"The Blood Sporting of Picking Off CEOs"

A crisis manager on how Wall Street’s “Mogul-Pariahs” are trying to salvage their reputations—and avoid the orange jumpsuit.

As someone who has spent his career in the cockpit of corporate crisis management, I assure you that Wall Street's Masters of the Universe won't spin their way out of today's financial crisis. Somewhere along the line, Americans developed an evangelical faith in the power of public relations, irrespective of whether image-making sleight-of-hand in the face of disaster actually works. PR has value around the margins, but it's not the antidote for this.

All over Wall Street, the newly decreed Mogul-Pariahs are assembling their dream teams: attorneys, PR people, assorted consultants (and often a trophy wife), all reputed to be the best. Their mission is to save the Mogul-Pariah from the twin perils of crisis: denial and delusion. By focusing on the abstraction of image, the principal at first ducks the notion that something is wrong at the core of his existence and persuades himself that there was no original sin, only a misunderstanding that can be corrected by better communications.

The lily-white Mogul-Pariah joins an “inner-city” church. The oilman airs soft-focus ads promoting wind power (wind is about right)… As with a mugging, the Mogul-Pariah’s goal isn’t to save his fortune or image, it’s to get out alive.

So in the early stages of the crisis, flacks have the Mogul-Pariah's ear, urging him to tell your side of the story and get your message out. Someone may archly suggest a call to 60, insider PR-speak for CBS's 60 Minutes, in the hope that one of its correspondents, who travel in the Mogul-Pariah's social stratum, might want to flush his or her journalistic reputation down the toilet because of some clubby sympathy. Not likely. So if 60 does offer a sit-down, cooler heads will convince the Mogul-Pariah to decline.

Day after day, the Mogul-Pariah watches cable-channel pundits declare the crisis to have been mismanaged. It dawns on him that these bloviators are not neutral parties, they are investors in his peril. I call this the meta-crisis where these investors only win if the crisis is perpetuated. When JetBlue cancelled more than 1,000 flights during a 2007 Valentine's Day snowstorm, a television interviewer asked me, "Why is JetBlue in such a mess?" I answered, "Because you keep inviting guests on asking them 'Why is JetBlue in such a mess?'"

Then the Mogul-Pariah sees what now stands behind broadcasters are the feds, and it finally hits him: Nobody wants to hear me out—they want to disembowel me!

The Mogul-Pariah is obsessed with his reputation until faced with trading silk pajamas for an orange jumpsuit. This is more than paranoid magical thinking, The Washington Post has just reported that federal prosecutors will likely seek criminal indictments of individual executives as opposed to corporate entities. Then the discussion of talking points urgently shifts to admonitions from counsel that the Mogul-Pariah, who could not fathom at first that he might be accused of a crime, keep his mouth shut.

The flack now advises the Mogul-Pariah to apologize, until the lawyer points out that an apology could be used in court as an admission of guilt. The goodwill suggestion that he give back some of his bonus is rejected for the same reason: it might be mistaken for culpability. And that introduces the brontosaurus on the boardroom table: the dream team's fees, which could run has high as $50 million, not including penalties and civil settlements.

The bulk of these fees will—rightly—go to the lawyers. Other members of the team may generate six-figure invoices. It's advisable to get paid up front, because these dream teams are often nightmares. Traditionally, everybody hates everybody else, and they plan from the start how they're going to position a bad outcome when rival vendors start circling the carcass.

On one team I am acquainted with, the defense counsel were getting a bad vibe from the jury, so they cut a deal with the government that included a severe penalty, but not a lengthy prison sentence. The tycoon blamed the jury consultant for not foreseeing the negative karma and the PR firm for not convincing the universe of potential jurors to appreciate his social conscience. The tycoon stiffed the jury and PR consultants, but not his attorneys because, as he explained to one of his operatives, Them I need. Indeed, Martha Stewart's jury consultant had to sue her erstwhile client for $74,000 in unpaid bills. If that's all she's out, she's lucky.

The Class War is on once the networks start running segments that juxtapose workers who've lost their pensions with aerial photos of the Mogul-Pariah's 30,000 square foot crib on Further Lane in Amagansett.

Publicity stunts are bandied about, such as these, taken from cases I know: The lily-white Mogul-Pariah joins an inner-city church. The oilman airs soft-focus ads promoting wind power (wind is about right). Enron's Ken Lay conducting television interviews, dappled with references to his being the humble son-of-a-pastor.

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If criminal charges are filed, the objective is no longer reputation recovery; it's reasonable doubt. Some jurors will, God willing, recognize the difference between a risk that didn't fly and a criminal conspiracy. Acquittal is possible if the accused can sell the jury a plausible alternative narrative—what I like to call the P.A.N.

An appeals court dismissed most of the claims New York Attorney General Eliot Spitzer brought against former New York Stock Exchange boss Richard Grasso, in part because the action came off like class warfare—a zillionaire's son against a tough Italian kid from Queens, no less.

HealthSouth's Richard Scrushy's acquittal in his 2005 accounting fraud trial was due partly to the fact that five of his former chief financial officers had already pleaded guilty, which reinforced the argument that others were responsible.

When tycoons stare us down from magazine covers with folded arms and badass expressions, however, they surrender the "I was in the dark" argument. In the most challenging litigation I've toiled through, the central conflict has been reconciling the Mogul-Pariah's need to be embraced as both an omniscient wizard and a clueless naif.

As with a mugging, the Mogul-Pariah's goal isn't to save his fortune or image, it's to get out alive. Survival depends upon variables such as the severity of the offense, the depth and tenor of repentance, and having the will and resources to fight back when you've got a viable P.A.N. Finally, there's accepting that one's second act, if it occurs at all, will play out on a humbler platform over time. Lots of time.

In Michael Clayton, George Clooney's eponymous corporate fixer is confronted by a big shot client demanding to know why Clayton failed to deliver the miracle he was promised. Clayton's response: I'm not a miracle worker, I'm a janitor. The smaller the mess you made, the easier it is for me to clean up.