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Article: April 2018: You Too? Could Be. What to Do.

Business Litigation Reports

Introduction: Modern Life
“I believe all men are guilty,” Barry Diller recently told New York Times columnist Maureen Dowd. He went on to make clear: Not in what he, and everyone else, calls the Harvey Weinstein way, but at least of flirtation, maybe inappropriate comments, a hug or a hand, the kind of thing that we would not be talking about, except amongst ourselves, a year ago, and that is grounds for what Diller called “capital punishment” these day.

And so great is the stigma of such an execution that former Congressman and almost Senator Harold Ford, who was fired from his job at Morgan Stanley, was prepared to sue if the company did not make clear, as they did, that he was fired for all manner of incompetence, but not for sexual harassment. And thus he avoided, if not the death penalty, then certainly an indefinite period of virtually solitary confinement.


Here’s the problem: Diller may be right. He often was in his Hollywood days, where he ran most of the studios in town before creating his own empire with IAC. Not right in the sense that 100% of all men are vulnerable to following in the footsteps of (fill in the blank with the last person you couldn’t believe got summarily thrown down the stairs), but right in the sense that virtually any company is ripe for the picking.

Some years ago, eight female scientists, faculty members with tenure at MIT, began discussing things like lab space and research support and teaching responsibilities and what committees they were on, etc. Though none of them were “feminists,” it did seem that they had more in common than they should have, and what they had in common was often finding themselves getting less and doing more. So, and this is the public version, instead of screaming bloody murder right then, as some of us might do, they did what scientists do: they asked for a scientific study to be conducted of the Institute, using rigorous scientific standards, to determine if there were patterns of discrimination – or differentiation – that negatively impacted women. (The private story is that one or more of them threatened to sue the Institute. Take your pick, again.)

To the surprise of some but not of others, the study found a pattern ofdiscrimination – in the stuff that matters in academia, like research support and lab space and administrative support and the like; not to mention promotion and tenure. But the critical point was that it wasn’t just women with children, the motherhood issue, the familiar balance challenge, that defined women’s place. Many of the women who were being shortchanged did not have children, or had raised them. These were senior as well as junior women; the pattern of discrimination was as systemic as it was unconscious; sadly, many of those who were the hardest on women were other women, in this case administrative support staff.The study was replicated at a number of universities; where it wasn’t done, it was rarely for lack of asking. And where it was done, the results were always the same as MIT. Smart university
Presidents turned the mirror on themselves, not in the public way that MIT was forced to do, but internally, to assure that they would not be written about.

Sometimes I tell this story to show that eight women who didn’t see themselves as activists, by insisting that their skills be applied to examine gender discrimination, forced much of academia to take a look at themselves. For most of my audiences, this is inspirational. On the other hand, it can also be terrifying. Eight women can do that. Actually, it only takes three to make a pretty effective stand, if you’re counting.

But there are other lessons in the story, equally applicable today. First, when the bright light gets shined on you (by you I mean your company or your client) no one is going to come out scott-free. One is tempted to make a very tasteless joke about the institutions in our society about we all assumed had no such problem – and turned out to have a bigger one, far bigger, than MIT. Unless yours is a small company, preferably run by women, it isn’t likely you’ll be one of the few. Consider:

Has anyone in your company made inappropriate comments to young women, told them how nice they looked, asked them for a drink, even. Has anyone gotten sloppy at a party, or afterward, made advances, tried to kiss, laid a hand somewhere close, sent a stupidemail, sent a stupid text, sent a stupid picture even?

Is there no one with power who has ever abused it, even a little, with a more junior staff member?

I once asked Bob Squier, the late, great political consultant, how many of his
clients had had an extramarital affair within two years of the election they were trying to win. He laughed and said “95 percent,” and the only reason it wasn’t 100 percent was my then-boss, Michael Dukakis, who made up the five percent. It was, he said, about power; about liking the applause, the adulation, the currying for favor from those who worked for them, heard them, volunteered, wanted to be close to power. Those people, he said, have a tendency. They have a tendency to be found at the top, or on their way there, whether it’s in politics or business. They aren’t all sinners. But they certainly aren’t saints.

