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Crisis management: How to restore your company’s reputation after legal challenges

by | Jun 4, 2024 | Public Relations

Almost every company deals with a crisis at some point in their years of operation. This often includes legal issues, too. 

Whether it’s litigation or non-compliance with certain business laws, legal challenges can take hold at any moment.

The key is to always be prepared for such crises and know how to respond when they do happen. 

That’s what we’ll discuss in this article. We’ll uncover how to navigate legal challenges and the key steps to recovering your brand reputation. 

We’ll also touch on the different ways to be proactive with your crisis management strategy, which can help you address issues before they become bigger problems and damage your reputation even further.

How legal issues can affect your brand image

The number one way legal challenges can impact your brand’s reputation is lack of trust. Whether it’s customers, investors, or business partners you’re dealing with, they may lose trust in your business because you’re tackling some legal problem.

For example, an extreme case might be a pharmaceutical company being sued in a class-action lawsuit for the potentially dangerous side effects its medication caused. Even if the company won the case, many consumers probably wouldn’t go near the drug because they fear the possible side effects. 

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Investors also probably wouldn’t touch the business because of the obvious risk of more litigation and the chance of losing their money. The company would likely have high legal fees, compliance fines, and other financial issues that could run it into the ground or cause it to go bankrupt.

This lack of trust can damage a company’s reputation in the market it operates in. With litigation or compliance issues comes negative media attention and publicity. As people start viewing a brand in a negative light, they’ll stop spending their money on its products or services.

Or, in some cases, the government will take legal action against a company’s product or service, as they did with GlaxoSmithKline (GSK) after the pharma company engaged in misleading marketing practices, promoted Paxil (an antidepressant) for unapproved or off-label uses, and ignored the drug’s safety concerns.

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According to Zendesk, 52 percent of customers would leave a brand after a single bad experience. So, let’s say a customer has had a negative experience with a brand. Maybe their product didn’t arrive on time. 

Or perhaps ‌the customer service wasn’t great. Maybe the brand gets lucky and the customer is part of the 48 percent that chooses to give the business another chance. But when they see that the company is tied up in some sort of legal issue, they decide to cut ties for good.

So, there’s really no margin for error when it comes to retaining existing customers and attracting new customers. Your business might be able to recover after messing up ‌with a customer. But don’t let it be a legal crisis that gets you to strike number two.

The importance of PR crisis management

Nearly 70 percent of business leaders say that they’ve experienced a crisis over a period of five years. The average number of crises these companies experienced was three.

Remember the two strikes? Three is one too many.

However, the biggest problem here is that although businesses recognize the importance of crisis plans, less than half of them have a crisis communication plan.

This must change.

As a business owner, you should be doing everything right. But you never really know when a legal issue may arise. Preparing a team of lawyers and compliance officers isn’t enough to protect yourself from potential legal risks.

You need a proper crisis management plan that outlines all the actions you and other key stakeholders will take in case of a crisis.

How to restore your reputation after legal issues

Now, on to the good part. How do you protect your business after you’ve just been faced with legal issues?

“Protect” may be the wrong word here because the damage has already been done. So, let’s talk about how to rebuild your reputation after a legal problem has done some considerable damage.

1. Assess the current state of your reputation

You can’t fix anything if you don’t know what’s broken. So, it’s important to see where your business stands with consumers.

You’ll want to conduct a sentiment analysis to see how the litigation or compliance issue has affected how the public perceives your company. 

You can do this by analyzing media coverage, social media sentiment, and customer feedback.

The next thing you’ll want to do is get feedback from your stakeholders, including your customers, employees, investors, and business partners. This will help you gauge their perception of your brand and identify areas of improvement.

Then, do a competitive analysis to see how the legal challenge has affected your competitors’ positions in the market. Compare your company’s reputation against theirs to see where you fell behind or need to stand out during the recovery process.

2. Develop a detailed crisis communication plan

Now that you know where you currently stand with key stakeholders, you can start developing a PR crisis management plan that’s tailored to alleviate doubts and worries.

It all starts with communication.

A crisis communication plan is essentially how you plan to respond to the crisis. This involves the strategies you’ll use to communicate with your stakeholders to diffuse the situation and how you’ll reassure them that you have it under control and are coming up with effective solutions. 

