Legal Briefing

Defusing reputation risks for celebrity CEOs

The In-House Lawyer Logo

TMT | 01 December 2010

Some say that the age of celebrity is dead. That the birth of the reality star has killed off what it is to be a celebrity in the true sense. Not so. Celebrity will always be around, but just like technology and fashion, the concept of what a celebrity is will develop, adjust and adapt to the times.

CEOs are the new Celebrities

Today’s world is very different from that of just 18 months ago. The country is coming out of the depths of a recession. Commerce, finance and the economy are as much written about in the press as the indiscretions of premiership footballers.

The press are keen to scrutinise the goings on of anything and everything deemed to touch on the country’s economy, and will look hard for a fall guy.

Their new target is the CEO. Not just those who strictly hold this title, but anyone with power, prominence or reputation in the business world. These people are the decision makers, heads of operations, hedge fund managers and company directors.

CEOs, their companies and their employees must accept that they are firmly in the line of fire, and must take steps to protect both their personal and corporate reputations. As Warren Buffett memorably remarked, it takes 20 years to build a reputation and five minutes to ruin it.

Buffett wasn’t wrong, only today it might take just five seconds. The birth of social media represents the single most important threat to a CEO that may result in the disclosure of sensitive, private and personal information through the media and to the world. The likely consequences that will flow from such a disclosure are significant.

Why is there a threat from social media?

The threat posed by social media can be summarised under three heads; the mentality of the press; the speed of dissemination; and a lack of education.

Mentality of the press

The press must react to the demands of their readers. In an age where the reader can take the bare bones of any news story and flesh it out themselves, with copious amounts of information available at the click of a mouse button, the pressure is on them to follow suit. The media is, after all, a business. To stay ahead of the competition they must provide added value.

Worryingly, the ‘added value’ increasingly takes the form of personal and private information. This is an information society that cultivates intrigue and curiosity. The more salacious and intrusive the information, the better for the reader – this is exactly what they want. It is all about personalisation; putting a name and a face to the story.

The problem for a CEO is that, in the cold world of business which often lacks personality, it is their name and their face that represents the company. The CEO will be seen by the journalist as fair game. It does not matter that they are a private individual who does not court publicity. That is the problem. Just because there may not be that much information about them in the public domain, doesn’t mean such information is unavailable.

Social media is the first place a journalist will look for information of a private and personal nature, and their search will not be limited to the CEO. They will look to their spouse, friends, family and even children. So the wife or children tweeting or discussing wall-to-wall the level of the CEO’s remuneration or bonus, or posting pictures of the CEO’s new home or latest holiday, or where the CEO’s children go to school, increases the level of the potential threat.

Speed of dissemination

The speed at which information disclosed through social media platforms can spread is frightening. This can be attributed to three key factors:

  1. The speed at which social media enables newsworthy events and/or information to be brought to the attention of, and shared with, third parties;
  2. the speed at which the press and news services are able to report those events; and
  3. the speed at which information is disseminated across the internet.

The internet has played a key role in globalisation and has changed the way in which we communicate. Information, facts, figures, views and opinions can be imparted, shared or disclosed to the world at large instantaneously. Social media has become an important source of information for the press. A journalist will monitor feeds through sites such as Twitter to see what news is breaking, and will then use sites such as Facebook and Myspace to add colour and detail.

News used to be picked up and reported gradually. Today, the pick up could be described as almost instantaneous or exponential. The way in which news is picked up and reported means controlling, or even preventing, dissemination will prove an extremely difficult task.

Lack of education

Social media is still a relatively new concept, embryonic in fact. Myspace was founded in 2003, Facebook in 2004 and Twitter in 2006.

As with the rolling out of any new product or service, there are bound to be things that work and things that do not. Initial usage will be experimental. The users of social media are no different. They do not really know at this early stage how their use of social media will affect them in the long term. Some commentators are already sounding alarms. The CEO of Google, Eric Schmidt, recently stated that the lives of young people are now so well documented, primarily though the use of social media, that many will have to change their names on reaching adulthood to escape their ‘cyber past’.

In many cases, problems may arise simply from naivety. Disclosing details of your forthcoming holiday alongside your address and pictures of your home is a burglar’s dream. Making available too much personal information can lead to identity theft, as Carolyn Owlett, formerly of the girl band The 411, recently discovered to her horror.

The most high-profile example of disregard for the functionality and power of social media is that of Lady Sawers, wife of the head of MI6, Sir John Sawers. Lady Sawers unwittingly revealed on Facebook the location of the flat used by the couple in London, and the whereabouts of their children and other family members. She also posted numerous photographs of the family and unwittingly exposed Sir John’s cover name. This constituted a major breach of personal security for Sir John and his family, but you don’t have to be the head of the country’s intelligence service for social media to pose a threat to privacy or personal security.

Prevent a Crisis

Several steps can be taken so as to avert a potential crisis.

