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Crisis Experts Say WPP May Have Been Too Hasty in Defending JWT's Accused CEO

Backing Martinez in discrimination case may prove precarious

JWT global CEO Gustavo Martinez is in a legal battle with his agency's chief communications officer.

When JWT's global spokeswoman filed a discrimination case against her own agency this month, parent company WPP quickly issued a statement saying its internal investigation had found no evidence that the claims were true.

JWT global CEO Gustavo Martinez, accused by chief communications officer Erin Johnson of making frequent racist, sexist and anti-Semitic comments, denied the allegations and stayed on the job while Johnson was placed on paid leave.

This approach, crisis response experts say, puts JWT and WPP in a difficult PR position, especially as Johnson's lawyers begin to circulate what they describe as recorded evidence proving that Martinez made insulting comments about rape, African Americans and Jews.

"In retrospect, it was a mistake to appear to side with one party or the other," said Terence Clarke, a consultant who helped manage Johnson & Johnson's response to the Tylenol tampering crisis in 1982. 

"It's obvious that a group of WPP directors are being ill-advised by attorneys and not crisis communication professionals," Clarke said. "What, there's no one who can temporarily fill the shoes of both executives?"

(UPDATE: After this story was published, Adweek learned that WPP chief Martin Sorrell had sent a memo to colleagues announcing that the corporation has hired an independent investigative firm to review Johnson's allegations. See full update at the bottom of this story.)

No matter how the case turns out, it's almost certain to become an iconic case study in how agencies and other corporations should handle high-level executives who raise allegations of harassment, retaliation and discrimination. And that means the entire industry is watching.

The story so far

In the suit filed in Manhattan on March 10, Johnson accused Martinez of making an "unending stream of racist and sexist comments" over a period of more than two years, arguing that his behavior made her own job of presenting the agency's best face to the public "virtually impossible."

Here's a full copy of the lawsuit:

When news of the suit broke, Martinez quickly called the allegations "outlandish" and promised to prove his innocence in court. Around the same time, WPP sent a memo assuring executives and clients that its internal investigation of Johnson's allegations had "found nothing, as yet, to substantiate these charges."

Now, evidence supporting Johnson's claims appears to be emerging.

Campaign U.S. editor Douglas Quenqua wrote a column that, with some equivocation, corroborated the suit's claim about Martinez making an anti-Semitic comment during an interview. "In passing," Quenqua wrote, "he told me he had moved to Westchester briefly, but it hadn't worked out. 'Too many Jews,' I thought I heard."

Johnson's lawyers at Vladeck, Raskin & Clark then said they possess recordings of an incident in which Martinez allegedly joked about rape and made racist statements about African Americans at a 2015 agency retreat in a Miami hotel. The lawyers also claim to have email records of the formal complaints Johnson made about Martinez's behavior with global chief talent officer Laura Agostini, who indicated in the email exchange that the matter would be "addressed" but allegedly did not act on it, around the time executives cut Johnson's bonus pay.

A WPP spokesperson has declined to comment to Adweek on the case or its recent developments. Johnson has also declined to be interviewed.

Reputations at stake on both sides

Some crisis response experts say WPP is right to defend Martinez if it firmly believes the charges against him and JWT to be false, but they also warn that the agency must avoid letting its loyalty to the CEO cloud its judgment if the balance of evidence turns against him. 

"If it isn't true, the senior executives should be supporting the hell out of [Martinez]," said Robert Passikoff, founder and president of the consultancy Brand Keys. "If it's true, they should be looking for quick closure."

In the court of public opinion, at least, Johnson only needs to prove a few of her numerous allegations to be true, thereby poking holes in WPP's claims of a comprehensive internal investigation. 

In fact, a true win for WPP in this case is difficult to define. Short of producing evidence that Johnson falsified her claims, JWT's executives are likely to be on the defensive throughout the legal proceedings if the agency continues to position the case as a he said/she said tussle in which the agency stands behind its CEO.

"Continuing to favor one individual over another implies the aggrieved is the guilty party and that management will do all it can to keep the reputation of its CEO intact," crisis response expert Clarke said. "That reputation already has been impugned."

"If [JWT] flubs it," he said, "they'll be accused of living in a Mad Men age where behavior of this type was rampant. They have the opportunity to set the example by doing the right thing, but doing the right thing takes courage. Let's see if they have what it takes."

Johnson's reputation is also at stake, of course, and experts say that, win or lose, she's likely limited her future career options by becoming a high-level whistle blower willing to wage a legal war against her employer. 