Which used to be okay, if not ethically, then certainly in practice.

It isn’t anymore.

I have labored in these trenches for decades, mostly as an advocate for victims and recently in defense of fairness.

This much I know: we have never lived through anything quite like this. The younger generation in particular is, to quote the old movie, mad as hell and they are not going to take it anymore. They do not believe that it is any excuse that their mothers put up with it, or even that they have; what’s wrong is wrong. And if you think about it, it is rather stunning that the actresses who have spoken out include some of the most beautiful and successful in Hollywood; if they felt no choice but to suffer in silence, and in anger, imagine what it must be further down the food chain. Impossible.

But it is not a question of imagination. This is happening in real time. And in real
time, company after company, when it is caught in the headlights, does what is easiest, which is to operate and try to get the cancer before it spreads, which is to get rid of the accused, quickly. This is necessary even if it is not the CEO, indeed, especially if it is not, so that the CEO doesn’t lose his own job for delaying or taking inadequate action. But if an inappropriate comment, a loose hand, a stray touch is enough….

Sound bad? It can be much worse, actually. Or better.

Worst Case Scenarios
How bad could it be?

Let’s try an easy – and very plausible – one.

A relatively junior employee of one of the companies your client has invested in (actually, the fund is the major shareholder) walked into the HR department yesterday afternoon and asked to speak to a supervisor. She spoke to the Assistant Director. She gave her an envelope. In it was a note addressed to the chairman of the private equity fund you represent; or work for; or even chair. The letter states that she has been having an affair with the CEO of the company where she works and while the affair was consensual, it was not always tasteful (there are pictures in the envelope, and really unwise texts and emails from his private account). She is coming to HR now because she was recently passed over for a promotion which she believes that she should have received, and she believes it is because the “girls” making the decision are ugly shrews who are jealous of her conquest, and that’s discrimination, plain and simple. And it should come as no surprise to HR that the company discriminates because haven’t you noticed that a number of the best looking young women in the Company who were “rumored” to be having affairs with their bosses had been steadily promoted. If the “big money guy” to whom this letter is addressed doesn’t do something, she says in closing, she intends to go to the press not only with her story, but with the story of what is going on in the company, and how its owners have ignored it and refused to take action.

Good morning. Bad enough? Things like this getbucked upstairs with record speed, especially these days, which is how a letter like this from someone no one in headquarters has ever heard of could land on the desk of the client to whom it is addressed in a matter of hours.

What do you do? Call in the troops. The lawyers and the (spin) doctors and the crisis managers.

We will ask about where the emails were sent from and do you want to send someone in to get his hard drive right away, and pull all of his emails sent on the system, see if there are any of these pictures that have been within a million miles of his computer, a forensic image, right away, so we can see everyplace he has surfed, and her personnel record, and are there other personnel records we should look at? Does this woman have an employment contract and does it have an arbitration clause? They might even explain to you that there are two types of
sexual harassment – quid pro quo and hostile environment, which must be severe and pervasive according to a reasonableness standard; and that the law is still murky as to the rights of third parties to complain about others being favored for granting favors, not to mention the bold new idea that a woman who is sleeping with her boss deserves to be free of the resentment of other women employees and has a right to second guess (and sue) over the practice of promoting other women who are more “forthcoming.” I’m making this up, but someone somewhere has probably sued, or will. The lawyers might even tell you that, depending on where you are located and the details we learn, neither of those claims is likely to hold up in court. As if that matters right now. That’s the problem.

