Legal Crisis Management in a Time of Crisis

• Author: Jim Dragna, Randall Levine
• Pages: 23-27

Published in Litigation, Volume 47, Number 4, Summer 2021. © 2021 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not

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Legal Crisis

Management

in a Time of Crisis

JIM DRAGNA AND RANDALL LEVINE

The authors are partners with Morgan Lewis in Los Angeles and Washington, D.C., respectively.

The global coronavirus pandemic has changed the way we work,

recreate, and socialize. Dealing with the pandemic has put stress

on organizational structures, employees, and management, and

has made everyone question what the future looks like for their

businesses. The pandemic is in very real terms a worldwide crisis,

and the varied responses to it by governments and businesses

are all exercises in extreme crisis management. Some organiza-

tions are succeeding, some are not, and all will be changed by

the experience.

While the pandemic will pass, the risk to organizations of

future crises will not. We can neither predict nor prevent crises

born of accidents or scandals, but we can mitigate their impact by

understanding how crisis scenarios play out, by learning from the

mistakes and successes of others, and by planning ahead. In short,

while crises cannot always be prevented, a crisis can be managed.

What Is a Crisis?

As an initial question, what do we mean by “crisis”? A crisis for

a business or organization is any disruptive, unexpected event

that threatens to harm the organization, its stakeholders, the

environment, or the public. Most often the term “crisis” evokes

environmental disasters, like a leak, an oil spill, a fire, or an ex-

plosion. But other crises can be similarly devastating. Think a

compromise of customers’ confidential data, a C-suite scandal,

a high-profile discrimination lawsuit, or the recall of a defective

product. Any of these situations could have lasting effects on an

organization. They can tarnish the organization’s reputation, limit

operations, erode finances, or harm employees. All businesses

and organizations—both private companies and government bod-

ies—are susceptible to these kinds of crises.

Even worse, there is no rule that only one crisis can happen at

a time. In fact, the opposite more often is true—crisis scenarios

tend to cascade and build on each other. So, for example, a ma-

jor weather event like a hurricane (the first crisis) can cause an

industrial failure like a leak or a chemical fire at an industrial

facility (the second crisis), which in turn can lead to legal peril,

liability, and acute financial distress for the operator of the facil-

ity (the third crisis).

While the variations are limitless, all crisis scenarios are recog

-

nizable by their common threads. Most importantly, there is the

initial impact or damage caused by the event, which is followed

by a period of intense public visibility, scrutiny, and unwanted

media attention. These days, social media drive public percep-

tion of a crisis and tend to amplify criticism.

There will be multiple investigations by state, local, and fed-

eral government agencies, and overlapping civil, criminal, share-

holder, and insurance actions. Finally, there will be the inevitable