Trust plays a critical role in the sustained success of firms, yet it often eludes the quantifiable metrics commonly tracked by corporate departments. Legal departments, being the crossroads where numerous issues are adjudicated, have unique opportunities to either cultivate or undermine that trust. Columnist Rob Chesnut, drawing on his extensive background in legal and ethical consulting, underscores this dynamic in his observations shared recently.
As highlighted in Chesnut’s recent column, the legal department’s engagement with different stakeholders can be a touchstone for trust-building or erosion. For instance, Disney’s legal team’s handling of a wrongful death lawsuit threw such considerations into sharp relief. The plaintiff alleged that his wife’s death resulted from an allergic reaction to a meal at a Disney resort restaurant. Initially, Disney steadfastly sought arbitration based on an agreement signed years earlier, which led to a public outcry. Eventually, Disney retracted its position, opting to prioritize ‘humanity above all other considerations,’ but not before some damage to customer trust had been done Washington Post.
In dissecting relationships with business partners, Chesnut emphasizes that negotiating clauses fairly can foster a more solid foundation of trust. For example, suggesting a “he who sues, travels” clause can project fairness and mutual respect compared to imposing jurisdiction to favor the more powerful company.
Similar considerations apply to internal relationships with employees. While arbitration clauses and class action waivers could theoretically protect a company’s interests, they can also alienate the workforce. Following the passing of a 2021 law that permits victims of sexual harassment and assault to pursue claims in court, some corporations are increasingly recognizing the benefits of allowing employees a choice between arbitration and court proceedings. This move projects confidence in fair internal conflict resolution and significantly boosts employee morale.
The significance of such balanced legal strategies gains additional credence in light of the 2018 Epic Systems v. Lewis decision, which upheld arbitration clauses for individualized proceedings. However, in practice, these clauses might still erode trust and can adversely affect company culture.
Legal departments must constantly evaluate whether their actions serve to foster trust in the long run. Chesnut’s insights offer a roadmap for navigating these complex dynamics, reminding us that ethical and fair-minded approaches can fortify relationships far beyond legal confines.