The speed of harm runs far and wide.

• Author: Illingworth, Montieth M.
• Position: SHAREHOLDER RELATIONS

Hedge fund activism is on the rise and reports indicate there is no end in sight to its growth. The activist cohort--Ackman, Icahn, Peltz, Einhorn, Singer, Loeb, et al.--is clearly emboldened, and with that has come a new wave of litigation facing boards and management teams.

Shareholder derivative suits arising out of data breaches have opened a whole new front for suing corporate officers focusing on cybersecurity. Law enforcement and regulators have piled on to the cybersecurity breaches. Then there is the employee class action cases against Sony following the cyber attack on its data. The Department of Justice has also apparently come to the realization that deferred prosecution agreements with Wall Street were toothless and might bring more actions against past offenders.

All this poses serious challenges to boards. Legal teams have had to retool to meet the onslaught. But that means so should the litigation communications strategy and tactical planning. There are new rules for litigation PR and boards need to mindful of these changes or face a grim future fending off activists and other newly hostile parties:

* The Primacy of Real Time: Being timely in your responses has taken on a more urgent meaning. In August 2013, when Carl Icahn tweeted about his plans to have dinner with Apple CEO Tim Cook to discuss the "magnitude" of the company's stock buyback, a not so minor shockwave went through boardrooms. Activist public posturing designed to send a clear message to boards can have almost instantaneous and broad impact. Conventional communications strategy unfolds through short, medium and long-term timeframes. Driven by social media, real-time battlegrounds in the public sphere have become important. This heightens the necessity for close coordination between the PR and legal teams to be sure that if it has to be said quickly it's said right.

* The Speed of Harm Runs Far and Wide: It's always been the case that some of the biggest mistakes happen at the outset of litigation when the media pick up on one ill-considered statement made by an unprepared or undisciplined spokesperson "framing" the issue in a way that hurts your case. Making that mistake today not only happens faster but also reaches much further and wider across stakeholder groups--and you'll know exactly their response just as quickly. This results in a "boomerang effect" where PR missteps come back at the board from multiple directions. Social media has given just about...