When faced with an event that gives rise to significant legal, financial, and public relations exposure, corporate management needs more than ever to remain focused on running its business. Steptoe’s crisis management team can free management to focus on the bottom line and help steer the company through difficult times. Steptoe lawyers are experienced in handling multi-faceted problems with multi-forum demands. Whether it is "bet the company" litigation, a Congressional inquiry, regulatory proceedings, or a criminal investigation – or, as is often the case, a combination of law enforcement, oversight, and public relations inquiries – Steptoe has helped leading institutions prepare and respond, minimize legal exposure, and protect the reputation of management and the organization.
Our clients seek our assistance when dealing with a crisis because of our versatile lawyers and the multi-dimensional strategic plans we tailor to the individual client’s circumstances. We have decades of success in providing clients with coordinated political, business, public relations, and legal advocacy.
Steptoe advocates a multi-front approach to crisis management. Whether the situation stems from internal problems or external events, we enable our clients to maintain focus on their business objectives while managing a crisis to its best outcome. Some of Steptoe’s strengths include:
- Daily contact with congressional leaders, regulatory agencies and enforcement agencies
- Experience and success developing coordinated communications strategies that allow for simple, consistent, and credible communication with the full array of industry and corporate stakeholders
- Experience and success leading sensitive internal investigations quickly and discreetly
- Experience and success acting as lead counsel in "bet the company" litigation
- An anticipatory approach that takes into account the various potential directions developing crises can take
- A white-collar criminal defense practice group with vast experience managing high-profile, complicated matters
Preventing the Crisis
Many clients have benefited from a proactive approach towards potential crises, and asked us to advise them on implementing preventative measures and an avoidance strategy. The avoidance strategy includes systems to monitor changes in regulatory and enforcement practices and to monitor critical or vulnerable internal functions in order to give the client the maximum ability to address difficulties before they escalate.
Preparation is integral to preventing or minimizing the impact of a crisis. To meet this critical need, Steptoe helps clients conduct targeted internal investigations and draft crisis management plans and crisis communication plans. With Steptoe’s assistance, clients identify potential threats early and quickly implement proactive strategies.
While the firm’s more than 24 practice groups support the crisis management practice, a core group of lawyers with specialized backgrounds comprise the practice’s leadership. In addition to impressive legal careers that include significant time spent in government service, these individuals have developed particular insight that makes them uniquely suited to crisis management.
We assisted a global services firm in managing a data breach incident and complying with dozens of US and foreign data breach notification laws. In doing so, we assessed the scope of the breach, the nature of the affected individuals, the language of the various laws, and the alternative methods for notification, and determined the most effective and efficient means of notifying affected parties and minimizing harm to the company. As a result, the breach did not receive any coverage in major press outlets and the company avoided what could have been a significant public relations crisis.
When a financial services firm came under a multi-front attack for its involvement with a tax shelter, Steptoe went on the offensive to deflect these attacks. The assaults began after the IRS challenged the tax shelter’s propriety.
On the legislative front, the IRS challenge prompted an investigation and hearings in the United States Senate, which Steptoe helped address. The Senate hearings prompted regulatory investigations, two Department of Justice investigations, and a separate legislative investigation.
The company also came under intense public scrutiny that resulted in over fifty individual civil matters and several class actions.
To facilitate continuity of operations and minimize peripheral but potentially grave damage, Steptoe undertook more than a purely legal representation. Steptoe worked with the client to implement a coordinated communications and regulatory defense strategy designed to reassure the company’s investors while conveying a concise and credible message to other stakeholders and the government.
A leading banking client experienced multiple parallel investigations and over $25 million in regulatory sanctions due to a deficient anti-money laundering compliance program. This failure led to a congressional investigation, criminal investigations, regulatory investigations, and various civil suits, including shareholders suits and class actions. The bank also faced tremendous public relations challenges.
Steptoe’s diverse practice groups helped the bank navigate the numerous governmental inquiries and employed an overall strategy focused on preserving the bank’s value. To accomplish this goal, the firm advised the bank regarding the handling of disclosures to the securities markets, the retaining of government contracts, and the safeguarding of its sensitive merger with another bank.
Financial Services Trade Association
When a state attorney general opened an investigation into the business practices of the three largest members of a financial services trade association, the association found itself under intense scrutiny, forced to defend one of the industry’s core business compensation practices. The attorney general's investigation led to several class action suits against the industry. Congressional hearings, as well as state legislative and regulatory hearings, followed.
Steptoe lawyers teamed with the client, its members, and a public relations firm to develop a comprehensive response strategy to educate the trade association membership on relevant developments, to develop best practices to enhance industry credibility and to reduce liability exposure, and to coordinate the public affairs response on behalf of the industry.
California Energy Market Restructuring
In 1998, California transitioned into a deregulated electric power industry. Following deregulation, the price of electricity unexpectedly rose to shockingly high levels, triggering an escalating and potentially fatal financial crisis for the California electric utilities whose retail electricity rates were capped at fixed prices but whose costs of power supply were skyrocketing out of control. A major utility turned to Steptoe to help it craft a strategy to avoid the dire consequences of the energy crisis (including insolvency, a fate the largest utility in California failed to escape). The firm immediately coordinated leading lawyers from the relevant practice areas and launched a multi-jurisdictional campaign to combat market manipulation by power suppliers, to obtain temporary price caps and future refunds from the pertinent regulators and courts, and to develop an overall strategy to remedy and emerge from the crisis.
Steptoe's team worked together with the client's business executives, lobbyists, and in-house counsel to develop a coordinated regulatory, litigation, and legislative response at the federal and state level that charted a successful path through this unique crisis in the history of the electric power industry. The plan involved direct action by Steptoe lawyers on several fronts. Steptoe petitioned the Federal Energy Regulatory Commission (FERC) for relief and later challenged the FERC's lack of meaningful response in federal court. Steptoe's lawyers won significant appellate victories in the 9th Circuit and DC Circuit, which entitled the utility to recover substantial refunds. Steptoe lawyers also contributed to a successful effort to defeat a state voter initiative designed to further hamper the transition to a competitive market. While attempting to reconcile the Energy Crisis problems directly within the regulatory framework, Steptoe both worked with the federal government and assisted the utility with a legislative lobbying effort in order to address the out-of-control energy prices. Eventually, these initiatives helped obtain relief by contributing to the passage of the Energy Policy Act of 2005.
At last calculation, Steptoe’s ongoing efforts have resulted in hundreds of millions of dollars in settlement money for the utility, and over $4 billion in settlements for a coalition of related California interests led by the firm.
Select News & Events
- Philip Khinda Elected to the American College of Governance Counsel
- Law360 Features Philip Khinda for Practice Leaders Q&A
- “Surviving the Storm: Governance, Disclosure and Ethics Issues in a Crisis,” 2013 ABA Annual Meeting
- Jim Moorhead and Mike Miller Spoke at Martindale-Hubbell's Counsel to Counsel (C2C) Forum in New York on "Risk, Reputation, & Compliance"