The plummeting feeling when faced with a negative announcement may sound familiar. How can you make the best of negative news and indeed should you, or can a positive spin make matters worse?

When law firms are faced with announcing bad news; whether that be poor financial results, a merger which didn’t go through or a team defection to your closest competitor, the first question to consider is whether to take a proactive or reactive approach? A proactive tactic has the advantages of enabling you to be on the front foot when making the announcement and to not be blindsided by a leak. It also helps control the narrative and allows the key messages to inform the press ahead of their coverage of the announcement.

A caveat to a proactive approach is whether it will lead to scrutiny where there may not have been any.  Alternatively, a reactive approach involves as much preparation as being proactive, but in this instance the announcement is used only if the news becomes public or is leaked. The decision depends very much on the type of announcement, whether the news is likely to come out into the public domain anyway and whether you are able to provide a full comment on the matter.

An element to bear in mind when deciding whether a proactive or reactive approach is used is the context of the announcement. Is the bad news down to positive action; such as investment into a different practice area or a review of firmwide strategy? Trying to find a more positive message is important as long as you are also up front about the bad news.

Of course there is a difference between a negative announcement a firm may need to make which is perfectly natural in any business’ life cycle and a crisis situation. In both though, timeliness is crucial, reacting speedily and adeptly will help the news not spiral out of control. If bad news turns into a crisis (for example further damaging information emerges which you were not aware of when you released the initial statement) - a holding statement acknowledging the situation and saying you are looking into it as quickly as possible will be important. As will the follow up fuller announcement. This is because it shows that your key stakeholders and audiences that you are dealing with what has happened rather than trying to ignore it. Timing of releasing the announcement if proactive is important, never on a Friday afternoon when journalists may receive the distinct suspicion (rightly or wrongly) that you are trying to bury the news.

Every firm at one point or another will need to deal with bad news, it is in a large part how you deal with it which is the key to whether bad news has lasting reputational damage or can be seen as yesterday’s news.