Wednesday, June 23, 2010

Litigation Communications in People v. Grasso - The McCarthy/Langone Communications Strategy

(This is the last 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 five previous posts can be found here, here, here, here, and here.)

The McCarthy/Langone Strategy– Litigation Communications Is Public Relations

In May 2004 Grasso’s co-defendant, Kenneth Langone, pictured above, retained Jim McCarthy of CounterPoint Strategies as his communications adviser. While Starkman counseled Grasso to use a ‘non-engagement’ litigation communications strategy, McCarthy counseled a starkly contrasting ‘full-engagement’ strategy for his client. The strategy’s three components had a distinct PR flavor; improving Langone’s public image, tarnishing Attorney General Spitzer’s public image, and confronting reporters that McCarthy and Langone felt were biased, inaccurate, and in collusion with the Attorney General. In an interview with PR Week two weeks after the lawsuit was filed, McCarthy explained the strategy: “We will be very aggressive in defending Ken’s long track record of integrity. . . . We are also going to be pointing out some of the ulterior motives going on here, such as Mr. Spitzer’s political ambitions, the arbitrary way he’s put this case together, his egregious grandstanding on this. He’s flat wrong in this case. . . . [Spitzer has] relied on these bullying tactics for so long, but my practice is built on standing up to these bullies.”

McCarthy’s strategy was evident from the beginning of the litigation. On the day the lawsuit was filed, Langone issued a written statement insisting that the NYSE board’s compensation decisions were “diligent and sound” and accused Spitzer of grandstanding from “a very shaky soapbox.” Friends of Langone, such as Ross Perot (“There is no way you’d ever get Ken Langone to do anything that was purposely wrong”) and Rudolph Giuliani (“He’s a very, very honest man”) were made available to the press to vouch for Langone’s integrity.

Like Grasso, Langone also succeeded in getting an Op-Ed in the Wall Street Journal. Langone’s Op-Ed, “Let’s Bring on the Jury, Mr. Spitzer,” was a defense of Langone and a very personal attack on Spitzer: “Reasonable observers are far more likely to see through the political cynicism of Mr. Spitzer and his cheerleaders. This is a man, after all, who sent out photos of himself wielding a flaming baseball bat, asking people to pony up $100,000 apiece for his political bank account. . . . There appears to be an idea that a court fight – that is to say, a public fight – would be unseemly. But the vulgarity lies with an attorney general who believes he can bend honest men to disgrace their own hard work.”

Shortly after the Op-Ed ran, McCarthy said that Langone would be doing more outreach “fairly soon,” which would include media interviews. However, Langone did more than give interviews; he gave speeches, such as one before the Cato Institute where he asserted “I believe business leaders have a responsibility to take [Spitzer] on, not for personal reason, but for civic responsibility,” and openly raised money for Spitzer’s political opponents. Unlike Grasso, there does not appear to be any point during the litigation where Langone went “radio silent.” Not surprisingly, it did get personal between Langone and Spitzer. For example, Langone accused Spitzer of sending a message to him through an intermediary, Jack Welch, the former head of GE, that Spitzer “would drive a stake through his heart.” Spitzer denied using those exact words, and said in an interview that what he said to Welch was: ''Ken's kind of like a vampire -- you kind of have to put a stake through his heart to stop him.''


Although their litigation communications strategies were very different, the advisors for Grasso and Langone both achieved the goal of protecting their clients’ public images. After the litigation ended, the Wall Street Journal published an editorial entitled “Langone’s Heart” - a sly reference to the organ Spitzer wanted to put a stake through. The Journal opined: “This week’s dismissal of the case against Dick Grasso is sweet vindication for the former New York Stock Exchange CEO. But beyond the debate over his $190 million pay package, there are lessons here about prosecutorial discretion, pack journalism and business courage under political pressure. These columns defended Mr. Grasso from the beginning, not because we cared a whit about his pay but because it looked like one more case of overreach by Lord High Executioner Eliot Spitzer. . . . Mr. Grasso is fortunate he had the resources to fight back. He’s also fortunate he had an ally in Kenneth Langone… . Mr. Spitzer no doubt figured the pair would settle under his publicity barrage, but Mr. Langone had the guts to defend himself and the principles at stake.”

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