UK-WIDE: An Introduction to Litigation PR & Communications

Managing Communications During Regulatory Investigations

The initiation of a regulatory investigation presents a number of unique challenges for companies. While navigating the legal strategy around the investigation is a clear priority, ensuring that operations continue to run effectively throughout any investigation is vital, particularly where regulatory investigations can sometimes run for years. Companies will be required to divert resources and significant management time to the investigation, while both clients and investors will be keen to receive updates and reassurance as rapidly as possible. Balancing the legal and operational requirements in communications – both internal and external – is therefore crucial.

Whilst it is almost impossible to entirely pre-empt a regulatory investigation and be fully prepared, taking time to think about a potential response strategy in advance or during a period of calm will always be better than tackling the fallout at a point at which it has been publicly announced by the regulator, when damage is harder to contain. Relevant staff should be briefed on the legal protocols around an investigation being announced, while it should also be ensured that a robust crisis communications plan is in place ahead of time for deploying necessary protocols immediately.

Perhaps the most challenging aspect of a regulatory investigation, particularly by an agency such as the Serious Fraud Office or the Department of Justice, is the rapid escalation of this news in the media and therefore to corporate stakeholders and clients. The first that a company might hear about an investigation is the investigation team turning up unannounced on their doorstep for a dawn raid. Such events are typically followed by a pre-prepared press release, and sometimes with the attendance of political and media figures. This leaves management firefighting on multiple fronts at the same time – working closely with the legal team while also facing urgent requests from the media and customers for comments. Having protocols already in place can help streamline management response at critical junctures.

While initial media response will typically require a factual and conservative response while the legal position is established and agreed, ensuring that future communications are as iron-clad as possible and closely aligned with the legal strategy can provide a public reassurance to stakeholders that the matter is both being taken seriously and being dealt with effectively, and will therefore have limited impact on the company’s operations.

Of course, not all regulatory matters begin with something as sudden as a dawn raid. Sometimes investigations will initially be kept between the regulator and the company, but this does not mitigate the risks of early media coverage, or information leaking out into the market and causing concern among clients, staff and other stakeholders. Regardless of the type of investigation, it is vital to ensure that there is a well-considered communications plan in place to manage internal and external messaging throughout the lifecycle of the investigation, to minimise reputational and financial damage, and to manage communications alongside any litigation brought by the company against the regulator, or vice versa.

Clients and suppliers will be acutely aware of the potential risks to their own operations of an ongoing investigation. Ensuring that current and prospective clients and business partners are reassured that the matter is fully in hand both legally and in terms of communications can help prevent a crisis of trust. As far as facts and legal strategy allow, providing transparent updates on developments and putting rumours to rest will show clients that the matter is being handled rapidly and competently. Such efforts will be particularly crucial amongst clients who may have contracts up for renewal, or who are particularly averse to reputational risk. During the period immediately following the announcement of the investigation, where appropriate, key clients should be prioritised with face-to-face meetings with senior leadership, while other clients should initially receive detailed updates from the individuals managing the relationship. Client-facing individuals should be provided with a briefing document on how to respond to any queries, with detail on when enquiries should be escalated to more senior members of the company or handled by specialist media advisers.

Ensuring staff are handled with compassion and care is key, as they will understandably be concerned about their careers and reputation, but this must be balanced with practicality and the legal strategy. To minimise damage, it is paramount to have an internal protocol in place for staff to follow, to avoid the risk of information leaks. Ideally, this should be pre-existing and available on the staff intranet, or, more sensibly, the company may wish to update any protocols to reflect the developing situation. This should highlight the importance of not talking about the investigation to anyone, and reporting any press attempts to glean information from staff to the relevant team handling communications.

Stakeholders, including banks, investors and suppliers, will be understandably concerned by the announcement of any investigation. Ensuring that these groups maintain trust in the company under investigation is vital to prevent the withdrawal of banking services, or to reduce the risk of follow-on litigation from investors. As with clients, certain supplier relationships will require bespoke materials in order to provide adequate reassurance, and a plan must be established alongside the stakeholder to maintain this trust and faith in the response from the corporate.

A regulatory investigation is a highly challenging prospect for any company, potentially posing an existential threat to ongoing operations. From the first time the company becomes aware of an investigation, or the real possibility of one, a comprehensive communications plan should be considered for all aspects of the business and integrated with the legal strategy, receiving consistent updates as matters develop. Managing the competing priorities of each group requiring updates is challenging, particularly where the legal position may not be fully settled, and requires careful and considered management throughout.

Good communications preparedness before, during and after regulatory investigations can give companies the edge. Effective communications can help corporates weather the storm in good shape, and turn an existential threat into a story of strength and survival.