BRAZIL Law and Practice Contributed by: Thaís Vasconcellos de Sá, Bermudes Advogados
4.2 Planning Some of the particularities of the models and frameworks to be adopted for crisis response will depend on the nature and consequences of the crisis, which will of course only be fully under- stood when it occurs. It is therefore paramount that the internal procedures and protocols cre- ated as part of the risks and crisis management provide enough information to be easily and efficiently implemented (when necessary) but do not contain too many particularities and render it ineffective/inadequate for a specific type of crisis or plainly useless as a general framework. Typical elements of a basic framework or model for crisis management include: • an immediate action plan, with the first steps to be taken for the potential crisis; • immediate communication within the com- pany, and with governmental authorities and other key external stakeholders; • formation of the crisis committee; and • engagement of third-party consultants (as previously explained). 4.3 Risk Assessment and Mitigation As part of adequate enterprise risk management, the company should structure its action plans for response to potential crises that might arise. That management should involve an assessment of risks associated with the company’s activities – which, according to Brazilian civil and environ- mental law, could lead to significant exposure to liability – and other regulatory and market risks that could affect the company’s businesses. The most immediate action plans associated with each risk should be tailor-made and target- ed to the specific consequences of that risk, but they should be complemented by a structured general immediate action plan for a crisis, in
into action. External law firms play a key role in crisis response due to their knowledge and expertise, and play a key role in co-ordinating these efforts. Engagement of law firms that pro- vide this co-ordination service is essential, as Brazil is a high-litigation country. Any company involved in a crisis – especially one arising from a risk inherent to its activities – should antici- pate being subject to immediate enquiries and legal actions by authorities ( “justice institutions” in Brazil – ie, public prosecutors and public defenders) and numerous third parties. These multiple legal measures can involve consider- able expense and usually lead to an overlap of contradictory orders from different courts, as well as measures that can impair the company’s ability to continue its activities (such as freezing of assets and bank accounts). The only way through this potentially cha- otic scenario is a transparent and consistent response to all enquiries, and ensuring that the company’s relationship and reputation with these governmental authorities, courts and other relevant stakeholders remains strong and intact. The engagement of external counsel to help co- ordinate response efforts also ensures that steps are taken to mitigate exposure to future litiga- tion arising from the crisis response itself. The company will not only have to promptly respond to the crisis but will have to demonstrate that its response was as adequate, thorough and efficient as possible, and that it abided by the company’s internal policies and procedures for crisis management (another reason why said law firms should be engaged to consult on drafting and training of these policies and procedures as a pre-emptive measure).
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