In business, protecting honor, dignity, and business reputation is not only about protecting specific individuals — owners or executives. Information published in the media or on social networks directly affects the business itself: the company’s activities, its relationships with partners and clients, and, ultimately, the business’s financial results. The sources of reputational harm and how much a business owner’s reputation actually costs were discussed with UNN by Sviatoslav Bolinskyi, CEO of the Bolinskyi and Partners law firm and an attorney.
The mere publication of negative information about an owner or company does not mean that it is an attack by competitors or ill-wishers. At the same time, this is precisely the method they may use. A single publication, often on a little-known platform, begins to be actively disseminated on other resources, including social networks and messengers. This creates the impression that the information has broad confirmation. It is necessary to establish not only the number of materials, but also their origin and the connections between the resources where the information was published.
It is important to understand that even accurate information may be taken out of context or presented in such a way that the reader or viewer forms a false impression of the situation. For example, a company owner may be summoned for questioning or other investigative actions not as a suspect, but as a witness in criminal proceedings. A summons for questioning may be related to an inspection of counterparties or partners. The mere fact of questioning does not indicate his involvement in an offense.
Depending on the circumstances, information about a person’s participation in investigative actions may be disseminated both by the relevant state authorities and by other participants or interested parties, including competitors. In the first case, this concerns informing the public about the progress of the proceedings. In the other, the information may be used to shape a certain perception of the person or company.
How much does reputation cost?
Protecting honor, dignity, and business reputation is always a matter that requires fairly serious preparation in what may seem to be a simple legal sphere. In each specific case, it is necessary to establish exactly what constitutes the violation infringing upon honor, dignity, and business reputation, and to understand how it occurred. It is important to determine whether the statement is an evaluative judgment or a factual assertion, who disseminated the information, who specifically learned of it, what evidence confirms the published material, and exactly where the information degrading honor, dignity, and business reputation is located.
"There is no universal algorithm for protection—each situation requires separate analysis," notes Sviatoslav Bolinskyi, CEO of Bolinskyi and Partners. "One of the most difficult problems in such disputes is determining the amount of compensation for the moral harm and reputational losses caused. It is not enough to say: ‘I want one million hryvnias.’ Why exactly one million? Today, there are no tools that would allow the cost of the harm caused to honor, dignity, and business reputation to be reasonably determined. Courts may award 20, 30, or 50 thousand hryvnias. However, the question of a methodology that could be used to determine the amount of such compensation remains open. Creativity and a methodical approach to determining the value of harm caused to honor, dignity, and business reputation require flexibility and an understanding that these are philosophical concepts that will be entirely different for each person who has suffered an infringement. For example, a person may experience no moral suffering or distress, while their dignity and business reputation have been harmed, or vice versa. In this regard, if there are methodologies for determining moral harm, there are no methodologies for determining the value of business reputation or honor, which, from our point of view, provides unlimited scope for research and assessment."
The lawyer emphasizes that a combined approach is needed to determine the amount of damage caused to honor, dignity, and business reputation through relevant categories and conceptual frameworks. In particular, such relevant categories may include methods for determining the value of business reputation based on goodwill. Although this category is relevant to legal entities and is defined under the Tax Code of Ukraine as an intangible asset whose value is influenced by high-quality management decisions, market position, and so on, if such a category exists for legal entities, it can also be applied to individuals, since individuals likewise have a position in the market, particularly within a certain business environment. Business and communication skills, experience, and the position held directly influence the effectiveness of certain processes. In other words, it is necessary to answer the question: how much are the "word," "action," and "recommendation" of an individual who has suffered a violation of their honor, dignity, and business reputation worth?
The approach of using something akin to marketing research into the positioning of a product—or, in our case, an injured person —in a particular environment is not without merit. In short, the protection of honor, dignity, and business reputation is not merely a matter of moral damage, given that most courts award only paltry sums in such claims. We need to take into account international practice in considering similar cases, for example, the well-known case of E. Jean Carroll v. Donald Trump (United States), in which information about untrue events and fabricated facts was disseminated through the media. However, unlike Ukrainian courts, the court assessed the costs of restoring the reputation at more than 11 million US dollars. Rush v. Nationwide News (Australia) was a case in which the court found that the publisher had failed to prove the truthfulness of the information disseminated and awarded 2.8 million US dollars in compensation. However, such sums are hardly likely to be encountered in Ukrainian courts, given that the supposed discretion in presenting evidence has effectively been reduced to the need to prove specific data in philosophical categories—morality, honor, and dignity
Sources of reputational damage
Any situation in which information about a person or company becomes known to third parties can become a source of reputational damage: publication in the media, a blog, or a social network; a statement by competitors; a public speech; a client’s comment; or an account by former employees or counterparties.
