BP's Crisis Management 'Terrible,' Expert Says

BP has lost all credibility and is out of its league in handling the oil spill, APCO Worldwide's Kent Jarrell says.
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GULF COAST, U.S. (TheStreet) -- BP (BP) - Get Report botched its attempt to cut and cap its pipe spewing oil into the Gulf of Mexico, but it's having no problems curtailing conversation about its crisis management.

A spokesman for Burson-Marsteller -- the New York public-relations agency that handled damage control for


(XOM) - Get Report

after the Valdez oil tanker spilled 10.8 million gallons of oil into Alaska's Prince William Sound in 1989 -- refused to comment on the

BP disaster

, citing its ties to another oil company. Considering that Burson-Marsteller also represented Blackwater USA when its employees killed 17 Iraqi civilians in 2007, spun for Babcock & Wilcox when the manufacturer's plant at Three Mile Island suffered a partial meltdown in 1979 and backed Union Carbide when its Bhopal, India, plant leaked toxins and killed more than 3,700 people in 1984, silence in BP's case speaks volumes.

Meanwhile, a spokeswoman for Washington-based crisis-management firm Public Strategies Inc., which represented voting-machine manufacturer


(DBD) - Get Report

during the 2004 elections, also refused to comment, citing BP's recent contact with the firm. Even Chicago-based sponsorship-consulting group IEG couldn't comment about BP's upcoming role as a World Cup booster, as BP is one of the organization's clients.

Kent Jarrell, senior vice president and director of litigation communications for Washington consulting firm APCO Worldwide, was more than willing to share his views on the BP spill. The crisis-management veteran consulted with


(F) - Get Report

during the Firestone tire failure controversy in 2000 and 2001, helped with the liquidation of Lehman Brothers, represented


during its post-bankruptcy restructuring and is still managing


(MRK) - Get Report

response to Vioxx-related litigation. Jarrell spoke to TheStreet about the BP spill, what the company should do next and how it can still save both its reputation and its brand:

If BP came to APCO with this scenario, what would be your course of action?


There really are two phases of this crisis, the magnitude of which is so incredible. The first is getting your communications in order in the midst of an unfolding crisis where you don't know what's going to happen next. I've heard from reporters that some of them are very dissatisfied with how BP is communicating with them -- some said it was like amateur hour. What they need to do is have a crisis-communication operation set up now, which is easier said than done. Their media demands are incredible and everybody wants to get out there -- Brian Williams and NBC were down there live.

The media has determined this is


story, so you're getting hundreds of demands from reporters instantly and you have to set up an infrastructure around that. The infrastructure has to be accurate up to the minute, because any time BP slips a bit, they're going to get criticized. During a BP news conference late last week, they said the operation was still continuing even when it was stopped the night before. You'll get crucified for that because the media is a filter and the media makes judgements. If your information isn't holding up and isn't prompt and accurate, they don't trust you and that will very quickly move into the copy and turn that filter against you.

Secondarily, they ought to have a second communications group that is not working on the day-to-day crisis. What's happening now is that all the day-to-day people, every morning, wake up and put a fire hose in their mouth, and that fire hose whips them all over the place -- which is the nature of the instant response. They also need a communications strategist to sit down and look at the next phase.

What is the next phase?


At some point, there will be a decrease in the crisis and some sort of engineering fix for the leak. They then have to have some long-term communications strategy to save the company's reputation. Right now, they're just trying to get the leak under control, but the second that happens, they're going to face years of investigations and litigation.

You want to slowly but surely remove the controversy of the investigations from the ongoing day-to-day operations of the company. If there's any chance for this company to survive independently, they have to have that in place.

You have to have a series of marking events and you have to plan them out now, because the people who have the fire hoses in their mouths are exhausted and can't think long-term about how to bring this company back.

Looking at the Exxon Valdez case, litigation was still going on in the Supreme Court just two years ago. How do you prepare for a fight that long?


If you look at BP's ads today, they've said a couple of things: We'll honor all legitimate claims and we'll continue to take full responsibility

for the cleanup

. What's happening now is that all of the plaintiffs' lawyers -- including a guy named Danny Becnel down in Louisiana who I call "The Provocateur" -- are all hovering. A lot of these same folks were the ones that were involved in the Toyota recalls, and if they couldn't get a chunk there, they'll try to get one here.

When BP says they're going to honor all legitimate claims, the question is about punitive damages. The litigation will become a full-time business for BP, and BP and the other parties are already hiring the best lawyers in the country because they realize this litigation will be important for a couple of reasons: because of the costs and what will be said about the company for years.

At each point of the process, the BP name will come roaring back into the headlines. One, two, three, four or five years from now, you're going to have that brought back as a current thought, which is devastating to a company's credibility. They've lost



How do you save the brand in this situation?


They did a pretty good job after the Texas City refinery fire

which killed 15 people in 2005 by going green and bringing in a new CEO. The problem now is that this is a catastrophic event where the government stopped holding briefings with BP. The government is now an adverse party to BP.

One of the rules of crisis communications when you're in a situation like this is that you want the government standing next to you at every press conference. That's a very important path out of your crisis. That is now gone, and the Obama administration will certainly throw BP under the bus if they deem that they have to, and that's going to happen for a long time.

Now you have the specter of a criminal investigation and every comment that BP makes is fodder for litigation. That's why you not only have to have your communications people tied into what's happening, but you have to have them tied in to the lawyers as well. You're trying to be accurate and do things that will put some sort of protection around the company's reputation.

How has BP fared at protecting itself so far?


If you make a mistake with what you say, that mistake is going to haunt you in court later. CEO Tony Hayward has done a terrible job of shooting from the hip on comments he's made: from calling it a modest spill early on to recently saying that the illnesses that the cleanup crews on the Gulf are suffering is food poisoning. That's going to haunt him.

All the plaintiffs' lawyers are watching all the avenues of claims they can possibly bring and the one to watch is the illnesses. They've already said that they don't know what the combination of the dispersant and oil will have on health. For a plaintiffs' lawyer, that's gold at the end of the rainbow, because that's unknown liability.

Can BP mitigate the damage at this point?


This is an engineering problem of unprecedented magnitude and they've got to get it stopped. Everybody's ready now and it's like the hostage crisis for Jimmy Carter. Instead of Ted Koppel every night saying it's day 45 or 102, you have the cable networks talking about the number of days and you have live footage of the spewing.

They're going to have to have a marker event. If it goes until August, they can't sit there until August and do nothing. They're going to have to change management, they're going to have to bring in outsiders, they're going to have to do something to change the equation. If they can't stop the leak, they have to do something that will at least cause people to give them the benefit of the doubt over time.

In the world I live in, the minute that you lose that benefit of the doubt, all you're going to do is get whipsawed.

-- Reported by Jason Notte in Boston.


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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.