Thursday, June 17, 2010

Litigation Communications in People v. Grasso - The Starkman/Grasso Communications Strategy

( This is the fifth of six posts examining the litigation communications strategies in the lawsuit challenging the $139.5 million paid by the New York Stock Exchange to its CEO, Richard Grasso, shortly before the NYSE Board asked for his resignation. The four previous posts can be found here, here, here, and here.)

Shortly after the New York Stock Exchange Board asked for his resignation, Richard Grasso, pictured above, retained the services of Erik Starkman, president of Starkman & Associates and a former financial journalist, as his communications professional to help him deal with the media frenzy his termination caused. Grasso's co-defendant, Kenneth Langone, retained Jim McCarthy of CounterPoint Strategies as his communications adviser. Starkman and McCarthy pursued starkly contrasting styles of communications counsel in guiding their clients through the litigation.

The Starkman/Grasso Strategy - Litigation Communications Is Not Public Relations

For his legal representative, Grasso retained Brendan Sullivan of Williams & Connolly, a lawyer most known to the public for his representation of Oliver North in the Iran-contra affair. The collaboration between Starkman and Grasso’s legal team highlights one of the subtle differences between public relations and litigation communications. Public relations focuses on improving the client’s general image. Litigation communications, on the other hand, is designed to protect the client’s image by providing the context and clarity needed to give the general public a common sense understanding of the client’s legal position, and to articulate the position in a way that supports the client in the public eye without compromising legal arguments. In this particular instance, Starkman’s advice to Grasso was that actively engaging the media was not the best communications strategy. As Grasso explained in his PRWeek interview: “I had the good judgment of Eric Starkman saying there’s no way in the current environment that you’re going to effectively counterpunch. There [was] no need to try and parry in the press.” Instead, Starkman devised a ‘non-engagement’ communications strategy that had three components. The first component involved monitoring the media. As Grasso related in his interview: “Eric and I spoke multiple times each day for the better part of a year and a half. His team at Starkman & Associates covered the landscape of media through their use of electronic monitoring. I knew every morning exactly what was being said about me, where it was being said, and he didn’t just give me an abridged version of stories appearing in the US and around the world. He gave me a strategic understanding of why, for the most part, we weren’t going to respond. And if we were going to respond, how we would. He was more than just an aggregator of news services.”

The second component involved providing background to reporters, but not granting any on-the-record interviews, something Grasso admitted he found frustrating: “Given the environment that my lawsuit was wrapped in – we were in the middle of the period of Adelphia, Enron, Tyco – I got swept up in that current. It’s very easy for me, as a principal, to believe if you can sit down with a reporter, you’re going to change someone’s perspective. Eric was [the] best objective source to remind me that you couldn’t do that. It was a very difficult period.” Starkman, who also participated in the PRWeek interview, added: “A lot of what I did was behind the scenes with reporters. As a courtesy, every major news outlet made their cases about why they should get an interview with Dick Grasso. I heard them out, set them straight about where they were going wrong, but [at] the end of the day, it didn’t make any sense to grant on-the-record interviews.”

After Attorney General Spitzer filed the lawsuit, the third component of the strategy was to issue a response in a way that allowed Grasso and his team to control the message. The message Grasso wanted to communicate was aimed not so much at the general public as it was at the Attorney General. Spitzer was perceived as an adversary who used the weight and resources of the attorney general’s office, along with a compliant press, to bully his targets into settling. The message Grasso wanted to deliver was that he was prepared to fight the lawsuit and that settlement was not an option: “The message was a very simple one: I was firmly of the belief that my vindication would come in the courtroom when all the facts were laid out objectively for an unbiased audience to evaluate … [m]y belief from the start … was if I were to settle, it would be an admission that I did something wrong. I hadn’t and therefore settlement was not an option.”

The editors of the Wall Street Journal were willing to provide Grasso with a vehicle for him to deliver his message, an Op-Ed to run the day after the lawsuit was filed. Starkman explained that after the lawsuit was filed, “Every major business outlet wanted to speak to Dick, and we decided as a team that there was no point in making him available. The bias and support of Mr. Spitzer were so overwhelming. Our logic with the Op-Ed was we wanted Dick’s message to be delivered in his own words and in his own way. We negotiated with the Journal that we would do the Op-Ed but there were certain conditions: that they wouldn’t share it with their own newsroom. They agreed. The next day’s stories were all based on the Op-Ed, but people who really cared would just go to the Op-Ed.”

The Op-Ed, "My Vindication Will Come in a Courtroom", which you can read here, was written by Grasso, Starkman, and the lawyers at Williams & Connolly. In it, Grasso tied the lawsuit to Attorney General Spitzer’s gubernatorial ambitions and defended his compensation and the methods used to decide how much he was to be paid. Grasso believed the Op-Ed was very effective: “It was extremely effective in communicating without any ambiguity that this was not going to be a lawsuit I was prepared to settle. The Journal, to its credit, allowed my piece to run as the collaborators wrote it.” Starkman added that the Op-Ed worked because of their decision not to grant interviews: “Had Dick given media interviews, the Op-Ed wouldn’t have had the same value or impact. That was the first public comment that he made since Mr. Spitzer brought the charges. If he had given interviews and all his positions were known, the impact would have been severely diminished and The Journal may not have even wanted it.”

Even though the litigation continued until July, 2008, Grasso and Starkman’s working relationship ended in 2005. Explained Grasso: “Beginning in June 2005, we were getting to the phase of the litigation where the lawyers felt it essential to go on radio silence. . . . As much as I value the media, you’re not going to be tried in the court of public opinion. You’re going to be tried in the courtroom. That’s when you have to listen to the lawyers who say it’s time to go radio silent.” Even though Starkman's representation of Grasso ended before the lawsuit, Grasso found Starkman’s services as important as Williams & Connolly’s: “From the client standpoint, in the issues that were embedded in my litigation, the beauty of a top-flight professional communications strategist is that he’s a partner to the process. He doesn’t practice law and the lawyers don’t practice communications. They compliment and work with each other. And collectively, the two disciplines are responsible for managing the client’s best interests.”

Next: The McCarthy/Langone Strategy

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