Stopping the “Snowball Effect” of a Reputation Under Attack
For ultra-high net worth individuals (UHNWIs), reputation is both a highly valuable and sensitive asset that's constantly at risk. A strategically placed narrative aimed at undermining an individual’s commercial or political objectives can “snowball” to impact their personal and professional lives. As we explain, defensive and proactive strategies can be deployed to defend an UHNWI’s reputation, demonstrate their source of wealth and protect their freedom of movement around the world.
February 8, 2023
A good reputation opens doors, and a bad reputation closes them.
For ultra-high net worth individuals (UHNWIs) and their families, who often live their lives under immense public scrutiny, reputation is a highly sensitive asset that is difficult to control. This sensitivity makes their reputations an easy target for opponents (including commercial and/or political rivals).
Take the below hypothetical case as an example of the “snowball effect” that occurs when an UHNWI’s reputation falls under attack:
- A UHNWI is competing for valuable mining rights from a foreign state.
- Their opponent, seeking to undermine the bid, conjures up a story about their alleged involvement in a money laundering scheme.
- This story gathers pace and results in political pressure on the foreign state to reject the bid.
- The bid is unsuccessful, and the valuable mining opportunity is lost.
The fallout from the attack does not stop there:
- Afterwards, the allegations are picked up in a due diligence report, and the UHNWI is informed that their bank is terminating the relationship as a result.
- The UHNWI is now faced with the task of opening new accounts with other banks, which means passing enhanced due diligence checks – which is now problematic for the same reason.
- Suddenly, the UHNWI’s family offices, trustees and other advisors are coming under pressure for associating with the family.
- The story triggers investigations by the authorities, which may result in the UHNWI’s worldwide assets being frozen pending the outcome of that investigation.
- The UHNWI also has concerns that an Interpol Red Notice may be in the works, so they cannot travel for fear of arrest.
This example shows the “snowball effect” of a reputational attack: a well-crafted, strategically placed narrative aimed at undermining an individual’s commercial or political objectives can “snowball” to impact many aspects of their personal and professional lives. Reputational threats follow globally connected UHNWIs across borders. They can also come to jeopardize not only a UHNWI’s image but also their business interests and personal liberty.
You can counter even the most daunting of attacks with a global, forward-thinking approach.
UHNWIs and their advisors must understand how a comprehensive global strategy can strengthen their position and mitigate the damage that can be caused by a targeted hostile campaign. While each client’s needs are different, defensive and proactive strategies can be deployed to defend reputation, demonstrate the source of wealth and protect freedom of movement around the world. UHNWIs and their advisors should:
- Build a team that can coordinate across jurisdictions and defend the UHNWI’s core interests where parallel proceedings or media inquiries may arise around the globe. Depending on the issues at hand, a robust team may need expertise not only in the local laws of various jurisdictions but also across a range of subject matters, be they tax, PR, or criminal defense.
- Prepare a factual and legal narrative so that, to the extent that the UHNWI chooses to comment publicly, they can share their side of the story coherently, avoid unnecessary spotlight and counter any false or misleading allegations.
- Anticipate and preempt future threats by undertaking a vulnerability assessment to spot litigation risks facing key assets and potential disruptions to business activity or stakeholder relationships.
A good reputation is among an individual’s most valuable assets, but for UHNWIs and their families, it is an asset constantly at risk. By taking the above steps and choosing a team with capabilities in jurisdictions globally, UHNWIs under attack can ensure that their reputation and interests are comprehensively safeguarded on an international scale.
About Kobre & Kim
Kobre & Kim is a global Am Law 200 law firm that focuses on cross-border disputes and investigations, often involving fraud and misconduct.
Our team provides offensive and defensive cross-border litigation and crisis management strategies to ultra-high-net-worth individuals (UHNWIs) with global business interests, to preserve their assets, liberty and reputation.
Our capabilities include:
- Our global team of roughly two dozen former U.S. and UK government lawyers spread across EMEA, Latin America, Asia and the U.S., including former prosecutors from the UK Serious Fraud Office (SFO) and U.S. Department of Justice (DOJ).
- Our industry-recognized experience in “[helping] businesses and successful individuals to understand and deal with the reputational and privacy issues that have the potential to put them in the spotlight.”
- Our onshore and offshore lawyers – including an integrated group of U.S. litigators, offshore lawyers qualified in key jurisdictions, Hong Kong solicitors, and English barristers and solicitors –helping clients identify vulnerable assets and mitigate reputational harm caused by investigations.
- Our ability to coordinate legal strategy and work closely with a range of stakeholders (including crisis communications and public relations firms) to formulate holistic strategies to preserve reputation and mitigate privacy concerns.