"Is [Johnson's] career over?" asks Russell E. Adler, who runs a New York law practice specializing in discrimination cases. "It has been damaged in some sense, I assure you.

"There's a tremendous fear factor here," Adler said. "As you get more senior, you have more to lose in a lot of ways. I would expect that Mrs. Johnson struggled long and hard before she complained orally, went to HR and retained outside council for these very reasons."

How will clients react?

When agencies face high-profile controversy, client relationships can often become frayed quite quickly. For example, when one agency staffer at Campbell Ewald was recently revealed to have sent a racist email to colleagues without getting fired (until the email was reported publicly, resulting in the CEO's firing), one of the agency's largest clients instantly dropped the shop, and others have severed ties since.

But JWT's case, for now, is different, because it hasn't admitted any fault, and parent company WPP has kept Martinez in place as agency CEO. In cases like this, experts say, it's hard to predict how clients will react amid an agency's legal back and forth.

"Clients are likely to to react on a purely personal basis," Passikoff said. "There are worse things than one bigot—assuming it's true—and, generally speaking, it's a big world out there and most consumers don't know who's creating advertising for a brand."

But Cindy Gallop, one of the ad industry's most vocal advocates for gender equality, says every day that JWT denies Johnson's allegations is another day it weakens its relationship with diversity-minded clients.

"This is not a situation that any client of either WPP or JWT can afford to stand by and appear to do nothing about," Gallop said, "because every one of those clients is talking the talk themselves about diversity."

"The worst thing that WPP and JWT can possibly do right now," she said, "is fight the case and say, 'We've found no evidence of this, it's all fabricated.'"

While a bit more neutral in his take on the situation, crisis PR veteran Clarke said WPP certainly could have positioned itself in a more balanced position that wouldn't rest too much of its reputation on JWT CEO Martinez's innocence. 

"In this day of corporate and government suspicion, 'internal investigation' simply doesn't cut it," Clarke said. "People need to know that the company indeed is taking the charges seriously to the degree they are passing it along to an outside group of credible professionals."

2 paths through the crisis

Crisis PR expert Peter Sandman said JWT and WPP have two viable options for how to handle Johnson's discrimination case, but so far the agency and its holding company are doing neither.

"Let's assume that Johnson's claims are basically true. Under that assumption, what should JWT do and say?" Sandman said. "It needs to get rid of Martinez. It needs to acknowledge the basic truth of Johnson's claims. It needs to apologize to her, not just for what Martinez did and said, but for the company's complicity. It needs to take seriously the question of whether Martinez is a one-off or symptomatic of a broader problem at JWT.  

"It needs to resolve to make changes in the agency culture—both with regard to respect for diversity and with regard to openness to employee concerns and grievances," he continued. "It needs to follow through on that resolution in ways that employees and outsiders can see. It needs to make all of the above a higher priority than defending against Johnson's lawsuit. That is, it needs to realize that its reputational vulnerability is orders of magnitude bigger than its legal vulnerability."

But what if Martinez is innocent?

"If Johnson's claims are false, JWT needs to say so," Sandman said. "It needs to insist that Martinez is the victim here and Johnson the perpetrator. It needs to marshal the evidence that this is the case and go public with that evidence now, not months or years from now when Johnson's lawsuit is finally litigated."

In summary, he said: "I see little value in mealy-mouthed statements that the parent company's lawyers have been investigating the charges since late February, haven't found any evidence yet but are still investigating."  

On a larger scale, Gallop hopes the case's notoriety encourages those who've witnessed or suffered harassment in the industry to step forward and motivates their employers to listen.

"You know who you are, the ones who are not speaking up," she said. "Quite frankly, I know you're looking in the mirror and not feeling good about yourself after reading the details of this case. If nobody speaks up, nothing changes."

UPDATE: WPP CEO Martin Sorrell announced to colleagues today that he has hired an outside firm to conduct an investigation of the lawsuit's allegations.

Sources who have read Sorrell's memo confirmed that WPP has retained New York-based law firm Proskauer Rose LLP to review and investigate Erin Johnson's claims against Gustavo Martinez.

Proskaeur, which has an international presence beyond its Manhattan headquarters, specializes in labor and employment law. Its considerable client list includes many athletes and pop stars along with record companies, talent agencies and various corporate interests.

WPP has also tapped one of its own PR agencies, Finsbury, to help manage crisis comminications and other PR services concerning JWT.

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