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Court ruling may help clients reclaim reputation management costs

Court ruling may help clients reclaim reputation management costs

Reputaton management The PHA Group

‘image courtesy of patparslow in Flickr’

Suffering a wrongful attack in the media which leads to reputational harm is more often than not a highly damaging experience.

Whether it is a business or an individual, the loss of custom, revenue, respect and social standing, can be devastating.

Then there are the financial costs of seeking redress and repairing the damage caused.

Public Relations professionals would always advocate that crisis and reputation management should begin from the outset and be preventative rather than a cure.

The old adage of “once the horse has bolted” is clichéd, but rings true when it comes to the media and crisis prevention, particularly in the age of the internet when the flames of one story can quickly be flamed and spread across Google in a flash.

Employing lawyers and public relations consultants is an added expense.

The recoverability of legal costs are covered by rules laid out in a set of guidelines commonly termed the Jackson Reforms, which came into play last year and received attention outside of the legal profession during the publicity surrounding the early rounds of the now famous Andrew Mitchell libel trial.

But to most, the costs of hiring public relations professionals to help restore reputation would seem to be a spend that, despite it being an absolutely vital investment, could not be recovered in monetary terms.

However, a little-known court judgment handed down at London’s High Court recently could be set to influence that.

It came following a trade libel case brought by one UK company which battled against a campaign waged against it by a group of defendants.

The company sought PR advice to help it repair damage caused by the slurs. The reputation management work proceeded over 12 months in a bid to retain customers.

 

At the end of the case, which was won by default by the company, the judge ruled that the money spent by the company on its PR firm were recoverable damages.

Mr Justice Parks said that he had “no difficulty in concluding that…..the cost of employing a public relations consultant to undo some of the reputational damage which the first claimant suffered…. are recoverable as reasonable mitigation.”

This meant that the money spent on the PR campaign would, be the order of the court, be recoverable from the losing side.

It added to damages which totalled more than £400,000, including some £240,000 in profits which had been found to be lost as a result of the reputational attacks on the company.

Of course, not all reputation management matters end up as libel trials, and this judgment would only be relative to matters which have proceeded to court and a libel hearing.

Lawyers, and indeed Public Relations professionals worth their salt, would only advise on litigating to seek redress only if that course of action was absolutely necessary.

Nor should those who have suffered reputational harm take it as read that they will always be able to recover costs of PR if they end up using those who have libelled them.

But this judgment is important as it means the PR costs have been recognised by a judge as being a cost which can be recovered by way of damages from the other side. It is down to a clients’ legal team to argue the case and claim for the PR costs as part of the case.

As lawyers and public relations professionals often work in tandem when fighting to restore a mutual clients’ reputation, the judgment is worth noting in case the battle ends up in court.