by For general counsel and the communications teams who work beside them, the first real “verdict” rarely comes from the bench. It comes from the public, the media and the company’s stakeholders, who form a perception of the company’s work and reputation.
Once a complaint becomes public, investors, customers, employees and regulators start reaching their own conclusions about the company. That’s all it takes – a filing.
Because litigation can drag on for years, those judgments often harden long before a court rules on the merits. Many won’t wait for the verdict to reach their conclusions. Any lawsuit, regardless of whether it has merit or not, is an immediate test for a company’s reputation.
That gap between the truth and the perception can be hard to manage if a company’s reputation is not solidified.
Litigation communications exists to keep legal uncertainty from becoming a broader crisis of confidence.
What Reputational Capital Means in Litigation Communications
Reputational capital is the credibility a company builds through consistent behavior and accurate and compelling communication over time. It works like a reserve. When something goes wrong, stakeholders read new allegations through what they already believe about management, governance and follow-through.
That reserve can work in the company’s favor.
A business with a long record of transparent disclosure gets more room to explain an unexpected development. Its stakeholders are also more willing to separate an allegation from an established fact.
Litigation draws the reserve down faster than almost any other event. A complaint puts the company’s own claims about itself under examination in a public forum.
Four Ways a Lawsuit Draws Down Reputational Capital
The drawdown tends to follow a few recognizable patterns.
- The allegation contradicts the company’s identity. A company known for effective and strong governance faces governance-related claims. A bank that promotes customer-first values faces claims about its poor treatment of customers. The closer the allegation sits to the brand promise, the faster the capital drains.
- Prior public statements become evidence. Before being put to the test and under public scrutiny, “we take compliance seriously” reads as boilerplate. After filing, journalists, plaintiffs and investors give it another meaning.
- Silence hands the record to someone else. The complaint, court filings, opposing counsel’s arguments and press coverage fill whatever space the company leaves open. Legal caution may justify saying little, but stakeholders keep forming views either way.
- Executive messages diverge. Sometimes the CEO’s remarks, the investor materials and the legal filings describe the same events in different ways. Stakeholders then close the gap themselves, and rarely in the company’s favor.
Because perception differs by stakeholder group, a single “we strongly disagree with the allegations” reads like boilerplate. It is also why litigation so often turns into crisis communication when a company treats it as a legal matter alone.
The fix is structural. Legal counsel and communications counsel need to work from one plan, with each side clear on its role. The legal team protects the case. The communications team protects the reputational capital the company will need long after the case ends.
How Legal Counsel and Litigation Communications Counsel Can Coordinate Once a Complaint Is Public
Coordination gives lawyers and communications professionals defined roles: lawyers own legal strategy, and communications professionals own public messaging. It requires establishing a disciplined process for determining what the company needs to say, what it should not say, and how its public communications will play in the wider environment in which the case is unfolding. This needs to happen without communications getting ahead of the legal strategy, and without legal strategy unintentionally affecting an unrelated aspect of the firm’s communications objectives.
Montieth & Company works alongside in-house counsel and outside litigators to build that process, so the communications plan follows the legal strategy from the first filing.
That process should follow a consistent sequence:
- Audit the public record first. Review earnings calls, investor materials, marketing claims and executive interviews for statements the litigation claims against the company and within the firm’s own legal strategy will test.
- Set one approved factual baseline. Agree with counsel on three things: what the company can say, what it cannot say, and what remains in dispute.
- Map stakeholder questions by audience.
- Investors ask about exposure and management attention.
- Employees ask about stability and culture.
- Customers ask about continuity.
Each group needs an answer grounded in the same baseline.
- Align the CEO, CFO, board and investor relations. Every spokesperson works from the same approved language, and counsel reviews it before release.
- Separate allegation from fact in every statement. Credible messaging acknowledges what is known and what the court has yet to decide.
- Plan for each case milestone. Motions, discovery disclosures and rulings each generate coverage. Positions prepared in advance cut down on improvised responses.
The goal is credibility. Courts decide legal outcomes. Litigation public relations determines whether stakeholders trust the company’s account while they wait for one.
We saw this sequence at work for a multi-billion-dollar hedge fund facing several pressures at once: a former partner under criminal indictment, regulators and law enforcement questioning its investment practices, and investors redeeming as the press swarmed.
Montieth & Company built a new investor narrative around management’s plan of liquidation, scheduled a series of investor letters to set expectations, and worked closely with legal counsel and other advisors throughout. Coverage improved in tone and accuracy, factually wrong stories diminished, and management could focus on executing the plan. Read the case study.
Coordination keeps legal strategy, communications strategy and the company’s stakeholder relationships working from the same factual foundation. But it works best when the company has built reputational capital long before a lawsuit arrives.
Why Reputational Capital Matters Before the Filing
A company can’t manufacture years of credibility after a complaint is filed. It can only draw on the credibility it already has.
That is what makes reputational capital an asset. When litigation creates uncertainty, stakeholders look past the allegations and to the history behind the company’s response. Has management been consistent? Has the company been transparent before? Do its actions back up the story it is telling now?
A company whose reputation rests mainly on slogans and advertising has far less to draw on during a reputational crisis. Those claims lose value quickly once stakeholders, reporters and opposing counsel test them against the facts.
Building Reputational Capital Before the Next Lawsuit
For companies in regulated industries, litigation can pose a recurring cost of doing business. The companies that come through it with their credibility intact tend to do the preparation while no case is pending.
That preparation should be concrete, focused and intentional. It requires checking what executives say publicly against what the company does, keeping investor, marketing and legal language consistent, and building relationships with the reporters who cover the sector before there is a story to pitch. It also means effective management between legal and communications teams and objectives.
Litigation communications protects a company’s credibility while a case is pending. It works far better when the company already has reputational capital to speak on its behalf, while the litigation communications strategy protects it.
Learn more about how Montieth & Company approaches litigation communications: Litigation Communications