The Dos, Don’ts and Maybes of Social Media

Social mediaIt takes one second to send a Tweet or Instagram post onto the internet for all to see. But for companies active on social media, the legal ramifications of those 140 characters or that one photo can last a whole lot longer.

At a recent seminar in New York, lawyers and communications professionals representing some of the world’s most famous brands learned a lot about the dos and don’ts of social media for companies, specifically companies interested in pushing boundaries but avoiding lawsuits. Perhaps more importantly, they learned a lot about the maybe dos and maybe don’ts through several real-world examples.

“When you get it wrong, it comes with a lot of implications,” said Maggie O’Neill, managing director and partner at strategic communications firm Peppercomm, which recently co-hosted the event with Davis & Gilbert LLP.

Sue Me, Maybe?

O’Neill and her counterpart, Davis & Gilbert marketing and promotions partner Allison Fitzpatrick, brought up one of the more famous “maybe don’ts” in recent memory: Peyton Manning’s proclamation after Super Bowl 50 that his first order of business was to “drink a lot of Budweiser,” setting off a social media firestorm.

“This had the potential to really blow up into something legal,” O’Neill said. After all, Manning isn’t a spokesman for Budweiser, but he does own several Budweiser distributors. The appearance of “free” advertising if, say, an implicit agreement between the two parties was in place, would have been a no-no, and the fact that it’s not common knowledge that Manning owns those distributors makes it a “maybe no-no.” Adeptly, a Budweiser communications pro tweeted that, while the brewer was “surprised and delighted” at Manning’s off-the-cuff endorsement, “Budweiser did not pay Peyton Manning” for it. While that tweet doesn’t guarantee Budweiser’s immunity from a government lawsuit, it certainly represents a skillful handling of the situation.

Know Your Subject

Not all companies have been as adept, O’Neill and Fitzpatrick pointed out. The Duane Reade chain famously got sued by Katherine Heigl after tweeting an unflattering photo of the actress coming out of one of its pharmacies carrying bags. Heigl sued for $6 million, claiming the company violated New York State and federal laws that protect the use of a person’s likeness for trade purposes. She eventually dropped the suit, but it made the kind of headlines Duane Reade – and most companies – never want.

Fast-food chain Arby’s, on the other hand, got universal kudos for its tweet about the hat worn by rapper Pharrell Williams at the 2014 Grammy’s, which looked similar to the one on the Arby’s logo. “Hey @Pharrell, can we have our hat back,” Arby’s tweeted, with the hashtag #GRAMMYs. Pharrell was a good sport about it, and when he eventually put the hat up for charity auction on eBay, Arby’s announced via Twitter that it was the party responsible for the $44,100 winning bid.

“The best part is, Pharrell did not sue,” Fitzpatrick said at the panel. But, she added, “it doesn’t mean there’s no risk.” One quick and easy first step, according to Fitzpatrick, is to do a quick Google search to “see if they’re litigious or not.”

Copyright Law in the 21st Century

For brands active on social media, copyright law is another consideration. Being mindful of trademarks like “Super Bowl” and “NCAA” while tweeting about events can save companies a lot of money from potential legal woes.

For instance, when TGI Friday’s pushed boundaries by petitioning the International Olympic Committee to make bartending an official sport, lawyers were kept in the loop to make sure the campaign garnered media and public interest on traditional and social media but didn’t cross any copyright law lines.

What’s next?

With technology constantly changing and regulators scrambling to adapt to those changes, Fitzpatrick said the next frontier could be regulatory action against celebrity spokespeople. It’s generally known around the world that Nike endorses Tiger Woods, but what if a celebrity whose endorsement deal is lesser-known doesn’t disclose the relationship in a tweet? This could be the next major question the Federal Trade Commission starts asking.

Key Guidelines

Fitzpatrick offered a few general guidelines that companies can follow.

  • When using hashtags, be careful not to suggest an endorsement or association between your brand and the event, unless there actually is one.
  • The more the merrier. See if other brands are tweeting about the event. If they are, chances are your legal risks are lower.
  • There are a lot of work-related reasons to follow, a brand, on social media, so most experts think a simple follow is probably okay. A “like” or a “share” could be a little dicier.
  • When in doubt, research, confirm, and speak to legal.

Laremy Tunsil’s Social Media Controversy Highlights NFL Draft Risks

shutterstock_212182807Last night was the first round of the 2016 NFL Draft and the lead story was that of Laremy Tunsil. By many scouts’ accounts he was one of the most talented prospects in the draft and was expected to be chosen in the top five or six. Instead, Tunsil tumbled all the way to number 13 after an untimely video was posted to his Twitter account depicting him smoking marijuana through a gas mask. The tweet was quickly deleted but not before creating a snowball effect that will likely cost Tunsil approximately $8 million in lost contract value, as estimated by Forbes based on the NFL’s Salary Cap and Rookie Compensation Pool (a player chosen at #6 would be expected to receive a contract of $20.4 million, while the 13th pick would receive an estimated $12.4 million).