The spin doctors may actually be even less helpful,although it is hardly their fault. They will tell you to get ahead of the story if there is going to be a story. They will tell you to at least be prepared for the story if there is going to be a story, to have talking points about what to say, and they’ve started to prepare some notes on that. They are busily writing. What they can’t tell you is whether there is going to be a story or not. How would they know, unless someone calls you. And they can’t even promise, not for sure, that they will call you, or call you much in advance. It all depends on who she goes to, and if she is a junior employee with pictures, I would not count on a call from a New York Times reporter. Their story would come later, if it came at all. And by the way, those notes they are taking? How quickly will it take opposing counsel, when we get there, to get them in discovery.

The crisis person, especially if he’s not a lawyer, might turn to the big-boss, thinking he is making a connection with the boss, and ask him: what do you think? Could this be true? Have you heard such things about him?

There is a long pause before one of the outside lawyers tells the Chairman not to answer, not with all these people in the room, including PR people talking about the spin, and taking notes about what to say, activities which have been known to blow the lawyer-client privilege sky high. The GC nods but looks troubled; he asks the outside counsel, who represents the company, whether he should be advising the Chairman of what questions to answer, or whether separate counsel should be doing that. Everyone knew the guy was a player, that is why they’re here so quickly.

There is a much longer pause as everyone considers the importance of that question. Could they really get booted because this jerk in a company they own slept with a junior employee and then (maybe) punished her for it, or at least didn’t reward her? (More women, in my experience, sleep their way to the middle than the top.)

Someone breaks the silence.

Maybe we should just fire him. Suspend him for sure. Starting today. Without pay?
People nod.

And get an independent investigator, someone who is not in this room, who none of us know, to look at the company – even look at us – from top to bottom and tell us what to do. People nod more.

What Is Wrong with This Picture
Let’s start with the fact that we are now considering firing a senior executive who has not even heard of the charges on the basis of as of yet unsubstantiated report. And if not firing, then certainly publicly humiliating, a story that could become a story. Because a leak by anyone on this particular food chain is all too possible; the chain includes not only senior executives (who may see him as a rival) but the more junior folks who took the initial report, and her boss, and her, not to mention (although people often forget) the secretaries and assistants who have access to everybody’s email, and the people who might look at their phones, jealous wives who happen to be newspaper reporters, for instance.

But it is surely right that this is neither the time nor the place to ask the chairman what he knew about this guy, or when he knew it.

That was last month, or even a few months before that. That was before this particular woman walked in to HR. If someone has a heart attack waiting to happen, we don’t wait for it to happen. We try to prevent it, treat and remediate with no headlines. We need to start treating sexual harassment the same way. Find the problems before the problems find you. Fix the culture if it needs fixing. Tell whoever needs to be told to knock it off and that they must. Pay attention to patterns of inequality. Look for yourself before someone looks for you.

Because the potentially innocent executive is not the only victim of this scene gone wrong. The first instinct of many executives these days is to bring in an independent investigator. They think this will protect them. It is, frankly, just as likely to do the opposite. There are wonderful independent investigators, but they don’t play in the many horror stories I’ve been unfortunate enough to witness. In the horror stories, the investigations go out of control, which is to say, out of the control of everyone but the investigators. The original scope of the investigation, perhaps one incident or one individual, expands exponentially, as you should expect when you start asking people if they have every witnessed the sort of conduct that Barry Diller suggests most men may be guilty of. And no one dares to “interfere with the
independent investigation,” which means that no one can tell them that enough is enough, they should stop running the clock, spreading dissent, giving every whiner and dissident employee a chance to get even, or at least get attention. No, you can’t say any of those things.

There are, to be sure, occasions where an independent counsel is the only solution, where everyone even remotely loyal to the company and its future cannot be in any way a part of it, or the investigation will have no credibility at all. But it is a last resort, or should be. The horror story is not even uncommon.

Do the Right Thing
My partner Bill Burck says that when he arrives at a crisis, which he does frequently, the first thing he tries to do is put a “warm blanket” over the assembled group. He tries to calm things down. The goal in a crisis or a would-be crisis is to contain it – not to fan the flames.You need to get the facts. You may not get them all, and you may not get them all at once, but until you have some idea of what is going on, getting the facts is all you should do. Even if the reporter does call. The only thing you can say is that we take such complaints seriously and we will take any appropriate action. What you want to convey is that you will do the right thing. You will take it seriously. You will do it fairly. And then, you do.

