Media & Communications Corner: The $700 Billion Bailout and How Some Law Firms Missed an Opportunity

Editor's Note:

I am pleased to announce that Nick Gaffney of Infinite Public Relations has joined our Board of Editors. We welcome Infinite PR as the regular authors of the Media & Communications Corner. The company provides strategic media relations and communication services for leading professional services firms. Infinite's extensive, award-winning experience counseling the legal and accounting industries on proactive strategic media relations campaigns and crisis communication matters makes them a positive addition to our newsletter.

' Elizabeth Anne “Betiayn”
Tursi, Editor-in-Chief

The government's historic bailout response to the economic crisis requires all kinds of high-level expertise, including sophisticated lawyering and legal analysis. Yet as the most significant government action since the New Deal evolved, there was little if any information coming from the law firms best able to advise business leaders ' and the country ' on how to recover from this crisis.

In fact, what was coming from the legal community was a sorry combination of “no comment” and false and misleading information. This serious misstep demonstrated a lack of appreciation for how important this matter is and how to engage the media in a meaningful, substantive and safe way. And it painted these law firms as disinterested in how news is managed and shaped in the Internet era.

As this situation demonstrates, mishandling stories is even riskier in a digital world where information travels at the speed of light and anyone with a blog can weigh in without vetting the facts.

Here's what we know: As the federal government began seeking legal counsel to help with the $700 billion bailout, the media began reporting that one law firm had been hired to provide counsel. It apparently snared the lead legal adviser assignment from among a group of six elite law firms under consideration. But only two of those firms even bothered to pursue the opportunity, reports said.

The Treasury Department refused to release the names of the firms it contacted or even say whether the government had sent out any requests for proposals, but speculation was rampant about who had been contacted.

One source said its firm had been asked for its advice, but conflicts made it impossible to provide any. Another spokeswoman confirmed that her firm had been approached about playing a general advisory role, but the firm turned it down. It didn't say why.

Ultimately, four of the six law firms on the government's list confirmed discussions. Two firms, including one that Treasury had turned down, remain unidentified. Two likely candidates would not comment. A third did not respond to media inquiries. The topic was ripe for speculation, particularly when a few days later the original firm's contract was posted on the Treasury Department's Web site with blacked-out paragraphs in the sections dealing with compensation. The firm and the Treasury Department did not respond to media requests for comment.

Poor Posturing

Did all this posturing do anyone any good? With the country and the world in a crisis of historic proportions, it would have been reassuring to know that our best legal minds were on the job ' particularly when the government was desperate for their help. This opportunity would have also provided a marketing boost at a time when law firms' revenue and profitability are at an all-time low (and declining).

These six law firms had plenty of room to contribute to the dialogue on how to handle the bailout and to provide aid to the country, but they did not. Why? Perhaps because they are living in the past, when offering up “no comment” was a feasible (if not expected) option.

Opting not to comment on a story in which you are in some way involved allows the information vacuum to be filled by others. Until a few years ago, this was a passable solution. Now that vacuum can be filled immediately by almost anyone with an opinion and a high-speed Internet connection ' a dangerous prospect indeed for corporate law firms' carefully honed reputations.

For the six law firms that did not comment on the government's invitation to provide help, the stakes were even higher: Keeping their mouths shut positioned them as non-players and even seemingly unpatriotic.

Instead, they should have been proud and gracious. They had two realistic options upon receiving an invitation to help: state why they could not help, or announce that they would do anything to assist in this time of trouble. But their collective response seemed as if they were saying, “We don't take this issue seriously; we have more important priorities than helping our government.”

The result was that instead of public acclaim ' deserved or not ' the law firms were assailed in blog posts.

A Not-So-Brave New World

The Internet has changed the rules, thrusting people equally and immediately into the story in a way that traditional newspapers could not. Now, more than ever, public relations is literally about relating to the public, and media-relations professionals need to remember that the public gets its information from a multitude of sources. The media landscape has been completely blown open to include not only traditional media but also bloggers and, most importantly, the very people companies and law firms want to reach: their customers.

One thing that government-bailout critics and supporters can agree on is that transparency is vital to winning public trust in the taxpayer-funded program. What could the firms have done to improve the situation, potentially restore public trust and make themselves appear magnanimous? They could have said something ' anything ' positive instead of responding with a “no comment” or silence. By providing a reasonable explanation of their situation, they would have enhanced their image with a public that is increasingly wary of Wall Street. Even under the most severe government constraints, there is always a way to provide useful insightful information or convey messages without resorting to the two most useless words in the media lexicon.

By working with reporters instead of playing cat-and-mouse games, the law firms could have helped the media get the complete story clarifying the facts, explaining why they could not comment at the time, and operating on background. In addition, they could have derived some positive press by linking the firm's name to a prominent project.

In the end, these six elite law firms missed the opportunity of a lifetime because they were wedded to PR principles from an era that's long gone. The firms' communications people should have persuaded their most articulate lawyers to become newsmakers and heroes, to be truthful and share the information necessary to inform all interested parties of the relevant facts. Instead, the firms botched the opportunity, and confused the situation, establishing a bad precedent for the legal industry ' and indeed for the professional services industry ' going forward.

Nicholas Gaffney, who joins this newsletter's Board of Editors, is a lawyer and former journalist. Nick manages Infinite Public Relation's San Francisco office and can be reached at [email protected] or 415-732-7801. The opinions expressed in this column are those of the author, and not necessarily those of Marketing the Law Firm or Incisive Media.