Know your legal rights

There is no statutory law of privacy in the UK. That said, using the tort of breach of confidence as a vehicle, a privacy law has evolved at common law informed by the jurisprudence of the European Court of Human Rights (ECHR) to which English courts are required to have regard pursuant to Human Rights Act 1998.

Historically, such a cause of action concerned the unauthorised disclosure of confidential information that had been communicated in circumstances importing a duty of confidence. Today, the type of privacy law that has developed is simply referred to as ‘misuse of private information’ and concerns the unauthorised disclosure of ‘private’ information.

It is trite law that the misuse of private information will constitute an infringement of an individual’s right to privacy pursuant to Article 8 of ECHR, where the person or entity disclosing the information:

‘Knows or ought to know that there is a reasonable expectation that the information in question will be kept confidential.’ Campbell v MGN Ltd [2004].

The basic position is that, save for anodyne information, a user of social media will have a reasonable expectation that the information they upload to their social media profile or account will be kept confidential and will not be disclosed to the world at large by the press.

A user’s account is also set behind a wall of security. Users are no longer leaving their information unprotected and open to the world. The increased implementation and use of privacy settings on social media platforms ensure that information contained behind that wall is, by its very nature, private. The unauthorised disclosure by a journalist of information gleaned from such an account will normally be protectable at law, and might entitle the individual affected by the disclosure to seek injunctive relief and give rise to a cause of action.

Experience shows the following types of information are commonly misappropriated from social media profiles and accounts by journalists without user authorisation:

  • photographs depicting the appearance or image of the individual;
  • photographs of the home;
  • address details;
  • comments made by the individual on their account; and
  • photographs depicting the individual’s private and family life.

There are, of course, limits to the protection afforded by the law. Where there is genuine public interest in the disclosure of personal and private information, for example, that public interest might outweigh an individual’s right to privacy.

Yet the use of social media does not constitute an automatic waiver of a user’s privacy. In addition to a user having a reasonable expectation of privacy and their account being behind a security wall, the existence of privacy controls ensures that, at the most basic level, there cannot really be an arguable case supporting that contention.

The operation of privacy settings for most social media platforms reflects, almost exactly, the position of the law when it comes to the disclosure of information; they allow a user to take a selective approach. The law affords the same privilege and is supported by legal precedent.

In X & Y v persons unknown [2006], the court rebutted the suggestion that because information had previously been published about the claimant’s private life, this constituted an automatic waiver of their privacy, so as to allow the further publication of intimate relationship details or information about their private life in general. This supports the proposition that an individual can choose to disclose some private information about themselves without constituting complete waiver of privacy.

Further, in Green Corns Ltd v CLA Verley Group Ltd & anor [2005], the court held that, in a case concerning private information, it was not possible to simply ask whether the information was generally accessible and, as such, had lost its quality of confidence. The court in WB v H Bauer Publishing Ltd [2002] also held that, in the context of personal information, confidentiality may not be lost for all purposes by virtue of that information having come to the attention of certain readers or categories of readers. Accordingly, just because private information has come to the attention of some members of the public (friends or followers through social media), it does not automatically entitle the press to display it to the world at large.

Implement a social media policy

A Manpower survey in January 2010 indicated that only 20% of companies worldwide have a social media policy. Employees must be placed on notice of how they are required to act with regard to the use, at all times, of social media concerning the company. Employees will almost certainly appreciate the guidance and it will make disciplinary action, should it become necessary, more straightforward.

Alternatively, the installation of a social media representative, whose responsibility it is to publish and/or authorise social media content on behalf of, or concerning, the company, will go some way to channeling social media through one source, making it easier to control.

Act quickly

In 2008 Max Mosley attempted to restrain publication of an edited recording of activities of a sexual nature in which he was a participant (Mosley v News Group Newspapers Ltd [2008]). The court refused to grant an order in the terms sought by Mosley, relying on the fact that restraining publication would not serve any purpose because the edited recording was too widely available. It had been viewed 1.5 million times in a single day. The court said that ‘the dam had burst’. In any other circumstances relief would have been available to the claimant. The material complained of was held to be intrusive and there was no public interest in its publication.

Mosley raises the possibility of implementing a crisis management policy. Such a policy might establish a crisis management team that may include retained PR advisors and retained solicitors, and set out what will be considered to be a crisis; what will trigger the crisis management mechanism; how will a crisis be dealt with; and what methods of response will be employed.

Educate

Education is vital from the top down. From CEOs, directors and managers down to the general work force, most people use social media without a thought as to the potential consequences. Why should they? Educate your staff, including your CEO, with regard to the world of social media. What it is, how does it work and what are the potential pit falls.

Most importantly of all, education as to privacy settings is absolutely essential. Simple, easy to follow, written guidance might be the best way to reach out to your CEO and employees.

Social media is fun and it should be an enjoyable tool. However, it does pose a threat. Taking time to properly consider what, if anything, can be done to reduce that threat may avert a crisis.

By Steven Hudson, solicitor,

Schillings.

E-mail: steven.hudson@schillings.co.uk.