Much has been said about the fines levied against banks found guilty of LIBOR manipulation and foreign exchange (FX) manipulation. However little has been said about the victims of that manipulation and how they might recover their losses. Many intermediaries are now being approached by clients seeking advice on whether they have a possible claim, and, if so, whether it is worth pursuing. These clients may have the potential to bring a legal claim, either against their bank or against other professional advisors, but what are the reputational implications of taking the matter to court and how can they be managed?
High profile litigation in a public forum conflicts with the natural desire of many high net worth individuals and companies to protect their reputation. The potential reputational fall out has to be considered at the outset and a strategy put in place for dealing with issues as the case progresses.
The fear of a publicly fought case can be a strong incentive to settle as Claimants may be reluctant to have their dirty laundry aired in public. However, this cuts both ways. Financial institutions and professional advisors are, if anything, more vulnerable to reputational damage; revelations about profiteering at your client’s expense do not tend to be good for business.
If managed correctly, the press can even be used to assist the claim. The media can, for example, be used to throw the spotlight on issues which concern large groups of individual investors and attract other Claimants, possibly facilitating a Group Litigation Order. This has been done, for example, with claims brought by groups of investors in particular funds or schemes and it can have a number of benefits, such as information sharing and cost savings.
It cannot be ignored that reputational dangers lurk at every stage of the litigation process. In a defence to claims of this sort, the Defendant may lay the blame at the door of particular individuals within the Claimant company. Disclosure rules mean that internal communications that companies would prefer to keep under wraps may get read out in court. Journalists are free to report fairly and accurately what is said in court. It is therefore vital to look beyond the first step of suing; however strong the case, capturing the king may not be much good if the queen is sacrificed along the way.
So my advice would be to involve all stake-holders at the outset and ensure that the advisors co-ordinate strategy. The lawyers can and should tailor the claim to narrow the issues and should work with PR advisors to control adverse publicity.
Once proceedings are underway in high profile litigation, journalists will always ask questions. It is important to engage with them. Answering journalists’ questions needs to be done in a way that gets the key message across. If the journalist has misunderstood the claim, it needs to be explained.
It is always important there is a media strategy which covers the worst case scenario. Ultimately however, winning a claim will generate its own positive press.
Stevie Loughrey is a partner at Carter-Ruck