When news breaks about big legal settlement, a lot of people look first for the dollar amount. I look for the apology.
It probably comes from my days as a federal prosecutor, listening to defendants speak at sentencing. They often entered “not guilty” pleas in ther first court appearances and maintained their innocence throughout the proceedings, even on the witness stand.
I was always curious to hear what they’d say after being convicted.
Would they “accept responsibility” for their actions in exchange for what they hoped would be leniency? Would they express remorse? What if the judge asked: “exactly what are you sorry for, what would you do differently?” Would their words ring true? Or were they simply sorry that they got caught?
Similar questions also often come up when major companies are accused of violating the law. How much money a company will pay to make a case go away can say a lot about the claims against it. Whether or not the deal also comes with a mea culpa can speak volumes about the organization.
I looked for the apology from Fox News when news broke of the blockbuster $788 million with Dominion Voting Systems Inc. on the eve of trial in the defamation suit against the network.
I scanned for something along the lines of: “We deeply apologize for failures as a news organization in broadcasting claims of election fraud that we knew to be untrue. We failed Dominion and we failed the country at a critical moment, and we will learn and grow from those failures.”
Or maybe even: “We regret if anyone was offended or hurt by our actions.”
Instead, there was nothing.
The radio silence isn’t surprising. But there are some good reasons why companies—and their lawyers—may want to consider a different tack.
Sign up for our In-House Counsel newsletter, showcasing the news general counsel needs from Bloomberg Law.
We live in an age where it’s not fashionable to back down, or give an inch. Better to deny, deny, deny. Even if you’re convicted of a crime or a jury sides against you in a civil case. Or if you pay an unprecedented sum to settle the matter.
Standard settlement language is well-worn within companies and their legal departments: “Neither the execution nor delivery of this Agreement, nor compliance with its terms, shall constitute an admission of any fault or liability on the part of any of the Parties. None of the Parties admit liability of any sort and, in fact, all Parties expressly deny any liability. Vigorously.” Also, “here’s the $787.5 million check.”
Still, the art of the apology isn’t entirely dead. Instead of lawyering up and hunkering down, there might be another path that ultimately protects your interests and does justice at the same time. It starts with three words: “We screwed up.”
The Justice Department earlier this year sent a strong message that it wants companies to promptly self-report legal violations and fully cooperate with government investigations.
Prosecutors now have discretion to decline a criminal prosecution, even where there are aggravating circumstances, if (a) the voluntary self-disclosure was made immediately upon the company becoming aware of the allegation of misconduct ; (b) the company had an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the company’s voluntary self-disclosure; (c) the company provided “extraordinary” cooperation with the DOJ’s investigation; and (d) the company undertook “extraordinary” remediation.
In other words, “we’re sorry” is starting to look more and more appealing. And not just in criminal matters.
I was Airbnb’s general counsel in 2017 when the California Department of Fair Employment and Housing filed a civil class action against the company. The DFEH alleged that Airbnb hosts were discriminating against guests based on race.
The agency was surprised when, shortly after the complaint was filed, Airbnb officials flew to their office and admitted that there was a problem that the company wanted to solve.
We didn’t argue over whether the company could actually be held liable for discrimination by hosts using the platform. Instead of getting drawn into an expensive (and brand damaging) legal fight,
we firmly embraced the challenge of combating the alleged discrimination. We quickly resolved the matter with a settlement that enabled the company to work with the DFEH and civil rights groups to make meaningful progress on an important issue.
Sometimes, it just takes a little courage to own a mistake and trust that doing what you learned to do in kindergarten might actually be the best thing for your company.
Rob Chesnut is the former general counsel and chief ethics officer at Airbnb. He spent more than a decade as a Justice Department prosecutor and later oversaw US legal operations at eBay. The author of “Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution,” Rob consults on legal and ethical issues.
To contact the editor responsible for this story: