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Wednesday, Jun 23, 2010 5:50 PM UTC

BP public relations strategy no surprise — to lawyers

Saving face is weighed against admitting liability, frustrating all those involved

By , and

Topics: Gulf Oil Spill,

To a nation frustrated by the Gulf oil spill, BP’s attempts at damage control have sometimes been infuriatingly vague. But from a legal standpoint, that’s exactly the point.

With the company facing more than 200 civil lawsuits and the specter of a Justice Department investigation, saying the wrong thing could expose BP to millions of dollars in damages or even criminal charges for its executives.

Inside the company, experts believe, there is a natural tension between public relations people who want BP to project a positive image and lawyers who don’t want to be boxed into a corner.

It’s a balancing act with billions of dollars — perhaps even BP’s survival — at stake.

“BP must weigh the cost of admitting things that could be used against it later against the cost now of bad publicity,” said Michael Siegel, a University of Florida law professor and former federal prosecutor.

In an effort to clean up its image, the company Wednesday put Bob Dudley, its Mississippi-bred managing director, in charge of the spill response. He replaces CEO Tony Hayward, whose gaffes, notably that he’d “like my life back,” have angered Americans.

Beyond the remarks that have made headlines, BP has tread carefully with its words. To pick one high-profile example, Siegel and other experts noted that BP has spoken of paying “legitimate” claims for economic damages — without defining the term.

Exactly what “legitimate” means is a question purposely left open, said Houston attorney W. Mark Lanier, who represents people and businesses in lawsuits against BP and the other companies involved with the Gulf disaster.

“BP always has an out for any claim they want to refuse,” he said.

At the same time, BP needs flexibility to determine what is “legitimate” so that the oil giant is not saddled with bogus claims, said Matt Cairns, president-elect of DRI-Voice of the Defense Bar, an organization of attorneys who defend corporations.

Failure to disclose all the facts can be harmful, too. Two years ago, on the advice of lawyers, Merrill Lynch CEO John Thain resisted disclosing details of huge bonuses paid to executives just as the brokerage house was about to report billions in losses.

Earlier this year, a federal judge approved a $150 million settlement between the bank and the Securities and Exchange Commission, which accused Merrill, now part of Bank of America, of misleading shareholders about the bonuses.

BP agreed last week to set aside $20 billion for spill-related claims and have the process overseen by attorney Kenneth Feinberg, chosen by President Barack Obama for the job.

Otherwise, though, people watching BP’s public-relations strategy could be forgiven for scratching their heads.

Hayward, who spent last weekend at a glitzy yacht race, declined or failed to answer 65 questions before Congress last week.

BP’s Swedish-born chairman, Carl-Henric Svanberg, said BP sympathized with the “small people” of the Gulf region. (He later apologized for clumsy wording.) And with government fines calculated by the barrel, BP has been accused of lowballing the size of the spill.

Dudley, who will still report to Hayward, may stand a better chance of connecting with angry Gulf Coast residents than the British CEO. On his first day, he would not say whether BP would resume deepwater drilling in the Gulf.

Asked about it on NBC’s “Today” show, Dudley said the company would “step back” from the issue while investigating the rig explosion.

BP has brought in outside PR firms, including the Brunswick Group and Ogilvy Public Relations Worldwide, to help shape its message and hired the WilmerHale law firm to handle congressional and Justice Department investigations. WilmerHale’s team is led by Jamie Gorelick, a former deputy attorney general in the Clinton administration.

None would comment on its strategy for BP.

The lawsuits, filed virtually every day across the Gulf Coast, include potential class-action cases brought by people and industries hurt by the spill — fishing, seafood, resorts, property owners, even tourist attractions like the Ripley’s Believe It or Not museum in Key West, Fla.

The avalanche of civil actions could easily add up to billions in damages on top of the $20 billion BP is promising to pay in claims. One of BP’s top attorneys on the civil cases, Andrew Langan, also would not comment. Nor would a BP spokesman.

Bruce Blythe, CEO of Crisis Management International, an Atlanta company that represented BP until the late 1990s, said lawyers and the crisis-management team have to understand they are working toward the same goal: protecting the company’s assets, brand and reputation. It’s just that their approaches often contradict each other.

“This is an age-old problem between the attorneys who say ‘Don’t say anything’ … and the communicators, the public-relations people who want you to get your message out,” he said.

And yet, in a catastrophe like the Gulf oil spill, complete silence isn’t really an option. That can lead to mistakes, and BP is no exception.

Bruce Hicks, general manager of The Alliant Group in Houston and a veteran of crisis PR work for American Airlines and other big companies, says BP has recovered reasonably well after some missteps. He said the company deserves credit for repeating that it bears responsibility for the spill and will pay to make things right.

Besides Hayward’s gaffes, BP was reluctant early in the crisis to make streaming video of the leak available publicly. Hicks said that looked like the company was hiding something.

To some American ears, even Hayward’s British accent can be off-putting. It was spoofed recently in the “Doonesbury” comic strip, when a PR manager asked if the CEO could lose the fancy accent or at least sound more working-class, like ex-Beatle Ringo Starr.

Hicks said Hayward deserves credit for taking his lumps in Congress without fighting back or appearing hostile, and he said the public understands that the lawmakers quizzing Hayward “had a political agenda to fulfill, and Hayward was just fodder.”

Siegel, the former federal prosecutor, gave Hayward credit for not having an attorney by his side at the hearing and for declaring early on that BP will not try to hide behind attorney-client privilege in sharing its internal oil spill probe with federal investigators.

“A bold move given they don’t know what it will turn up,” Siegel said.

Exxon also failed at messaging in 1989, during the Exxon Valdez crisis, Blythe said. It took the CEO at the time, Larry Rawls, three weeks to get on TV. There was a sense that Exxon didn’t care and didn’t want to take responsibility, he said.

“To this day, there are people who will not go to an Exxon station,” Blythe said. “BP’s looking at the same kind of thing.”

——

Anderson reported from Miami. Plushnick-Masti reported from Houston. Koenig reported from Dallas.

More Curt Anderson.

More Ramit Plushnick-masti.

More David Koenig.

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