Legal advice, and when to ignore it

When a crisis strikes, the CEO’s first public statement can set the tone for everything that follows. However, top executives often feel themselves handcuffed by legal advice which may lead to false-sounding apologies, wrong decisions and unwanted outcomes.

A good example of saying what’s right rather than what might be legally recommended is Bill Simon, CEO of Walmart, immediately following a road smash which killed American comedian James McNair and seriously injured comic actor Tracy Morgan.

As a Walmart truck was involved there were a lot of things Simon could have said. What he did say was: “If it’s determined that our truck caused the accident Walmart will take full responsibility.”  He added: “We can’t change what happened, but we will do what is right for the family of the victim and the survivors in the weeks and days ahead.” It was calm, clear and, above all, effective.

Yes, the truck operator was accused of driving excessive hours without sleep.  And, yes, cynics might argue that Simon’s commitment was a statement of the obvious. Of course the company may ultimately be held responsible for its driver, depending on legal proceedings months or even years into the future. But that’s a world away from the CEO so promptly and unambiguously putting his company on the line.

We’ll never know what legal advice was offered inside Walmart Headquarters. Yet it’s a pretty sure bet that the corporate lawyers did not say: “Here’s an idea boss. Why don’t you just go out within 12 hours and say you’ll accept full responsibility.” Just about every issue and crisis has a legal aspect. But that doesn’t make it primarily a legal matter to be determined solely by legal advice.  As American crisis expert Richard Levick once quipped: “Lawyers sit near the front, but they don’t drive the bus.” Legal advice is simply that – advice.  It isn’t that much different from HR advice, or accounting advice, or operational advice or even communications advice.

The reality is that the CEO should listen to a range of views – including legal – and then do what is in the best interests of the company. Walmart’s forthright statement harks back to a major oil spill from a contract carrier which polluted Huntingdon Beach in Southern California in 1990.  The CEO of BP America flew to the scene and famously told a press conference: “Our lawyers tell us it’s not our fault. But we feel like it’s our fault and we are going to act like it’s our fault.”  The BP legal department probably weren’t very happy, but because the communication and clean-up were relatively well handled, the spill was soon forgotten and out of the headlines.

Contrast this with the Exxon Valdez oil spill, which happened only a few months earlier. Twenty-five years later it remains a persistent blot on Exxon’s reputation. No-one yet knows how the Walmart truck crash will play out. But the CEO’s frank statement will certainly be remembered for all the right reasons.


About managingoutcomes

Issue and crisis management expert
This entry was posted in Issue Management, Reputation risk and tagged , , , , , , . Bookmark the permalink.

One Response to Legal advice, and when to ignore it

  1. I found your blog quite interesting and the concern in the blog is really impressive. Thanks for sharing.

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