Apologies - Short Term Loss, Long Term Gain

Published: by

No, I am not referring to the pro forma apology every politician offers to get him/herself off the hook before running again (see under, Weiner, Anthony). I am referring to honest apologies that are perceived as honest by your customers.

On Saturday, Asiana Airlines flight 214, a Boeing 777, crashed on landing in San Francisco International Airport (SFO). It is a tragedy that two appear to have lost their lives and more than 100 were injured. On the other hand, it is a blessing that only two died; I remember crashes in the 1970s and 1980s, even in advanced Western nations, where many more died. For example, a look at Wikipedia under DC-10 immediately brings up the many incidents with that plane.

As of this writing, no one - absolutely no one - knows why the plane crashed. They do know that the tail, including the horizontal and vertical stabilizers, elevators and rudder - sheared off, but it is unclear if it was mechanical failure on landing that led to the crash, if the plane came in on too high an angle and the tail hit the ground and broke off, if something hit it, or some other cause.

Nonetheless, on Sunday, the executives of Asiana Airlines, based in Seoul, South Korea, apologized to their customers and the flying public. In true Asian style, they bowed in humility. Note that they don't know if it was their fault. Perhaps it was poor maintenance, or perhaps a sudden and unavoidable wind shear flipped the plane; perhaps the pilots were in error, or perhaps Boeing had a failure in manufacturing. Nonetheless, the executives recognized that it was their plane on their airline that passengers were flying, and in some manner, directly or indirectly, they bear responsibility. Further, notice they didn't blame a pilot, or mechanic, they apologized and showed humility, as they are responsible for the entire airline. President Harry S. Truman is famous for having had a sign on his desk, "The Buck Stops Here."

Nowadays, if you have an issue, your lawyers will tell you, "never apologize, never take responsibility." They might urge you to settle, make an offer "without admission or denial of responsibility," if it gets to legal claims to make a settlement out of court, but never ever apologize, as it is tantamount to an admission of guilt, which can put you at a legal disadvantage should legal proceedings be initiated. Unfortunately, that is true; unfortunately, it is also the lawyers - through plaintiffs attorneys, defense attorneys and judges (who are almost always attorneys) - who made it that way.

But lawyers are trained to focus on the legal and only the legal. They mitigate risk, thinking only (or at least primarily) of the downside.

Executives are those who look for risk, since they know that risk is not only the chance of a loss, but also the chance of a gain. Risk is something executives look for, balance, and weigh.

The executives of Asiana Airlines are taking a very large, yes, risk that passengers will sue them, and use their apology as an admission of guilt. But the lawsuits are inevitable, and the out of course settlements are unlikely to be materially higher due to the apology. At the same time, they have a bigger issue than few tens of millions of dollars in lawsuits. If customers perceive Asiana as unsafe, they will leave the airline in droves. Asiana will go under far more quickly due to lack of passengers, than due to higher lawsuit settlements (see ValuJet, Flight 592). On the other hand, if Asiana can convince customers that its executives take the matter seriously, deadly seriously, personally, it has a chance to regain the faith and trust of the flying public.

Your attorney's job is to mitigate your risks; yours is to weigh your risks. Sometimes apologizing for hurting your customer, even if your attorney tells you not to, might be the better move for your business.