Australian and New Zealand PR Directors and Managers and their PR agencies should be reviewing their roles, responsibilities and protection as legal proceedings on both sides of the Tasman put corporate public relations practices in the spotlight.
In Australia 10 former directors of James Hardie are arguing about a press release in the NSW Court of Appeal. They were found guilty last year of having breached their duties based principally on a contention by the Australian Securities and Investment Commission (ASIC) over what was said in the press release relating to the funding of Hardie’s asbestos compensation trust.
In New Zealand , where there has been a flurry of actions instigated by its Securities Commission, Lombard Finance is facing criminal prosecution, accused of misleading investors through its prospectus, road shows and other company communication efforts.
It’s ironic that in these two cases it’s been the Directors of the company that have faced the music.
To date, as far as I am aware, no PR Director or Manager or a PR agency has been caught in the legal web, although James Hardie’s former head of public relations Greg Baxter (now with News Corp) was reportedly grilled intensively at the court hearings last year (but as a witness – not as a defendant).
And ironically one of Lombard’s Directors facing prosecution– Lawrence Bryant – ran a public relations agency in New Zealand for a number of years!
So if corporate PR practices are being put under the regulator’s blowtorch what does it mean for those in work in, and advise on, public relations and communication – from within the company and from external PR agencies?
There’s no need to panic. But there is a need to address the issue in a deliberate and formal manner so that protection is afforded to all.
I think that focusing on the following three actions will provide 90 percent protection for PR Directors and Managers and/or PR agencies:
1. All those who might draft or release corporate communication must have formal indemnity protection. In my previous PR agency life all contracts included this provision (although whether there was always a formal contract with the client is another matter!). PR Directors or Manager’s should insist on this as part of their terms of employment and this is especially important if they act as the organisation’s spokesperson.
2. At a policy level there should be a written, codified procedure for the approval and release of corporate public communication which the PR Department and/or PR agency formally agrees to. This should include appropriate levels of authority for the approval of all materials – and their release. The aim of this is to ensure that if the internal or external PR advisors follow this procedure they are automatically afforded a degree of protection (and if they don’t they only have themselves to blame if they find themselves in the gun).
3. At the implementation level ideally every piece of written corporate communication that is released (or any messaging or scripts that are to form the basis of answering questions) should be formally signed as approved by the responsible executive. In the old days a client had to sign everything produced by its ad agency. PR people have, in my experience, been lax in this regard!
For the PR Director or Manager there’s a double challenge. On the one hand they have to act on behalf of their organisation if their PR agency decides they want to have greater indemnity protection. On the other hand they have to negotiate an appropriate indemnity for themselves.
There’s one other matter to consider. That’s when an organisation is clearly facing challenging times and the corporate communication is demonstrably risky. In such situations it is always wise for the PR or communications people to draw up specific agreements and procedural
Of course, all kinds of side issues arise. Merchant bankers, lawyers and every Tom, Dick and Harry like to get involved in press releases and public communication. Not to mention the Corporate Counsel!
That’s fine. What I’m proposing is unashamedly aimed at protecting the butt of the PR and communications people. If others get in the act and there’s a foul-up so be it.
My three actions sound simple. But from experience they can be difficult to implement. Over my career I’ve had many arguments with the legal counsel of clients about how communicators need to be, and should be, protected by indemnification. And in the rush of battle getting your Managing Director or CEO to actually countersign a simple press release can be seen as awfully pedantic and small minded.
Nonetheless times are changing for Australian and New Zealand public relations and communications’ professionals. By taking a more professional and disciplined approach we might just help keep some of our masters out of Court. Then they would thank us!
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