There are ways to do it, but you obviously have to do this in a smart way and sometimes you just have to find different tools and ways and go to the regular media, in the old style, in order to correct things, because it’s very hard to try to control what’s happening in the social media space,” Pleuhs added.
Savina, likewise, said social media has shaped the position of in-house lawyers to require them to be quick on their feet, even if that means putting their own reputations at risk.
“Social media has definitely shortened our timelines, especially with consumer issues. When someone can snap a photo or video of a potential issue with your product and have it on Facebook or Twitter in seconds, you have to think differently than you did a decade ago,” Savina said.
“There’s not always time to get to the root cause, understand the full scope of the issue, address the consumers’ concern, etc,” Savina added. “You have to learn as much as you can as soon as you can, then try to manage it as best you can with what you know. That can be uncomfortable for naturally risk-averse lawyers who know they’ll be the ones holding the bag if they make the wrong move. This is one of the forces pushing good in-house lawyers to be faster thinking, more decisive and better prepared, even at the risk of being wrong sometimes.”
Dealing with social media risks isn’t only the concern of top lawyers at large companies; it can extend to small legal teams at startups.
That’s the case for Yankun Guo, who serves as in-house regulatory counsel on a three-member legal team at the 150-employee online lending company Opportunity Financial, known as OppLoans.
Guo’s role includes keeping up on regulation and compliance issues while also looking into complaints that surface about the company, which can include negative reviews posted online.
“We do work really closely with our public websites to monitor and see that everything on there is a good reflection of our company and also is a way to investigate if there are any exposures or things we can do better,” she said.
An evolving role
When Guo was attending The John Marshall Law School before graduating in 2015, she said she would never anticipated that monitoring social media would be part of her legal job. She’s since developed an understanding that the role of the in-house lawyer involves more than working on legal matters, she said.
“I think this role is definitely evolving more, at least from what I’ve seen, to be more business-oriented as well as having more awareness of the impact of social media and different public websites,” she said.
“There’s a lot more startup companies and smaller companies popping up in Chicago and as these companies expand I’m sure a lot of their people will jump into the in-house role and realize it’s a crazy time to be part of a company that’s growing so fast.”
Pleuhs — who oversees a legal team of about 100 people — said he sees similar changes afoot for the top role of the general counsel at a large company.
The company’s public image is not only important in maintaining its image, Pleuhs said, but he was recently reminded at Mondelez’s annual shareholders meeting how public perception is also important to shareholders and investors. In addition to good financials, Pleuhs said shareholders and even potential future employees want to see that a company has a positive public image.
“The GC plays a very big role, especially when it’s in combination with the public and corporate and government affairs roles, because there, you really need to somehow shape and form the appearance of the company … to make sure that corporate social responsibility is somewhat respected,” he said.
“Companies are more and more looked at more as a body rather than an anonymous kind of leader structure, and when you look at this, people want to see how do you feel, how do you handle certain things in a holistic way and therefore I feel the role of the general counsel is expanding.”