In the past I have commented on crisis management and the tools needed to handle crisis in today’s business environment. It is clear however, that an international crisis, such as the COVID 19 virus or even a geo-political crisis is harder to deal with than a domestic crisis. Because of international considerations, an international crisis is normally harder to manage than a domestic crisis. As it is more complex, companies caught up in an international crisis have to pay more attention to international, cultural, and communication issues than they would in a purely domestic scenario.

Crisis communications has become very important. Therefore, an international crisis requires a number of steps, including:

• Planning for an international crisis
• Appointing a crisis manager
• Establishment of a Crisis Management Team
• Establishment of a Media Crisis Team to handle international communications

The principle focus of any crisis management strategy, especially in an international contest, is communications. All crisis management plans call for effective crisis communications, which many times are not always executed. Inadequate or failed communications lead to bad publicity, unhappy stakeholders, and potential disaster. An effective crisis communication strategy is necessary for any international crisis. A number of companies and even governments have failed to defuse international crisis because of poor communications.
An effective crisis communication strategy is necessary when dealing with an international crisis. It also requires the establishment of an effective Media Crisis Team that can respond to potential media issues. Who should be on the team? At least 6 people from the following areas or departments:

1. Legal- someone from the GC’s or CLO’s Office
2. HR- HR should designate a staff member capable of handling crisis related issues
3. Outside legal- in the case of most companies, the primary outside law firm should also be on the team
4. PR- if the company has a PR department, someone from PR should be on the team
5. Outside PR- it is a good idea for most companies to retain an outside PR firm if possible
6. QA or Service, etc.- depending on the product or services the company provides, perhaps someone from the Service Department of Quality Control Department should also be on the media crisis team.

A number of processes need to implemented and issues addresses to create an effective Media Crisis Team. Such processes and issues include the following:

• Creation of the Media Crisis Team.

• Identify a key spokesperson or spokespersons on the Media Crisis Team who will speak for the organization. Who are they? What are their roles?

• Training on cultural issues, if the crisis involves other cultures.

• Establishment of communication procedures and protocols for the Media Crisis Team. Who communicates to whom and why? Can the Media Crisis Team members communicate to each other directly?

• The main messages that should be communicated to key stakeholders should be thought through.

• A budget for the Media Crisis Team, should be approved and set up.

• The facts surrounding the crisis should be established as well as the major talking points.

• How will the Media Crisis Team handle the Press? Processes?

• Has a communications war room been set up for the Media Crisis Team in order to meet and handle communications?

• Has a hotline been set up?

Though companies try and resolve the crisis at hand and spend significant sums of money to do so, if they fail to properly communicate to the media and the public, they in effect have lost and can expect outrage and consumer dissatisfaction to such an extent that the very existence of the company can be threatened. So remember, a company doing business internationally has to plan for eventual crisis. If it fails to handle communications properly during a crisis, it faces not only a potential loss of business but a negative impact on its brand. Therefore, I recommend to all companies that now is the best time to create a Media Crisis Team.

At the beginning of litigation and selection of the law firm that will handle the case, the in-house lawyer must assess the case—the strengths, weaknesses, costs, etc., involved. Case evaluation is very important. Evaluation can be made through an early evaluation by outside counsel, knowledge of potential costs, use of employee interviews, and formulation of a plan/budget. When a company has a good idea of the chances of winning, as well as the potential costs, it is in a better position to determine whether to proceed to trial. Therefore, at the beginning of litigation, the company or organization should obtain a thorough evaluation of the case and use internal risk management tools to assess the cost of a trial. Is the cost of litigation worth it?

Risk analysis of litigation can be a useful tool in evaluating a case. One such tool that is often utilized is the decision tree. A decision tree analysis can be used to evaluate the probability of outcome of certain events during trial. Each event can then be analyzed in the context of the probability of the entire outcome. A decision tree risk analysis provides a systematic method of analyzing cases from the beginning

Besides the use of a decision tree, a properly formatted litigation budget should address the fees and costs of going to trial. Using a budget helps to establish a realistic framework for litigation as it should cover expected fees and costs. Remember however, a law firm’s fees at trial could skyrocket for a number of reasons, including:

-The number of lawyers involved.

-Time: Most trial lawyers will work long hours during a trial, so fees will add up.
This especially true if the trial is a complex one involving patent disputes or
Competition/ Anti-trust claims.

-The cost of expert witnesses.

One of the major issues facing in-house counsel is justification of the legal function. In-house lawyers in fact are like a small to medium size law firm depending on the size of the company and therefore are not cheap. On the other hand, in-house lawyers play a vital function within an organization as they manage legal issues and risks on behalf of the company. Litigation management as well as legal risk management are very important functions of a company's law department. However, most organizations are profit driven. Investors look at the bottom line. Hence, management for the most part normally looks at its divisions in one of two ways- is it a profit center or is it a cost center? Profit centers get resources of course. Cost centers may not. Therefore, in order to obtain the resources needed to function in a corporate setting- Legal must justify itself. One way to justify the existence of the Law Department, is for Legal to quantify the company’s legal exposure. Once quantified, Legal can then justify its existence to Management.

Quantifying potential legal exposure is fairly easy. One can look at historical legal costs, expenses, and related jury verdicts, fines, etc., to determine a base line for future legal costs and expenses. If an historical record of legal costs does not exist, numerous reports and surveys exist on how to average legal costs and expenses via a particular industry. Your insurance broker may have summaries of legal costs for your industry. At least it should have a historical summary of insurance related claims.