Sviatoslav Bolinskyi:
In each case, it is necessary to determine what the negative impact of the information consists of and whether it truly demeans a person’s honor, dignity, or business reputation. It is important not only to assess the accuracy of an individual fact, but also how it was presented and precisely what conclusion the audience may draw. Freedom of speech should not mean the absence of responsibility for disseminating inaccurate and manipulative information. It is particularly dangerous when a person is called a criminal in a headline even though their guilt has not been established by a court, while we clearly understand that the case may not even reach court. Not everyone reads beyond the headline or delves into the substance of the material. Therefore, particular attention must be paid to information sources, wording, and context. In our view, today it is necessary to create sufficiently strong legal positions and court precedents so that informing the public is objective and does not cause harm to the subject, and so that the information itself is civilized.
Publications containing negative information or an organized reputational campaign?
First of all, the situation needs to be broken down into parts and the following verified: what specific claims are contained in the publication; whether they constitute facts or opinions; whether the information corresponds to reality; in the case of truthful information, whether it has been taken out of context; who said or wrote it and why, and whether the claims can be verified by documents. It is also necessary to assess whether the information damages the reputation and whether the rules governing its dissemination were violated, and to distinguish criticism from a factual assertion.
It is by no means worth responding from a legal standpoint to every negative review and defending one's honor and dignity. Comments about service are common practice. In the case of clearly commissioned publications in little-known media outlets, it is also not always worth resorting to a legal response. Such a publication may not have sufficient reach to cause actual reputational damage. The response itself may draw more attention to it.
There are several possible ways the situation may develop. In one case, it is best not to respond—the information will already be irrelevant tomorrow. In another, a response may lead to even greater publicity. In a third situation, it is necessary to immediately collect evidence, conduct expert examinations of the publications if needed, assess the damage caused, and file a lawsuit. At the same time, courts analyze specific statements, as well as the content and context of the publication.
Why launch a discrediting campaign?
Launching a discrediting campaign is not merely an act of revenge. It may arise from a corporate conflict, when one owner pressures another. The reason may be a desire to retaliate for a lost case, an unsuccessful tender, or revenge by a dissatisfied former employee. A legal dispute may also be taking place at that moment, and it may be necessary to shift the other party's position by creating reputational risks. In most cases, it is enough to raise doubts about whether it is worth cooperating with this company.
What can be demanded and what should be done?
It is worth having an action plan in case of a possible reputational crisis. When negative publications bearing signs of a commissioned campaign appear, it is necessary to record the date, time, author, source of the publication, link to it, comments, number of views, and so on. The next step is to analyze the consequences for the person about whom the publication was written and for the business, as well as to prepare a legal defense.
The problem is that negative information spreads quickly. A rebuttal, meanwhile, does not receive the same level of publicity. This is particularly telling when the messages are based on assumptions, an unfinished court proceeding, or criminal proceedings. Often, a court may later establish completely different circumstances. This raises the question: will the media return to this story and inform its audience that the original information turned out to be incorrect? In practice, this happens far from always. Nevertheless, monitoring media publications is in the MUST HAVE category, since pretrial (criminal) investigations are conducted on the basis of publications, with consequences; certain actions are blocked; and even contracts may be terminated precisely because of the dissemination of inaccurate information that damages business reputation
Today, we quite often encounter publications in the information space that may demean honor, dignity, and business reputation. At the same time, a subsequent rebuttal of the disseminated information is practically never seen. However, the process of rebutting information and obtaining fair compensation for disseminating inaccurate information requires the development of effective judicial practice that takes a critical view of the fact that, through the dissemination of inaccurate information, a business may be subjected to persecution by regulatory and law-enforcement authorities, while actions to restore business reputation cannot always be measured using specific tools and expert examinations. The highest social value enshrined in Article 3 of the Constitution of Ukraine—honor and dignity—must receive protection in the form of fair compensation, a rebuttal of the information, and restoration of business reputation.