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Reputation management for businesses: Assessing damages caused by defamatory statements against legal entities and available legal remedies

January 2023

One of the most important, but also most vulnerable assets of a company is its image. As a result of the fierce competition to attract and maintain the attention of potential customers and build a “name”, any negative information that is released about a company impacts the decision of business partners and of the public to purchase or, as the case may be, access the products or services offered by that company.

Although attacks on a company’s image may not always be immediately reflected in financial losses or may not have an obvious, tangible effect, they can have a profound influence on how a company is perceived by the business community and the relevant market in which it operates. A company’s potential development is undermined in such a situation, and the process of building a credible brand becomes more challenging.

Ileana Nicolescu and Oana Ionescu, Senior Associates in the Dispute Resolution practice of SIMION & BACIU authored an article approaching this sensitive topic, examining the legal remedies available to legal entities for the reparation of damages caused by the breach of the right to reputation. The piece covers:

  • Theoretical considerations on the means of defending the non-patrimonial rights of the legal entity
  • Case-law of Romanian courts in the matter of recognizing in favour of legal entities the right to reputation
  • Case-law of the European Court of Human Rights in the matter of recognizing in favour of legal entities the right to reputation

Enshrined both domestically and internationally, the right to reputation is one of the primary rights of a legal entity that requires effective tools to protect and guarantee, all the more so as the current legal reality shows that the internet, as the main tool for shaping public opinion, has completely changed the rules of the game in terms of the propagation of information, democratizing publishing and expanding the speed with which the most diverse information is received by the general public.

Private websites, independent posts, blogs, and social media have made it easier than ever to damage a business’s reputation through an abusive post. As a result, companies should develop robust strategies to prevent and act against defamatory information released on the market, as soon as possible. As part of this effort, legal mechanisms that are recognized by law for dealing with a reputational crisis need to be activated immediately and effectively.

The success of such an approach, however, depends to an overwhelming extent on the discipline with which companies understand to document the consequences arising from a reputational crisis and to maintain a detailed analysis of the specific impact produced throughout the course of the events – both from a financial perspective and from the perspective of the deterioration of their perception in front of business partners or target audience.

This is even more so since the legal reality materialized in judicial practice has proven and continues to prove that, in the absence of solid evidence presenting the negative effects resulting from the reputational attack, the actual possibility for legal entities to defend their non-patrimonial rights (such is the reputation) is still rather limited.

Reputational damage is a real problem, and the consequences can be far-reaching. That is precisely why reputational management must be included in the list of priorities of any company. It is imperative that any approach to the topic includes the analysis of existing reputation threats and the preparation for all the hypotheses that could lead to risks. This assessment should be seasoned with an increased familiarity with the legal mechanisms available to protect reputation, together with the alignment of communication and legal strategies.

The article is available in full (in Romanian language) HERE.

SIMION & BACIU’s Dispute Resolution practice proposes a sharp and genuinely diligent commercial judgment that enables our litigators to get to the heart of a business-related dispute. Details about our practice are available HERE.

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