If you watched the first round coverage last night, the term “risk management” was thrown around generously by commentators. In many cases, NFL draft prospects are investments worth many millions of dollars. But with each investment comes questions of risk versus return. The Miami Dolphins, who selected Tunsil, made a decision last night that the investment of approximately $12 million dollars mitigated the risks posed by a player who could have drug related issues that could violate NFL player conduct rules. Moving forward, the Dolphins will have to consider the following risks:

  • Organizational Risk: In addition to the marijuana video, Tunsil admitted to what amounts to violating NCAA rules while in college, which will certainly result in disciplinary actions against his alma mater. The Dolphins still have to sign Laremy Tunsil and now have to determine if they can expect a positive return from a player who demonstrates the potential to weaken an entire institution.
  • Reputational risk: Will there be a backlash from the fan base for drafting someone who clearly demonstrates serious lapses in judgement? Remember, these players are not just investments in terms of their performance, but in the revenue and public relations image they create for their respective team. As has been demonstrated in the past with other NFL teams, reputational risk is not just an external factor but an internal one at that that can affect team’s performance on the field.
  • Social media risk: Laremy Tunsil’s agent claims that his client’s social media accounts were hacked. Regardless of whether or not that is true, the damage has been done. But what prevents any of his accounts from being hacked in the future? Will this inspire other potential black hats to hack athlete’s social media accounts? Can the Dolphins impose a social media blackout on its entire franchise? The Dolphins will need to consider what social media risks Laremy Tunsil may pose to the franchise’s image moving forward.

Overall, if Tunsil is as talented as he is expected to be, then the risk of selecting him will likely be worth the reward. Right now, the Miami Dolphins have made a decision that their potential investment of $12 million dollars will benefit the team in the future. Let’s hope for their sake that they have a risk management program in place that will give as much consideration to the risks listed above as they presumably give to winning a Super Bowl title.

Balancing Risk and Compassion: Life Sciences Companies Face New Risks from Expanded Access

Pharmaceutical companies operate with a singular objective: bring drugs to market. This is how they profit, how they ensure that their products help the most people, and how they maintain the resources to continue innovating.

The lifecycle of drug development can be complex and onerous, despite improvements to the regulatory approval process over the past several years. Now, a trend sweeping the industry is forcing many pharmaceutical companies to decide under which circumstances they’re willing to divert resources from their mission of helping the masses.

Expanded Access, or “Compassionate Use,” refers to the use of an experimental drug not yet approved by the FDA to treat a critically ill patient outside of a clinical trial. The FDA received more than 1,800 requests for access to experimental drugs last year and, over the last five years, it has approved 99% of these requests.

But ultimately, once requests are approved by the FDA, it’s up to manufacturers to provide the drug to these patients, many of whom are children, and many of whom have just months left to live.

Companies are then faced with a choice: to provide an unapproved drug to individual patients, which can delay the process of making the drug widely available, or to deny the request and risk backlash from the public, who see only a dying patient and the pharmaceutical company that could save them. In several cases, the latter has fueled social media campaigns demonizing companies for withholding potentially life-saving medicines.

How a company handles expanded access requests can affect its reputation and financial stability. Pharmaceutical executives often operate under a microscope, where patient outcomes are the key to keeping investors on board. As expanded access patients often do not qualify for clinical trials, they may be higher-risk candidates, so reporting their results to the FDA could potentially prolong approvals and market availability. On the other hand, a company that denies an expanded access request can face significant reputational damage and even legal action if investors believe that management decisions hindered the company’s progress.

Small and mid-size life science firms in particular may fear that they don’t have the resources to navigate expanded access cases. But requests for experimental drugs are on the rise: the FDA saw a 92% year-over-year increase in requests in 2014. Companies need to prepare their approach and policies before they find themselves in the throes of a difficult decision with pressures mounting from both sides. Here are four ways they can set themselves up to make informed decisions about balancing risk with compassion:

Monitor the Regulatory Environment

Over the last year, the FDA has been working to simplify the process for physicians requesting access to experimental drugs on behalf of patients. In February 2015, the agency streamlined the application form, which now requires physicians to submit just eight types of information, as compared with 26 types in the previous form.

The FDA has also been working with life sciences companies to find alternative solutions to expanded access when needed, such as designing expedited open-label trials for these patients.

