Legal vs PR–the BP trial highlights the conflicts between two competing courts

So BP is on trial and the news headlines are filled with stories about former BP executives testifying about the company’s putting “profits above people.” This situation highlights the often-discussed conflict between the court of law and the court of public opinion. And the often-discussed conflict between lawyers and PR folks.

The CEO and leadership of the company must make the decision when these two forces collide. Clearly Bob Dudley and the BP board have decided that winning in the court of law is more important than winning in the court of public opinion. Let’s look at this decision because as a PR person, like I suspect most PR people, my inclination is to think: how stupid can they be? Why encourage all the old outrage and hatred against their company to resurface? After spending an unbelievable amount of money to convince everyone they are doing it right in restoring the gulf after the spill, why waste the goodwill that that money was intended to generate by allowing this trial to scratch the scab off all the old wounds?

But, things are not so simple. And as we PR folks often accuse the lawyers of only looking at it from the legal perspective, we can be accused of only looking at it from the reputation perspective. According to one estimate, there is at least $17 billion at stake in this trial. 17 billion–that’s enough to pay the federal deficit for–wait, we won’t go there. 17 billion is a lot of money for even a company the size of BP. A CEO has to take numerous factors into consideration, including share value, responsibility to shareholders, and the long term future of the company. A major point of this trial is assigning blame, so there is also the consideration that when all is said and done, blame will be shared (as it has so far in the court of law far more than in the court of public opinion) between Transocean, Halliburton and others. So there is reasonable hope that a positive outcome in the trial will not only save billions, but help the public understand this was a complex event with multiple causes and multiple points of failure.

I think there is another reason why its more rational to proceed with this trial than first glance suggests: ExxonMobil. The shadow of the ExxonValdez lingers, but has been much diminished by the BP spill. You may recall that Exxon’s CEO took great heat for not showing up at the spill. BP CEO Tony Hayward, intent on not making that mistake, made the mistake of showing up too much until he was caught in an unfortunate comment. Funny thing–that comment is now tied to his name so the headlines read: Tony”I want my life back” Hayward. This is so ridiculous. But after the Exxon headlines died down then CEO Lee Raymond took a very strong anti-reputation position. It’s well known in the industry that his view was “people may hate us but they are going to keep buying our product.” So he set about continuing to build a company that would be the envy of everyone else in terms of efficiency, effectiveness and share value. He did. ExxonMobil recently regained its position, which it lost relatively briefly to Apple, as the world’s most valuable company. While many who buy its products may still have a lingering distaste over the ExxonValdez, the shareholders may be happy that the company didn’t waste too many dollars and too much effort on convincing everyone what a nice company they are.

The upshot: sometimes do we PR types make too much out of reputation? Oh my goodness, I feel like a heretic just asking that question. But, Jim Lukashevski (I’m using phonetic pronunciation rather than actual spelling which I can never get right) has made a career out of teaching PR folks to gain a seat at the table of organization leadership. One of the best ways they can do that is demonstrate they can think like a CEO and not just have a knee-jerk PR reaction to everything.

The BP trial is right now a PR disaster. That doesn’t mean Dudley and the others were wrong to refuse to settle. Time will tell.

2 thoughts on “Legal vs PR–the BP trial highlights the conflicts between two competing courts”

  1. A couple of points, if i may…

    1) If BP win the trial it’s a big PR coup for them.

    2)The impasse during the settlement was due to BP refusing the magnitude of the fine, because the pre trial settlement was predicated on a charge of “gross negligence” which BP has disputed since Day 1.

    3)The DoJ wanted a pre-trial settlement of 20-25bn, now that seems strange considering that’s around the figure BP will pay in Clean Water Act fines if found grossly negligent – they had no incentive to settle, it would have been idiotic to settle on those terms, they might as well go to trial where it’s a 50:50.

    4)Gross negligence is a high bar – All the investigations : BP’s internal (Bly), US Government Panel/coastguard have concluded that both Halliburton and Transocean made serious errors which caused the loss of well control at Macondo and the subsequent explosion on the Deepwater Horizon. BP was managing that team, but they all made errors. As I understand it, this is a cross party litigation (?) so they are all going to be throwing mud at eachother, which means Halliburton/Transocean will also be trying to apportion blame to eachother.

    5)BP cleaned up their mess, paid out almost immediately but seem to have been treated worse than Exxon, who did nothing. This incident has shown that “corperate responsibility” is pointless and counterproductive, the next time a big accident occurs it seems it’s better to take the heat, say nothing, pay nothing, and built a wall of the lawyers. Obviously Exxon were smart enough to realise it’s damnded if you do, damnded if you don’t type deal, the more BP tried to fix, with the containment vessel, top kill, the functioning fixture – the more they were publicaly ridiculed why? they were trying to fix the problem and they did, very quickly, in engineering terms.

    6)Legal and PR analysts talked of a dark and bruising February/March for BP, because this would be the worst part of the trial where the prosecution would be putting forward it’s case against BP and doing the main mud slinging. Now, this month with falling oil prices, the Cyprus crisis – BP’s share price is UP 3% ..which is a big move for an oil major, now make of that what you will, but I think its pretty telling of investor and legal opinion considering Exxon and Shell have both been flat.

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