How to deal with reputational risk

Jill and her family have run a popular Toronto gym for the past two years. Last winter, 44-year-old gym member Martin slipped on a wet floor during a workout session, and he had to have an operation on his hipbone as a result. Martin, now using a cane, sued the gym and unleashed his fury on social media. Jill turns to a lawyer and a publicist for help. How should she address the complaint, and how can she rehabilitate the company’s reputation?

Who do you call?

Lawyers and public relations specialists to help you deal with the legal and reputational risks of a lawsuit, which can lead to financial ruin.

What they say

Daniel Tisch:

Every business decision has four dimensions: financial, legal, operational and reputational. Jill is wise not to neglect reputation because it’s usually the one that has the greatest potential long-term impact on her business value.

The worst is for her to refuse to comment. The second worst is to have her lawyers speak for her. Old-fashioned lawyers usually counsel silence. But when reputation is at risk, silence itself is risky. If Martin’s social network is large, influential or active, saying nothing means people are more likely to assume that you’re guilty or hiding something.

The experts

• 

  Daniel Tisch

  CEO of Argyle Public Relationships, Toronto

• 

  Ruth Fernandes

  director of communications, Neinstein & Associates, Toronto

• 

  Gary Neinstein

  senior partner, Neinstein & Associates, Toronto

Jill should do four things.

• Have a written statement that shows sympathy for Martin, while also being clear about her legal position. The lawyer can vet the statement to reduce legal risk. Whenever someone raises questions about the issue, she can point them to that statement. A possible statement in response to this incident could be: “We were horrified and saddened about Martin’s accident and we send him our heartfelt wishes for a speedy recovery. We want to stress, however, that our gym takes members’ safety very seriously. We always act responsively, and naturally there are risks sometimes in using the facilities that members have to accept.” With these circumstances, I wouldn’t recommend a news release, because it will draw even more attention to this incident. A statement is something you’re using when people have questions.
• Do some scenario planning. What damaging things could Martin do or say, and how would she respond? If the judge finds her negligent, what would she say and how would she seek to repair the situation and improve in the future? We don’t know whether Jill and her family were wrong but, if they were, the second part of her statement should include what they’re doing for Martin and how they’ll stop this from happening again.
• Make sure the gym is a safe environment. What has she done to ensure members clearly understand their risks? She could get a third-party expert to review the standards of her operation and, if the result’s in her favour, she can tell people that experts have stated she’s operating at a high standard. Or, if the expert’s review isn’t positive, she could make improvements.
• Have a strong public relations strategy, which means having two-way relationships with her members, experts, employees and people in the community. She should also have a positive voice in the news and social media, so there’ll be positive content that balances the negative content from Martin. Examples of positive content could be testimonials from clients, employees and community stakeholders.

Expect to pay an experienced, senior PR advisor $200 to $300 per hour for crisis management services.

Jill can also survey gym members to find out what they think of her. You don’t want to do this just in times of crisis because, when you have a reputational challenge, you need a reservoir of good will that you can draw from. If no one has heard of you and the first thing people hear is negative, results may not be favourable.

Ruth Fernandes:

I would suggest Jill follow these steps.

What you learn

Reputation can make or break a business. When facing a lawsuit and bad social media reviews, address the concern immediately. Be empathetic with the person expressing the concern, while being clear on your legal position.

• Schedule an open house for the public to visit the grounds and offer a discount for signing up for membership.
• Start a blog on the gym’s website and post articles about the facility’s safety, cleanliness and maintenance.
• Create a YouTube channel with videos showing testimonials and tidbits of the gym’s improvements to the grounds, machines, personal trainers, or new programs or classes that are being offered.
• Start a social media campaign, including Facebook, Twitter, Pinterest and Flickr, to highlight the gym’s staff with a series called “Employee of the Month,” showing how each person has contributed to maintaining the gym.
• Create a LinkedIn page to feature personal trainer profiles and the success stories of clients who have experienced positive results by attending the gym.
• Put a tab on the gym’s website for displaying happy clients’ testimonials.

Gary Neinstein:

Assuming she has investigated the accident and knows this is a legitimate complaint, she has to advise her insurance company. To show she’s taking action, she should publicize that she has reported the situation to the insurance company to make sure that the injured person is properly treated.

You want the public to know that you’re not hiding anything and that you’re genuinely concerned about the safety of the customers. The fact that you’ve acknowledged guilt and that there was a problem shows that you’re sincere about dealing with problems.

This should be done immediately. Contact the insurance company and go public. Once the claim is with the insurance company, it could take about two years to settle. The insurers will ask questions including: when did the accident happen; were there any witnesses; were the police called; was a report filed; was hospitalization necessary; what doctors did the plaintiff see; what treatment was recommended; was there any loss of income or costs; and how serious were the injuries?

Insurers will also ask for other details, such as personal information and how the slip and fall happened.

To determine whether it’s a legitimate claim or not, there should be an investigation.

If there’s a complaint of grease on the floor, the investigator or engineer should go take a look. Also, if the injury is serious, there should’ve been ambulances and witnesses. We explore all that. There are many people who will fake a claim. If it’s fraud, then there’s no liability. Make sure people know you will fight.