Once one has enough empirical data to show potential exposure, it is easy to show potential legal costs. In fact, a number of companies in the legal industry have issues benchmarking reports breaking down the average legal costs and expenses in particular industries. This can be a great tool to use when showing management what costs and expenses are normally incurred by companies of a similar size and in a similar industry.

The CFO of any organization is numbers driven. If you can provide, in effect, “the bottom line” to the CFO, he will be inclined to approve a budget for Legal. Be prepared to have all the facts and figures ready.

Effective litigation management during a trial depends on the company’s attitude toward litigation as well as its controls over the law firm that handles the litigation on behalf of the company. Trials, especially in the United States are quite expensive and could involve the future existence of the companies involved. In the US and elsewhere, trials by their very nature are costly. Especially in the US. Normally, lawsuits settle prior to trial, as both sides know that juries can be fickle. Some companies will, therefore, never want to go to trial (or try to settle during trial), and some will decide to fight and go to trial anyway depending on their risk appetite. Many times, it is more advantageous for parties in litigation to settle prior to trial, as trials have become extremely expensive.

Disadvantages of trials include:

• High transaction costs
• Length of proceedings
• Negative publicity
• Business interruption
• Unpredictability of juries
• Lack of finality—the loser will always appeal

If a company decides to go to trial, it must control the outside law firm, manage the litigation process, and understand the potential dangers (including costs and expenses) it faces. Prior to trial, a company’s in-house lawyer should ask trial counsel a number of questions, including:

• What is the true evaluation of the case?
• What is the approximate cost of trial?
• What are the chances of settlement before trial?
• What are the main strategies of litigating the case?
• What witnesses and experts will be needed?
• How long will the trial last?
• What are the chances of winning?

If a company knows it only has a 30 to 40 percent chance of winning at trial, is the dispute worth going to trial for, or is settlement a better option? Remember, when managing litigation you should ask yourself if it is worth it. Consider the costs.

Management of litigation, like management of most business processes, begins with a business plan and a budget. In this case, prior to trial, when a company seeks an appropriate law firm to represent it, it needs a realistic litigation plan and budget. Of course, some law firms may try to push back on the request of a budget, claiming legal costs are hard to predict. This, usually is not the case. Experienced lawyers, whether in the United States, Europe, or Asia, are very familiar with the legal costs in their own geographic region as well as costs and expenses associated with the particular issue, such as patent litigation or class actions.

Certain costs may be hard to quantify, such as defense litigation costs (which may depend on how aggressive a plaintiff is in trial), but for the most part, law firms can provide a litigation plan and budget using approximate or ballpark figures. Many of the larger law firms are experienced in providing budgets upon request. Don't be afraid to ask.

Effective management of litigation will depend on a well-prepared litigation plan and budget. This, in turn, depends on the proper identification of potential litigation issues and a plan for potentially adversarial proceedings.

Questions that should be asked when discussing the plan and budget with outside counsel include:

• Is this matter an actual or potentially adversarial proceeding?
• Will this matter result in potential commercial litigation?
• Will this matter result in potential regulatory litigation?
• Will this matter lead to governmental litigation?

Asking the right questions will help in preparing a realistic and effective litigation plan and budget.

When using outside counsel, most companies, especially those that have affiliates or subsidiaries, need a comprehensive approach. Unfortunately, many companies hire law firms on a case-by-case or ad hoc basis. Sometimes divisions of the same company hire different law firms without thinking about potential issues of legal talent and failure to obtain high-quality legal services on a consistent and reasonably priced basis. Sometimes, divisions of the same company hire different law firms to handle similar legal issues or litigation.

If a company has an in-house Law Department, it is incumbent upon the in-house Law Department to develop processes to select and use outside counsel on a consistent basis with a focus on quality, reasonable fees, and, of course, success. Such success is normally the result of a long-term relationship in which outside counsel becomes a member of the company’s “team,” learns the business, and can, therefore, provide timely legal and business advice.

Centralization

A company either has in-house counsel or it does not. To successfully handle legal issues facing most companies these days (especially those involving litigation ), the use of outside counsel must be centralized. If a company has many divisions or subsidiaries, a department should be empowered to oversee all legal matters. There are numerous advantages to centralization of the legal function:

Advantages of Centralization

-One organization has an overview of all legal issues confronting the company and can properly advise management on legal issues.

-Efficiency: Whether in-house or outside, efficient and fast response to legal issues is necessary.

-Use of a single law firm as outside general counsel can result in monetary savings.

-Centralization of legal services lends itself to the centralization of the company’s legal records, documentation, and information, creating a more efficient process.

-Centralization of legal services allows for a more efficient review of data, resulting in the proper use of information and development of an appropriate strategy.

-Investment: Whether a company is large or small, it needs to look at use of outside counsel as an investment. Picking the right outside counsel and developing a long-term relationship with such counsel will pay dividends in the long run.

Efficient and timely use of outside legal services, whether such use of outside legal services is picked by an in-house lawyer or by a company manager or officer, relies on whether outside counsel is the right fit for the company. There are many law firms around, but not all are the right fit. Picking the right law firm or outside counsel depends on a number of factors. Many times, a company picks a law firm because of a personal relationship between a company officer and a lawyer in the firm. Or maybe the firm has done a good job in advertising. The trouble is, without going through a process to determine the acceptability of a law firm, picking outside counsel can be hit or miss. A centralized legal function is necessary to avoid mismanagement of outside legal counsel.