Define the key messages you want to convey. Depending on your stakeholder group, you may need to tailor the message to their unique needs, preferences, and concerns.

Your customers aren’t the only people you need to win over again. You also must gain back the trust of your employees and investors. The media is another area to pay attention to. And depending on the situation, you may need to reassure regulators that your business is still trustworthy.

After you’ve figured out what you want to say to your stakeholders, determine how you’re going to get your message out there. Common channels include:

Let’s look at an example of how a company responded to a serious crisis. Soon after launching the Samsung Galaxy Note 7 in 2016, many customers noticed that their devices were overheating, which in some cases, led to a fire.

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Samsung quickly responded by issuing a global recall of the devices. This helped the tech company avoid potential legal issues. In a news conference three months after stopping production of the Note7, Samsung explained why the phones caught fire. It was due to faulty batteries. Although it took some time to publicly address the issue, Samsung was transparent with its customers.

And it was a reason why it took so long for Samsung to talk about the problem. The company built a lab where hundreds of researchers tested hundreds of thousands of phones to determine faults with the devices. 

This helps Samsung identify the battery as the problem. Being armed with this information, Samsung was able to properly address the public about the problem and how it planned to remedy the situation. It even worked with telecom companies to disable the phone’s charging function so that it would be rendered useless. This demonstrates a commitment to customer safety. 

Samsung also helped reassure customers by setting up a battery advisory group and designing an 8-point battery safety system. This lets customers know that they’ll be getting better phones in the future.

3. Rebuild trust by developing solutions

The next step to salvaging your reputation after a legal crisis is to gain back trust through positive actions.

Samsung was effective in diffusing the damage and havoc that the Note7 caused. For example, it developed a safety recall and exchange program, which allowed customers to replace their Note7 with a new device. 

This got a great response from the public. Over 60 percent of Galaxy Note7 phones sold in the US and Korea were exchanged through the program.

Consider another example. Your retail company experienced a data breach that compromised the personal information of thousands of customers. You choose to leverage contact center software to manage customer communications effectively. 

Your contact center representatives reach out to affected customers by giving them details about the breach, steps to secure their accounts, and resources for monitoring their credit reports.

Implementing robust identity management protocols, such as those based on the OpenID Connect (OIDC) and Open Authentication (OAuth) standards, is another subtle yet powerful testament to an organization’s dedication to security and privacy. 

OIDC provides a framework for authentication that isn’t only secure but also interoperable, ensuring that customer credentials are handled with the utmost care. 

By prioritizing these technical measures, you can demonstrate your commitment to upholding high standards of data protection. It’s a simple way to regain customer confidence and steer the narrative toward a commitment to operational excellence and trustworthiness. 

4. Use online reputation management tools

Use a social listening tool and a review monitoring platform to monitor what people are saying about your business.

Post positive online content to showcase your business’s strengths and values. This includes high-quality blog posts, press releases, case studies, or success stories to show that you’re an expert in your industry and create positive experiences for your customers.

5. Get professional guidance

No business owner can navigate legal challenges on their own. Consider working with reputation management and PR crisis communication specialists. They can help you develop a strategic plan to recover your reputation, from identifying your target audience to choosing appropriate communication channels.

It’s also smart to work with legal counsel. While this is a given, make sure your legal team or legal virtual assistants have the experience and expertise with the particular litigation or compliance issues you’re currently facing. 

For example, if you’re dealing with construction compliance challenges, you’ll want to work with attorneys specializing in construction law. They’ll have specialized knowledge of things like building codes, zoning laws, environmental regulations, safety standards, and permits.

Be proactive, not reactive

You can’t prevent every crisis. But you can prepare for one

So, if your business has been hit with a legal complication, you can navigate it with confidence if you’ve already created a PR crisis management plan.

It also helps to use media monitoring and social listening tools to gauge how customers, the media, and the public perceive your brand. 

By doing this, you’ll be able to identify potential crisis indicators beforehand, allowing you to stay ahead of any developing news.

Ethan Keller
Ethan Keller is an experienced financial strategist at Dominion. He’s passionate about safeguarding assets and maximizing wealth for high-net-worth individuals. Using an evidence-based approach with a special focus on risk management, Ethan excels at crafting personalized financial solutions that protect and grow wealth effectively.

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