by Rory Campbell, Forde Campbell Solicitors
“We do decanters with six glasses on a silver tray, for £4.95. People say, ‘How can you sell this for such a price?’ I say, because it’s total crap.” With this comment, Gerald Ratner saw his jewellery empire value fall by £500 million.
Reputation is critically important – and incredibly vulnerable. In the 2015 Risk Barometer published by Allianz, loss of reputation ranks second in the top business risks within the UK.
Aren’t lawyers the worst people to ask about business reputation protection? Our instinct is to ignore PR consequences and protect clients from liability at all costs. On that level, we understand Thomas Cook’s hesitancy over an apology relating to the tragic death of children on a Thomas Cook holiday. However, reputation depends not just on why things go wrong, but also on how the business deals with the matter.
We believe that businesses need to understand the importance of reputation, and take steps both to pre-empt reputational loss, and to deal with actual or potential reputational threat.
Understand the importance of your reputation
Although sounding like a stern parental injunction before a night on the town, this is fundamentally important. You can’t see it or touch it, but a reputation absolutely exists as an asset. It’s the basis for brand strength, and as goodwill it’s something that can be bought and sold by contract.
The law allows various ways to protect your business’ reputation. A business can get a trademark to register its exclusive right to use a name or logo in a particular business area and jurisdiction.
If its reputation is strong, the business can prevent potential competitors from using confusingly similar names and reputations. In ‘80s Randalstown, Hurrells Clothing spelt its name in green and gold, mimicking Harrods. Harrods’ lawyers’ letter arrived swiftly: their client’s reputation was strong enough to control a small business in a street hard to confuse with Knightsbridge.
Finally, if your business is hit by a defamatory remark, it can take legal action. The law differs between Northern Ireland and GB, but a NI company can claim damages for harm to its business or trading reputation.
Online tools and sites can help you understand public perception of your business: online reputation monitoring platforms search on their customers’ names and associated keywords across social media, capturing any conversation about the business within seconds.
You should consider the following steps:
protect your brand: if you haven’t registered your brand as a trademark, put ™ after it; if you have, you can use the ® symbol. Register a trademark yourself in the UK via the Intellectual Property Office, or get a trademark business to do it for you.
licence appropriately: if you allow other businesses to use your brand, control the scope of use in a contract. This can control how long they use your brand, what they use it for, and even how they use it.
sort out your data protection procedures: the Edelman Privacy Risk Index records 71% of customers saying they would leave an organisation following a data breach.
be careful with online marketing: the Advertising Standards Authority wants to make sure consumers know when they’re being marketed to: it’s keeping a close eye on social media commentators and vloggers who quietly market products. As the ASA warns, businesses caught marketing this way risk not just prosecution but also the reputational damage of being caught out.
A serious reputational threat to your business has emerged, and it’s gone viral. What steps should you take?
make an appropriate statement. In almost every circumstance, it’s vital to make a response: this shows that you’re alert, and have a degree of control over the situation. If threats are vicious and defamatory, a calm approach is crucial – a hysterical response can cause increased reputational damage.
if the story’s true: balance the risk of admission (taking legal advice as necessary) against the PR impact of being seen not apologise. If you’re going to apologise, do it properly: acknowledge the facts, show understanding of the consequences and suitable remorse, and take responsibility as appropriate.
if the story’s not true: say so, as part of your public statement. And then identify who spread the story: the internet may seem impenetrable, but there are processes which help. Court orders can oblige ISPs to reveal the users hiding behind concealing “dynamic” IP addresses. “Takedown” notices fight back against the online dissemination of unauthorised photos, threatening websites with action from their hosting provider if they don’t remove the offending material.
Your business reputation is a commercial asset. Laws exist to you protect it, and there are practical steps you can, and should, take to minimise reputational threat.