You also need to get the right help. Ideally, you want people who know your company and care about it to examine the situation, to start asking questions, to look at the materials in the envelope, to talk to the woman involved, to engage her enough to make clear to her that you are taking her concerns seriously so she doesn’t have to take them to the press.

In this day and age, you should assume that everything you write and everything you do will be leaked to whoever might be interested, whoever might be the last person you would voluntarily tell. If you assume this, in most cases you will be right. Do not assume that people will keep the juiciest gossip they know a secret. Who sleeps with the boss, the professor, the chairman, and doesn’t at least tell a few friends? And what is the point of knowing juicy gossip if you don’t tell others? Lawyers and doctors are bound by privilege, but everyone else is free to leak, And
dare I say it, lawyers and doctors do it too.

But public exposure is not the only reason to do the right thing. In my experience, many of those who complain do so not only because they are upset about the slights to them, but because they feel the company doesn’t take harassment/diversity/inclusion seriously. So they go to each other and tell their stories (corroboration), and they go to HR (complaint), and they go to the
press (leak). That doesn’t mean every complaint is valid or that every leak is true; far from it. But you can’t know that unless you at least do some looking and some asking, especially if (when only the lawyers are in the room) you have to admit that you always wondered, or maybe suspected or maybe even knew.

Notice I said some looking. Review. Not a full-scale investigation. Not a special prosecutor. Looking. Fact- finding. Rational decision making.

Ideally, you’ve read this far not because you have already faced your crisis, but because you haven’t. No one has walked into HR yet. No one has threatened to go to the press. You are the ideal candidate for preventive medicine, the heart attack that doesn’t have to happen.

Get there first. If you know you have problems, do your own review. We will do it
for you. The goal is not to collect scalps, but to collect facts and make recommendations. The goal is to communicate to whoever might ask later (like a reporter) that the company does take such concerns seriously, because it got there first, has credible people who can talk to the press, has a Board that has been informed from the get-go and will listen to reason, not panic.

In such a review, the company can do what it can’t do with an independent counsel. It can define the scope. It can ensure that there is no witch-hunt. It decides on the appropriate remedies. Steps can be taken to remediate: to retrain, seriously; to provide counseling, if needed; to impose penalties short of death and solitary confinement; in short, to handle the problems preemptively, before the complaint, and before the leak, before the Spotlight Team, before the whistleblower. And if people need to go, and settlements need to be entered into, you do that before any complaint is filed; you do it with the sort of agreements we have developed that make leaks less likely, and less effective, not only because of strict clauses in the
settlement, but because the other provisions make it difficult to prove anything about anyone, not to mention that the money has been paid over time through our firm. Confidential settlements should remain confidential, not be done Stormy Daniels-style.

Such a review should not be limited to wrongdoing. We look at the culture of the company, at least if youask us to, and we think there are certainly cases where you should. We look at the tone at the top, not for purposes of imposing sanctions, but in order to make sure that the values you hold are the values that are being communicated. We ask about diversity and inclusion; we talk about culture; we emphasize the values that the company’s leaders have asked us to emphasize. And if the day comes when questions are asked publicly, you aren’t standing there
defenseless, trying to figure out what is going on, saying no more than “we take it seriously.” I’ll be standing there with you. And I’ve spent much of my life looking into a television camera, so you don’t have to (unless we train you to do it, which we also do).

You took it seriously. You brought in the best team in the world, with people like Peter Calamari, the former head of HR for Credit Suisse, and the presiding partner of Quinn Emanuel, who sits with me as we prevent fires from breaking out, and prepares with me when they do. And we took steps to address each of the problems we found, because no workplace is perfect, all of us could use improving, new training, and better communication. Not to mention some preventive lawyering.