It is inevitable that companies of all shapes and sizes will have disputes to litigate, and that they will need to make settlement payouts or fines over the course of doing business. Disagreements between various parties with differing interests will always arise, and civil litigation has become the way in which we adjudicate conflicts, find compromise, or compensate those affected. Current law requires that public companies report significant lawsuits and ongoing liabilities related to harassment, discrimination, class-action suits, fraud, and ESG (environmental and social governance) violations.
The money spent on these lawsuits and settlements may seem like chump change to mega-corporations. But as companies conduct mass layoffs and remain stingy on paying out maternity and medical leave, that same cost-savings attitude could apply to resolving human disputes amicably.
Financial compensation for wrongdoing and bringing matters to court is a critical part of the justice system, and external, third-party adjudication will always need to coexist with internal controls. The potential for corruption, discrimination, and power abuse is part of human nature and therefore inevitably going to be part of workplaces. Workers and companies at opposite ends of a negotiating table have interests that are often totally at odds, meaning litigation will be necessary.
But right now, upon realizing a mistake or seeing a flaw or defect within a corporation, the kneejerk response of many companies is to go into crisis mode, immediately lawyering up and going for the nuclear option, even when this is not necessarily the only available option. On the opposing side, the employee who is bringing the issue forward has good reason to ensure they protect themselves–powerful corporations frequently play dirty when it comes to workplace disputes, silencing them, blackballing, defaming, or bankrupting the employee who has far less power in the situation. This outsized power pushes many employees to the court system, as a result, looking to attain a financial reward for the financial loss and/or pain that has been inflicted on them. And such an adversarial approach leaves little room for alternate outcomes, inhibits cultural change within an organization, and burns through hundreds of thousands (or millions) of dollars in legal fees.
Our overreliance on lawsuits has also created a system that lines the pockets of lawyers and crisis PR firms while giving a select few who hit the lawsuit jackpot massive payouts. For instance, last month, the Securities and Exchange Commission announced that an anonymous whistleblower would receive a $279 million reward for disclosures that led to more than a billion-dollar corporate fine. A few days later, Goldman Sachs announced that they settled a decades-long gender discrimination lawsuit for $215 million. Last year, it was revealed that the individual whistleblower Peiter Zatcko (Mudge) received a $7 million payout to settle his employment case with Twitter, which was filed in tandem with his whistleblower disclosures made to the government.
Perhaps none of those matters could have been avoided without litigation. But looking ahead, what if the incentives were reconfigured to require that companies revert to compromise, resolution, and problem-solving versus brass knuckles tactics?
Consider an engineer at a car manufacturer who recognizes a significant defect in the production line, one that could put driver safety at great risk. The manufacturer could run a risk analysis of the problem and decide that it makes the most financial sense to usher the employee out the door with generous hush money and continue business as usual. But their problems will not stop at that one employee’s severance pay. Product recalls, further lawsuits, and other litigation related to that initial red flag could plague the corporation for years to come, requiring a spend of hundreds of millions of dollars to handle the fallout. Imagine if the manufacturer had altered its production line upon the warning of that engineer. It can be hard to forecast precise savings on litigation fees, but certainly, some analysts could try as part of the disclosures to the SEC. You can apply this same logic to many other corporations, from vaccine developers to energy companies.
Or, take the case of one of the authors of this oped. Chelsey Glasson was a user researcher at Google who was iced out of her role and denied responsibilities while she was pregnant. When she spoke up, instead of moving her to a different team or taking her concerns seriously to align the reality of their workplace culture with the headlines about diversity fed by PR teams, Google offered her an insulting exit package–three months pay–she didn’t even want to be jobless while pregnant, and three months salary wouldn’t help a new parent, now unemployed, much. She pursued a costly lawsuit that resulted in a significant settlement after two years of litigation, which involved millions of dollars spent on the entire process and the involvement of seven lawyers and many more expert witnesses.
Was this a good use of company funds? The price of building and innovating any private enterprise is that you take the risk of hiring a bad executive who wreaks havoc among personnel, or you allow negligent or outright nefarious systems to create dangerous outcomes for consumers or for the public. It may not always be malicious or intentional that corporate wrongdoing happens. But it is just realistic to admit that at a certain scale, egregious or inadvertent mistakes will be made, and there will be differences of opinion.
Today, though, the incentives are reversed. Companies may see any problem raised internally as a potential liability, causing a crackdown that staves off future financial fallout. And then workers, seeing that they may not be treated fairly within the system, will see a greater upside in going outside the system to fight for the money that would liberate them–likely getting paid many times more than the employer ever intended to pay them as a salary if they are successful. Corporations end up spending millions on legal fees in some sort of us-vs.-them fight, rather than devoting energy to fixing the more endemic issues.
Shareholders, boards, and executives could start to require that their companies go beyond merely disclosing lawsuits and their financial ramifications, and answer for the way they handle employee complaints–including successfully mediated personnel issues, or anonymized resolutions from a whistleblower hotline. They could report more metrics outside of internal HR meetings, including how many internal sexual harassment and discrimination complaints occur annually, the outcomes of such complaints, the retention rates of those who file internal complaints, the number of discrimination and harassment lawsuits filed annually against the company, and how much money is spent on such litigation matters. This would put checks and balances on whether the company could have taken other routes to resolve issues in less adversarial ways, case by case, in a way that acknowledges a mistake, makes changes to rectify the problem and keep it from recurring, and takes ownership when wrongs occur.
It may seem counterintuitive to air the dirty issues that were subsequently resolved–but sunlight is a great sanitizer. Workplace problems that arise in a legal case quite often hide a mountain of issues within a company culture underneath them. By looking closer at how these issues are dealt with, shareholders could gain the cost savings of avoiding future legal battles and remedy internal problems that will become a drag on the bottom line. And it builds some goodwill with the public, too.
Chelsey Glasson is a former Google employee and workers' rights advocate. Amber Scorah and Ariella Steinhorn are the co-owners of story publishing platform Lioness.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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