Editor's Note:

I am pleased to announce that Nick Gaffney of Infinite Public Relations has joined our Board of Editors. We welcome Infinite PR as the regular authors of the Media & Communications Corner. The company provides strategic media relations and communication services for leading professional services firms. Infinite's extensive, award-winning experience counseling the legal and accounting industries on proactive strategic media relations campaigns and crisis communication matters makes them a positive addition to our newsletter.

' Elizabeth Anne “Betiayn”
Tursi, Editor-in-Chief

The government's historic bailout response to the economic crisis requires all kinds of high-level expertise, including sophisticated lawyering and legal analysis. Yet as the most significant government action since the New Deal evolved, there was little if any information coming from the law firms best able to advise business leaders ' and the country ' on how to recover from this crisis.

In fact, what was coming from the legal community was a sorry combination of “no comment” and false and misleading information. This serious misstep demonstrated a lack of appreciation for how important this matter is and how to engage the media in a meaningful, substantive and safe way. And it painted these law firms as disinterested in how news is managed and shaped in the Internet era.

As this situation demonstrates, mishandling stories is even riskier in a digital world where information travels at the speed of light and anyone with a blog can weigh in without vetting the facts.

Here's what we know: As the federal government began seeking legal counsel to help with the $700 billion bailout, the media began reporting that one law firm had been hired to provide counsel. It apparently snared the lead legal adviser assignment from among a group of six elite law firms under consideration. But only two of those firms even bothered to pursue the opportunity, reports said.

The Treasury Department refused to release the names of the firms it contacted or even say whether the government had sent out any requests for proposals, but speculation was rampant about who had been contacted.

One source said its firm had been asked for its advice, but conflicts made it impossible to provide any. Another spokeswoman confirmed that her firm had been approached about playing a general advisory role, but the firm turned it down. It didn't say why.

Ultimately, four of the six law firms on the government's list confirmed discussions. Two firms, including one that Treasury had turned down, remain unidentified. Two likely candidates would not comment. A third did not respond to media inquiries. The topic was ripe for speculation, particularly when a few days later the original firm's contract was posted on the Treasury Department's Web site with blacked-out paragraphs in the sections dealing with compensation. The firm and the Treasury Department did not respond to media requests for comment.

Poor Posturing

Did all this posturing do anyone any good? With the country and the world in a crisis of historic proportions, it would have been reassuring to know that our best legal minds were on the job ' particularly when the government was desperate for their help. This opportunity would have also provided a marketing boost at a time when law firms' revenue and profitability are at an all-time low (and declining).

These six law firms had plenty of room to contribute to the dialogue on how to handle the bailout and to provide aid to the country, but they did not. Why? Perhaps because they are living in the past, when offering up “no comment” was a feasible (if not expected) option.

Opting not to comment on a story in which you are in some way involved allows the information vacuum to be filled by others. Until a few years ago, this was a passable solution. Now that vacuum can be filled immediately by almost anyone with an opinion and a high-speed Internet connection ' a dangerous prospect indeed for corporate law firms' carefully honed reputations.

For the six law firms that did not comment on the government's invitation to provide help, the stakes were even higher: Keeping their mouths shut positioned them as non-players and even seemingly unpatriotic.

Instead, they should have been proud and gracious. They had two realistic options upon receiving an invitation to help: state why they could not help, or announce that they would do anything to assist in this time of trouble. But their collective response seemed as if they were saying, “We don't take this issue seriously; we have more important priorities than helping our government.”

The result was that instead of public acclaim ' deserved or not ' the law firms were assailed in blog posts.

A Not-So-Brave New World

The Internet has changed the rules, thrusting people equally and immediately into the story in a way that traditional newspapers could not. Now, more than ever, public relations is literally about relating to the public, and media-relations professionals need to remember that the public gets its information from a multitude of sources. The media landscape has been completely blown open to include not only traditional media but also bloggers and, most importantly, the very people companies and law firms want to reach: their customers.

One thing that government-bailout critics and supporters can agree on is that transparency is vital to winning public trust in the taxpayer-funded program. What could the firms have done to improve the situation, potentially restore public trust and make themselves appear magnanimous? They could have said something ' anything ' positive instead of responding with a “no comment” or silence. By providing a reasonable explanation of their situation, they would have enhanced their image with a public that is increasingly wary of Wall Street. Even under the most severe government constraints, there is always a way to provide useful insightful information or convey messages without resorting to the two most useless words in the media lexicon.

By working with reporters instead of playing cat-and-mouse games, the law firms could have helped the media get the complete story clarifying the facts, explaining why they could not comment at the time, and operating on background. In addition, they could have derived some positive press by linking the firm's name to a prominent project.

In the end, these six elite law firms missed the opportunity of a lifetime because they were wedded to PR principles from an era that's long gone. The firms' communications people should have persuaded their most articulate lawyers to become newsmakers and heroes, to be truthful and share the information necessary to inform all interested parties of the relevant facts. Instead, the firms botched the opportunity, and confused the situation, establishing a bad precedent for the legal industry ' and indeed for the professional services industry ' going forward.

Nicholas Gaffney, who joins this newsletter's Board of Editors, is a lawyer and former journalist. Nick manages Infinite Public Relation's San Francisco office and can be reached at [email protected] or 415-732-7801. The opinions expressed in this column are those of the author, and not necessarily those of Marketing the Law Firm or Incisive Media.