Every business needs to have plans in place to handle allegations of sexual harassment among their staff. Early judgement calls made at the onset of an incident will have the biggest impact on their staff and corporate reputation, explain Kathleen Harris and Sean Curran of Arnold & Porter LLP.

The #metoo initiative means victims of workplace sexual harassment are rightly more confident in coming forward. As a result, every business needs to be prepared to handle such an allegation sensitively and appropriately. It’s the judgement calls made at the onset that will have the biggest impact on corporate reputation. How a company is perceived to have handled an allegation will be as important to its reputation as whether or not any subsequent litigation is won. And mistakes made at the beginning are incredibly hard to rectify.

For example, when the allegations against Weinstein Company co-chairman Harvey Weinstein began to emerge, company management clearly wasn’t looking at the problem from a legal and historical perspective. The result was a knee-jerk reaction in which the company tried to avoid an allegation made by one person without anticipating there would be another 50 behind that one. The initial response to the allegations came from Weinstein himself, rather than the company, and was extremely muddled in nature. The decision to use in-house company lawyers to represent Weinstein also created a serious conflict of interest which later became an issue, with lawyers having to resign.

The Weinstein case exemplifies how a business that ignores reputational issues does so at its peril. Last month [March 2018] the Weinstein Company filed for bankruptcy, having entered a stalking horse agreement under which the substantial majority of its assets would be sold.

Closer to home, it appears that the London office of global law firm Baker & McKenzie may have made errors in the early stages of responding to allegations that a senior partner sexually assaulted an associate at a work event. Upon reporting the incident, the associate received a substantial payoff and was made to enter into a confidentiality agreement, following which she left the firm. At some point after these events, the partner received a promotion. When a website unearthed this story the firm denied it, falsely stating that a line item which the journalist had spotted in its annual accounts and suspected was related to the pay-off was due to departmental restructuring costs.

The claims, of course, did not go away, and resurfaced a year later, buoyed by the #metoo movement and by the widespread, blatant sexual harassment at a charity dinner organised by the men-only Presidents Club in the City of London. Baker & McKenzie had to apologise for failing to notify the Solicitors Regulatory Authority of a breach of conduct, and in February had to appoint another international firm to conduct an independent review into its handling of the allegation

Whatever the outcome of this review, it seems that mistakes may have been made in the way in which this allegation was investigated by Baker & McKenzie. Even if the partner in question had been falsely accused, it was an extremely detrimental move from a reputation management perspective to immediately promote an individual who’d faced such an allegation, and one which also sent a bad message internally to staff. The tone from the top should be the starting point for any company’s approach to sexual harassment allegation, to ensure a zero-tolerance approach to these issues in the workplace is understood by all.

From a cold, hard business perspective, once an allegation is potentially mismanaged in this way, particularly when company or firm is not open and transparent about what’s happening, this will inevitably lead to extra costs. Paying an external law firm to conduct an internal review ended up costing Baker & McKenzie a great deal more than investigating properly at the outset would have done. For a company, sexual harassment allegations are like shareholder issues: Handling them badly will affect your profit margin.

It is all very well to say that companies must handle allegations properly in the early stages. However, we are not convinced that many companies currently have procedures for dealing with them in place at all. Typically, a company will have procedures for dealing with HR issues, and a grievance process, but not a stand-alone procedure for handling allegations of workplace sexual harassment. Even if a company has such a procedure, it will need to be regularly updated and reviewed in light of the changing social and political climate, for example #metoo-related events.

Once a company is aware that an allegation has been made, the email accounts, diaries and computer and telephone hardware used by the complainant and those under investigation should be preserved. Preserving communications with personal assistants and colleagues is also a good idea. Any law enforcement body that may investigate the allegations will expect to have access to this material. Likewise, all accounts obtained from the complainant and anyone else questioned must be preserved.  First-hand accounts are particularly valuable. While all this is going on, it’s imperative that the company keep staff informed of what is happening. These are just some pointers for good starting points; it really is crucial to start as you mean to go on in terms of corporate culture.

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