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The Reputational Costs of Litigation

Lessons from Pao v. Kleiner Perkins

Author: Mike Kuczkowski

Last month, Silicon Valley was abuzz with the unfolding saga of Ellen Pao’s gender bias case against venture capital firm Kleiner, Perkins, Caufield & Byers.

A former junior partner at KPCB, Pao, 45, alleged that male partners there engaged in a pattern of discriminatory behavior against female junior partners. Pao, who worked at KPCB for seven and a half years, also said she had been sexually harassed by a former partner and that the firm retaliated against her by firing her after she filed her lawsuit.

Pao lost on all counts.

Pao’s lawsuit is a case study in the challenges of providing crisis communications support for litigation, the importance of focusing on reputation, and the value of a collaborative partnership between communications leaders and a party’s legal team.

In a post-verdict news conference, Pao focused on the battle for gender equality in finance: “If I’ve helped to level the playing field for women and minorities in venture capital, then the battle was worth it,” Pao said.

That’s a big “if.” A number of commentators have argued that Pao opened up an important debate about the treatment of women in the corporate world. But in losing the lawsuit, she failed to persuade a jury that she had been wronged.

What’s clear is that she has tarnished both KPCB’s reputation and her own. Here are some of the more salacious claims that emerged during testimony:

Ellen Pao Various individual partners at KPCB
–       Kept a “chart of resentments” against her Kleiner colleagues –       Consciously excluded women from a private dinner with Al Gore, saying that they would “kill the buzz.”
–       Had an affair with a married partner – who claimed his wife had left him, which later turned out not to be true – for six months –       Openly discussed their favorite porn stars on a private plane, when Pao was present (that’s according to Pao; another witness disputed this claim)
–       Sent negative emails about colleagues to partners behind the colleagues’ back –       Excluded women from a business ski trip
–       Was paid $200,000 in severance over a period of six months after being fired. –       Gave Pao “The Book of Longing,” a Leonard Cohen book of erotic poetry featuring nude drawings, as a Christmas gift
–       Is married to disgraced ex-hedge fund manager Alphonse “Buddy” Fletcher, who himself has a history of discrimination legal claims. (His personal debt has been offered as a motive for Pao’s legal action.) –       The same male partner who’d had an affair with Pao showed up at the room of another female Kleiner partner wearing only a bathrobe and slippers (He was later fired for this and other harassment.)

These gossipy details will stick with both Pao and her former employer for some time, and may have far-reaching implications. Both will have the challenge of proving that they are not the versions of themselves on display in the worst days in the courtroom.

This is where crisis communications plays a vital role in shaping an organization’s response to a lawsuit.

In a litigation, media relations is front and center. Simply put, reporters need to understand the fundamental claims, the key players and the calendar of events. The crisis communications leaders also need to understand the day-in, day-out rhythms of media coverage. Reporters have to file a story. That’s what they’re paid for, and in the era of the never-ending news cycle, they are often filing 140-character stories throughout the day.

The Job of a Crisis Communications Expert

In litigation like Pao’s, the attorneys for both sides are seeking to give their client the best representation possible, and to win their case. This invariably involves multiple fine-point decisions about legal strategy and obscure legal arguments. Some of this can get very arcane, very quickly and that’s where the crisis communications expert comes in. His or her job is to:

  • Own the narrative: Distill the essential legal maneuvers and arguments into comprehensible messages and narrative points.
  • Be compelling: Why does this matter? If millions of dollars are at stake, as is often the case in complex civil litigation, there’s most likely a compelling issue of fairness or ownership in play. Make sure it’s clear why this dispute belongs in a court of law.
  • Make it Relatable: Translating the legal issues into something we can all relate to is critical. Many disputes ultimately come down to matters of fairness, ownership or righting a wrong. Who can’t identify with that?
  • Align your narrative with the legal strategy: Words matter. You can’t say things to the media that are either at odds with or constrain what the legal team will say. Mine the legal team’s approach for a narrative and key messages that accurately describe what’s happening in the legal dispute.
  • Be resilient: There are three sides to every lawsuit: One side, the other side and the truth. It’s important to take into account what the other side is going to say and how they will characterize your claims.
  • Strive for Clarity: Lawyers have a tendency to be precise about the words they use. However, legal jargon can – and should, in court – take the place of clear, simple language. Get a copy of Black’s Law Dictionary. Dig in and understand what the legal issues mean, and find the simplest ways to convey them.
  • Use the facts: Lawsuits ultimately involve a set of facts assembled to support an argument. That’s a framework with which communicators should be very familiar.

Keep in mind that legal disputes have an ending, yet reputations are enduring. Ask yourself, which is more important?

Pao has now cast herself as a crusader for women’s issues. It will be interesting to see if her long-term career moves and activism keep her at the center of that cause, or whether that narrative was merely expedient to justify her actions. Anyone who will bring her on board as an employee (she is currently the interim CEO of the social media site Reddit) will now be aware of her tendencies.

On the other hand, Kleiner now has some serious questions about its culture to tackle. A number of observers have speculated that the firm may need to restructure to regain its status as one of the top venture capital firms in Silicon Valley. It’s up to us to decide whether what the firm said in a post-verdict email to reporters is true: “Today’s verdict reaffirms that Ellen Pao’s claims have no legal merit. We are grateful to the jury for its careful examination of the facts. There is no question gender diversity in the workplace is an important issue. KPCB remains committed to supporting women in venture capital and technology both inside our firm and within our industry.”

The lawsuit is over. Now the process of rebuilding reputations begins.

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