Nuclear verdicts against corporations, with awards that can surpass $10 million, are rising sharply with no end in sight. Given the financial stake, legal strategists easily lose sight of an equally damaging outcome of these cases: a company’s long-term reputation.
As communicators, we operate in the court of public opinion every day and understand the consequences of negative media coverage that influences perceptions. That’s why, when high-profile legal challenges arise, communications leaders must be included in the conversation—to ensure that legal strategies integrate plans to shape opinion outside the courtroom before, during, and after a trial.
In the past two years, the median nuclear verdict against corporate defendants jumped 95% from $21.5 million in 2020 to $41.1 million in 2022. The recent spike in massive verdicts has been trending for some time. Since the 2009 recession, multimillion-dollar verdicts have grown 55%, coming at a major cost to shareholder value.
The financial repercussions of high-profile lawsuits may have a lasting impact on a company’s reputation. Even after a verdict is reached, national headlines can continue to erode public trust and confidence in the organization.
This was the case for Bayer AG, which saw a 40% decrease in market value, equivalent to $63 billion, less than a year after acquiring Monsanto. The cause was a $2 billion verdict issued by a California jury against Monsanto for damages that resulted from its Roundup product.
Similarly, Samsung’s shares fell 7.5% ($12 billion) and traded 1.27 million shares (four times the daily average) after a California jury issued a $1 billion verdict against them in a patent suit brought by Apple in 2012.
These cases underscore the importance of giving communications teams an equal voice in decision-making alongside legal counsel. To shift rising tides, communicators should urge corporate leaders and legal teams to work with them to develop the online conversation well before the trial begins. They should consider launching a litigation microsite so reporters and other interested parties may learn the facts of the case without combing through legal documents. To complement the microsite, all online company content about the litigation should be optimized to ensure the company’s case, not the law firm’s, is the most readily searchable and retrievable content.
In addition to influencing the digital landscape, there are several ways attorneys can work with PR teams to shape the reporting of the case without being on the record or violating legal process. Establishing relationships with journalists covering the trial and offering opportunities to brief them on background about the details of the case can ensure more balanced and accurate coverage.
After the verdict, a full search engine optimization strategy should be deployed to minimize negative content and promote positive content and messages about the company. Press statements should be approved in advance and optimized for SEO, allowing the communications team to quickly distribute to reporters covering the case. On a parallel track, a proactive media pipeline should be developed to replace negative content in newsfeeds, position the company in a positive light, reinforce its business credentials, and, above all, burnish its reputation.
With hundreds of industries facing the prospect of legal damages in amounts that can rival the annual budgets of small countries, it is more important than ever that corporate leaders remove barriers that silo communications and legal teams. Collaborative strategy development is key to mitigate any reputational damage that accompanies such sizeable verdicts.
Today, reputation matters more than ever, so it’s essential to convince corporate leaders to prioritize reputation management at all stages of a case. While a judge may eventually clear a corporation’s name in a court of law, the court of public opinion is far less lenient.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Phil Singer is founder and CEO of Marathon Strategies, a communications and investigative research firm.
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