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A man uses his mobile phone to send messages in central London's Trafalgar Square, April 12, 2007. (LEFTERIS PITARAKIS/AP)
A man uses his mobile phone to send messages in central London's Trafalgar Square, April 12, 2007. (LEFTERIS PITARAKIS/AP)

Commentary

In crisis, smart management often trumps legal strategy Add to ...

Not a week goes by that a business in Canada isn't in crisis management mode because something reported in the press makes it look rapacious, incompetent or just plain mean.

Rogers Media has been in reputation-management overdrive since a media report alleging a customer of its subsidiary Fido gave his cell phone to his 11-year-old child during a family holiday in Mexico. The customer claimed he put the phone in “airplane mode: so the child wouldn't rack up roaming charges. The child, apparently not fooled by airplane mode – or his father, for that matter – is said to have promptly turned off “airplane mode” and downloaded videos and movies, racking up something like $22,000 worth of roaming charges in the process.

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I don’t like piling up high roaming charges just because I’m travelling outside Canada, so I do my best to avoid them. But unless I’m a billionaire, $22,000 sounds way too high, and it’s something the media picked up on right away. It’s led to a debate in Vancouver and other parts of Canada about international roaming fees and whether Canadians are being charged too much by their cellphone providers. Three providers control almost 94 per cent of the Canadian market in a regulated industry. Rogers didn’t need the story to spin out of control.

Rogers may well have been within its rights to enforce its legal contract with the customer – the father – and obtained a judgment for the whole $22,000 in court. The client signed a contract. Arguably, the father could have taken steps to avoid roaming charges by subscribing to an international data plan, or better yet, actually checking what the 11-year-old was watching, and the fact the boy was downloading those movies.

The story hit the press, the airwaves and the blogosphere, and despite what lawyers might have advised about the enforcement of contracts – or what Rogers may have owed the Mexican telecommunications company for the customer’s roaming charges – the story was being spun in such a way that Rogers appeared rapacious, even if it was trying to settle the matter.

I have a theory about lawyers. Sometimes we’re very useful, but sometimes we’re less useful than media and communications consultants who have experience in reputation management and damage control. Not every problem is a nail that needs a hammer.

I wasn’t in the room when the decisions were being made, so I’m surmising, but there must have been people at the table who wanted to reduce the $22,000 bill to protect the brand’s reputation, and get the “rapacious cellphone carrier” story bumped from the news cycle. But there also have been a few who wanted to send the account out for collection.

Fortunately, common sense prevailed. Rogers offered to reduce the account to $2,200, then it offered to reduce it further to $500, and the parties finally settled on $200.

Although the airwaves lit up for a few days with talk of high cellphone charges and the problem with roaming fees, the account reduction made Rogers look like a responsible corporate citizen “correcting” a bill that, from a public relations perspective, seemed way out of proportion. The company saving itself far more than $22,000 worth of intangible costs such as internal resource time, press interviews that probably couldn’t have been “won,” the risk of lost business from customers who might have chosen a different provider on the basis of the media reports, and overall brand damage.

The Rogers/Fido story is a pretty good example of how reputation management trumps, and sometimes ought to trump, legal strategies in cases where a brand is in crisis. But it’s not the only example.

A textbook case of crisis management in Canada – and something many business writers, including me, have written about before – was the reaction by Maple Leaf Foods to the outbreak of listeria bacteria in some of its products in 2008. Lunch meat packaged under the Burns and Maple Leaf brands was infected, and horrifically, there were nine confirmed and 11 suspected deaths of people who consumed the tainted meat, and many others who were made seriously ill.

Rather than fighting in the courts over liability and damages and forcing the complainants to prove that Maple Leaf was negligent and therefore lawfully to blame – and perhaps using litigation strategies that could have delayed an inevitable trial for years – the company took the high road. It took responsibility for the problem in media, admitted fault and apologized. By acting decisively to fix the problem, Maple Leaf not only instigated a massive recall, it settled almost immediately with those affected.

“Going through the crisis there are two advisers I’ve paid no attention to,” CEO Michael McCain said in his apology on TV and on YouTube. “The first are the lawyers, and the second are the accountants. It’s not about money or legal liability; this is about our being accountable for providing consumers with safe food. This is a terrible tragedy. To those people who have become ill, and to the families who have lost loved ones, I want to express my deepest and most sincere sympathies. Words cannot begin to express our sadness for your pain.”

Because of his handling of the crisis, Mr. McCain was named business news maker for 2008 by Canadian Press. David Dunne, a marketing professor at the University of Toronto's Rotman School of Management, was quoted in Digital Journal in January, 2009 as saying: “A lot of what they did was technically perfect. I think they've done as much as could be done, and it's a real example to other companies that face crises. Most companies are way too slow to deal with these things and tend to hide and they're afraid of admitting responsibility and so on, so this is a real example of how to do it right.”

Whether your company is large or small, a media story about you could adversely affect your business and jeopardize your brand and reputation, alienating existing and future customers. You have to be prepared for it.

Although big organizations often have their own media and communications professionals working in-house – or they have access to external media and communications firms – owners of small businesses could also benefit from having contacts in the communications industry, preferably well before there’s a media story coming at them, things are spinning out of control, and causing a public relations crisis in the process.

Dealing with the crisis correctly from the get-go is far more preferable than the alternative, and those trained in media, communications and reputation management may be the sort of voices you need to hear as much as any others, including those of your lawyers and accountants.

Tony Wilson is a franchising, licensing and intellectual property lawyer at Boughton Law Corp. in Vancouver, he is an adjunct professor at Simon Fraser University (SFU), and he is the author of two books: Manage Your Online Reputation, and Buying a Franchise in Canada. His opinions do not reflect those of the Law Society of British Columbia, SFU or any other organization.

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