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Article: February 2019: Lessons Learned from the Frontlines of #MeToo

February 28, 2019
Business Litigation Reports

Win the public relations battle. Winning the public relations battle is the most critical aspect of the dispute and makes resolving any potential legal claims far easier. The advice you receive from a public relations firm must be carefully vetted for its legal implications and compliance with disclosure obligations. Communications with a public relations firm are almost certainly not privileged as attorney-client communications would be.

Reserve judgment. In today’s climate, where the accused are often convicted in the court of public opinion before a legal complaint is ever filed, organizations are often pressured to immediately side with the accuser. However, taking this stance from the outset, when the facts are not yet (and may never be) clear, may slant internal investigations, limit strategic options in the legal actions to come, and ultimately be detrimental to the public relations battle.

Be careful making pledges of transparency. It is tempting at the beginning of a crisis to pledge “transparency”. Pledging transparency without knowledge of liability or damages may not be a realistic goal either in internal or external communications and may harm litigation defenses. Further, disclosing the results of an independent investigation publicly may waive attorney-client privilege over the investigation. Strive instead to disseminate accurate information as the facts and circumstances of the case require.

Don’t disparage the accuser. In an effort to win the public relations battle, particularly in situations involving time-barred claims, lawyers and clients sometimes disparage the accuser. Some courts have found public denials of otherwise time-barred allegations are defamatory and may be the basis for a separate defamation claim where the ultimate issue to be tried is the truth or falsity of the misconduct. No matter the circumstances, treat accusers with respect, even if you dispute their claims.

Getting to the truth is difficult. Individuals accused of sexual misconduct usually resist admitting to it—especially if they are married. Likewise, employees and executives interviewed during internal investigations may be reluctant to provide truthful information about the conduct of senior executives or company culture. Finding the truth may sometimes require closely examining all sources, including text messages, disappearing messaging apps, social media profiles, and personal and work-related emails. It also requires deft and sensitive interviewing techniques that foster candor from witnesses. Never assume the truth or falsity of any allegations or facts, and plan on continually evaluating the facts as reported by all parties involved (including witnesses) several times as new information is discovered.

Assess before settling. The first instinct when faced with a damaging sexual misconduct allegation may be to settle, and settle quickly. But if multiple claims are a possibility, settling with one accuser for a significant amount may encourage more allegations and set a high bar for future payouts.

Do not assume that a settlement will remain confidential. Organizations and individuals often settle to avoid public dissemination of allegations—regardless of whether they are founded. But new legislation may make confidentiality unenforceable. For example, a California law effective January 2019 prohibits confidential settlements of sexual discrimination and sexual harassment allegations. Moreover, even settlements covered by valid confidentiality agreements may be leaked. Make sure any settlement agreement contains information supportive of your position so that there is a disincentive for improper disclosure.

Individual’s interests usually won’t be aligned with the organization’s. When an executive is accused of sexual misconduct, our experience is that the organization has different interests and takes a different tack than the individual. While an organization usually wants allegations behind it, the accused often wants to clear his or her name, often through litigation. The organization may exert tremendous leverage over the accused individual by threatening to withhold defense costs and indemnification.

In valuing claims, consider using focus groups rather than relying on perceived public opinion or prior awards. When valuing claims, companies and attorneys may look to media reports and public reaction to those reports. Particularly in class actions or situations where there are numerous claimants, we have found that focus groups comprised of individuals with similar demographics as class members provide data points useful for assessment of claims. For the same reason, do not place a heavy value on what claimants have been awarded in other cases—no two #MeToo cases are alike.

Managers who do not intervene to stop known sexual harassment face serious risk too. It is not only accused individuals who face liability. Other executives and employees who are on notice of inappropriate behavior and do nothing to stop it are likely to lose their jobs as well.

A prompt corporate response to allegations is key. Although corporations are often concerned about corporate liability and stock drops resulting from allegations of misconduct, risk of liability to corporations is small so long as the company promptly responds when it learns of alleged misconduct.

The statute of limitations is not a defense in the court of public opinion. Many #MeToo allegations relate to misconduct that would be barred by the statute of limitations if brought in a civil or criminal complaint. But companies and the public are concerned about executive misconduct if allegations of misconduct are credible, serious, and, perhaps most importantly, relate to a pattern of behavior.

The past is never past. Executives invited to become board members, as well as political appointees and others being considered for high-ranking positions, are increasingly being asked specifically whether they have ever been accused of harassment or whether they have ever settled such a claim.

Consider changes to employment contracts. Historically, and by statute, certain executives’ financial benefits such as stock vesting and severance payments have been protected by a high bar for “for cause” terminations. Some companies are revising employment contracts to give the company the flexibility to terminate an executive “for cause” if the executive has engaged in sexual misconduct.

Consider international perceptions of #MeToo. While #MeToo has gained significant traction in the United States, it has not made as clear inroads in other nations. Understanding the cultural perceptions of the #MeToo movement in a given country is critical to developing an effective defense strategy.