the inside view
BY WELDON LATHAM
DISCRIMINATION LAWSUITS:
TO SETTLE OR NOT TO SETTLE?
High-profile discrimination lawsuits can
irrevocably damage brand
reputation whether you’re
found liable or not, especially if
the allegations involve your most
senior leaders. The average two-day
loss in market value of a company’s stock after a discrimination
lawsuit is more than 40 times the
average cost of a settlement and
legal fees—$169 million versus $4
million, according to Washington
University.
Given the costly shareholder
reaction to such negative press, the
decision to appeal or settle can be a
difficult one—and many employers
make the wrong choice.
In a Q&A with DiversityInc,
renowned discrimination-law
attorney Weldon Latham tells
you the best way to handle a
discrimination lawsuit and how
to salvage your brand reputation.
thing and they violated company
procedures, then you need to
decide how you’re going to proceed
with that case.
On the other hand, if you find
LATHAM: The smartest early re- that individual managers within
sponse, because it’s probably true, your organization accused of violat-is that you have not yet had an ing company policies were engaged
opportunity to thoroughly review in conduct that you “just didn’t
the allegations, but based on the al- happen to come across” or “couldn’t
legations you’ve heard, the conduct prevent,” then you should seek to
being described is totally at odds correct the conduct immediately
with the principles, the culture and and settle the lawsuit under terms
the mandates of your company. most favorable to the company.
Then you should retain counsel, The decisions must be made
probably a different counsel than on an objective basis with expert
you usually use, not the counsel that advice that assesses the likelihood
defends each of these cases every of success and tries to give man-time they come up and down the agement some sense of relative
pike. Get outside counsel who are responsibility for the problem.
“IF THERE’S any possibility THAT
YOU WERE EVEN PARTIALLY at fault,
YOU’RE BETTER SERVED BY IMPROVING
MANAGEMENT PRACTICES TO PREVENT A
RECURRENCE, settling the case,
AND MOVING ON.”
DIVERSITYINC: HOW SHOULD
EMPLOYERS REACT WHEN
HIT WITH HIGH-PROFILE
DISCRIMINATION LITIGATION?
experts in the area who can thoroughly investigate your own conduct
and then give you an honest assessment as to whether the company
has any serious liability or not.
Should you be lucky enough to
be in the situation where individuals within your organization either
acted properly and it’s truly a frivolous case or your top leadership
directed the people to do the right
DIVERSITYINC: EVER HAD A CASE
WHERE MANAGEMENT DIDN’T
LISTEN TO YOUR ADVICE?
LATHAM: We had an interesting
case where I was called in to advise
a national brand company that
was owned by a single individual.
By any objective criteria, this was a
poorly human-resource-managed
company and an even worse