Additionally, as of August 2015, 24 states have introduced right-to-try bills, which allow physicians to request experimental drugs without going through the FDA’s application process.

With both federal and state governing bodies paving the way for easier access to experimental drugs, the decision to provide these drugs falls squarely on the shoulders of corporate leadership at pharmaceutical companies. These firms also ought to keep in mind the need to prioritize building and maintaining relationships with the FDA, which can be key in developing a creative solution.

Update Your Crisis Management Plan

Crisis management plans are sometimes written in broad strokes. In preparing for expanded access cases, risk managers need to bring together leadership from various departments—senior management, investor relations, finance, human resources, etc.—to weigh in on the specific risks associated with experimental drugs. Many firms will seek outside counsel to guide the process.

At a basic level, a crisis plan should map out vulnerabilities across all risk areas. For example, companies need to consider the process for securing their facilities, fielding press inquiries, addressing social media backlash, managing investor concerns and navigating potential lawsuits.

Most importantly, companies need to develop the principles that will guide decisions in crisis situations. Rather than scrambling for direction in the heat of public scrutiny, companies should establish a clearly-stated policy and set of guidelines for participation in expanded access programs. This will serve as the foundation of a response if an issue arises. Management must then be prepared to defend that position to all stakeholders, including employees, investors, patients, physicians and potentially press.

Evaluate and Re-evaluate Your Insurance Policies

Organizations need to consider which financial risks they can transfer to their insurance policies. Not everything will be insurable, but a strong policy can provide protection if an expanded access case threatens a company’s financial stability.

This starts with a comprehensive review of a company’s insurance portfolio with the issue of expanded access in mind. Oftentimes, risk managers revisit their policy language through the lens of a specific issue and realize that their expectations for coverage don’t accommodate current events. This can be the case with expanded access.

When reviewing their policies, companies need to understand the intent of the language relevant to expanded access and work with their broker to make sure the coverages are as granular as possible.

Lead the Way

This year, Johnson & Johnson created a Compassionate-Use Advisory Committee composed of doctors, bioethicists and consumer advocates to evaluate expanded access requests and make recommendations to the company’s clinicians. While many have hailed this as a creative solution for maintaining ethical standards, smaller companies with fewer resources cannot as easily take such an approach. These firms have an opportunity to set the standard for managing expanded access cases by developing thoughtful policies, collaborating with regulators and academics and, of course, addressing risks to business from the onset.

Dealing with Reputation Risk

reputation risk and social media

Properly assessing risk is critical to any business. Successful businesspeople understand that every decision they make must be weighed against the potential risk to the company. This risk assessment must not be limited solely to situations directly related to the business itself, however. They must also consider reputation risk, or the risk events will have a negative impact on one’s personal reputation and, by extension, the business.

Whether fair or not, the decisions made in someone’s personal life can have a substantial impact on the company they are connected to. This risk extends beyond just the owner or executives of a company; employees caught doing unscrupulous things can cause a public relations nightmare for the business, ultimately resulting in massive losses for the company itself.

Assessing Reputation Risk

Unlike business transactions, where there are countless models and historical examples of the likely risk and reward of most given situations, reputation risk is far harder to quantify and prepare for. It is nearly impossible to predict, for example, whether or not an executive will get belligerently intoxicated and assault a police officer. The executive can bring unwelcome attention to the company, which in turn can cause investors, advertisers, and partners to shy away in the short or even long-term.

Exacerbated in the Social Media Generation

Social media platforms such as Facebook and Twitter have dramatically intensified reputation risks. In the past, it was possible for a relatively minor incident to be swept under the rug or forgotten relatively quickly. If not, chances were good that a story would stay relatively local, perhaps reported in an area newspaper once or twice before fading from memory.

Today, however, even a single story in a local newspaper (or, worse, an online blog) can be shared and re-shared thousands of times in a matter of hours. “Viral” stories can spread across an industry and the country within only a day or two. By the same token, an ill-advised Facebook or Twitter post on a controversial topic can be shared just as quickly.

Mitigating the Danger

Unfortunately, there is only so much one can do when trying to guard against reputational risk problems. It is impossible to control every human being’s actions, and even harder to control them every second of every day. The only viable solution is offering guidelines to employees and executives to try and minimize the problem as much as possible. It is also worth calculating risk factors among employees. For example, an employee with a history of public intoxication or domestic abuse issues may not be someone you want representing your company.

At the end of the day, there is only so much one can do to reduce reputation risk. It is important, however, to have a public relations strategy on hand for if and when a troublesome situation arises—and it almost certainly will at some point.