The spin doctor.

Companies in crisis know that P.R. man Michael Sitrick costs a small fortune - but may save an even bigger one

Sitrick & Co. is one of L.A.'s biggest public relations firms, although you won't find it on the Business Journal's List of P.R. agencies - or anybody else's.

That's because Chairman and Chief Executive Michael Sitrick refuses to divulge any financial information about his firm; Sitrick says the reason is that quality is what matters, not size. Another possible explanation is that he doesn't want to advertise just how highly paid he and his 32 specialists are. He concedes that his own time is worth well over $350 an hour.

Sitrick is highly paid because he is widely acknowledged as being worth it. Though Sitrick's firm handles corporate and financial public relations, it is best known as the first phone call for the likes of Marvin Davis, Lee Iacocca, and even Orange County supervisors when they find themselves in trouble. Last year, it was named Crisis Management Firm of the Year by Inside PR magazine.

Sitrick, known for hiring journalists, used to be one himself. He started his career reporting for the Washington Star and the Baltimore News American, as well as WSID Radio in Baltimore.

Question: What do you think is the most common mistake made by companies that are in crisis situations?

Answer: It's generally over-reacting or under-reacting. Over-reacting means over-estimating the reaction to a specific event. When you have earnings releases, you send them out to your employees and suppliers and customers on an as-requested basis. You have a downturn in earnings, and all of a sudden you implement this massive communications program. So now people are saying, "Why are they doing this? My god, this may be worse than I thought." That's what I mean by over-reacting. You're anticipating problems that may not really be there, and it's really just a matter of experience - being able to gauge these things.

Q: You're known for hiring a lot of ex-journalists. Why hire them, as opposed to seasoned P.R. people?

A: I think the most important part of our business is knowing what news is and being able to identify it. I think it's easier to teach a journalist public relations than it is to teach a public relations person what news is.

Public relations has segmented into a lot of different specialties. The problem with our practice is, you don't have to be licensed. There is no formal training required. I made my daughter, who is in high-tech P.R., work for ABC for a year, do some newspaper reporting for a year, before she went to a high-tech P.R. firm in the Silicon Valley, and now she's doing fabulous. Now she says that when I want her to come here, I'm going to have to negotiate a better package.

Q: I know that part of your business is discouraging stories when clients don't want coverage. How do yon do that?

A: I hate to talk about this, not that I'm giving away any secrets or anything, but ... well, first of all it's understanding what makes news. Public relations is a business of subtleties. Sometimes it's tone of voice. Sometimes it's the way you approach it. And it's basically credibility - we'll never lie to a reporter. And we won't allow our clients to lie, because all we have is our credibility.

Q: Well, it has a lot to do with research too, I mean presenting a reporter with enough facts to convince him to kill a story, right?

A: Before we go into a client situation, we've done extensive database searches, read anything there is to read, reviewed any litigation that is outstanding. I mean, we investigate a company like an investigative journalist, because we've got to know what kind of skeletons someone may find in the closet. So we can demonstrate to a reporter that there's a better story, or that the story that they thought was there really isn't relevant, or it isn't what it seems. We would never try to "spin" a story, of course.

Q: Of course not!

A: Look, you give me a set of facts, and I'll give you four stories, from the most positive to the most negative. That's packaging, it's perception. Knowledge is power in our business. That's another reason I like to hire journalists, they know how to do research.

Q: Can you give an example of a situation where that kind of research has paid off?

A: Last year, there was a story in the front page of the Orange County Register that said, this guy was in an El Torito restaurant, he bit into a taco, and bit the bead off a frog. Leno and Letterman of course had a great time with it, but we were able to make that story disappear.

El Torito was panicked when they called us up. I said, "What do you know about this guy?" They did a database search and found that he had been convicted of credit card fraud, and he had filed for personal bankruptcy. We had the frog tested at a university and they found there weren't teeth marks in it, and the head was still part of it.

The first thing we did is, we found out if it could possibly be true. We grilled the people at the company the way a reporter would if they had access. Then we looked at the guy's background. Then we had the frog inspected by an expert. If the guy had really been good, he would have really put the frog in his mouth and bit down on it, but he didn't do that. By disproving it, and showing why it couldn't have happened - and then the media found his ex-girlfriend, who said he had always been planning to get a lot of money by planting a frog in a restaurant - the thing went away like that.

Q: You have a reputation for being very good, but very expensive. How do you prove to clients that you're worth the $350 an hour, or whatever you charge?

A: Well, it's actually more than that. But I'll tell you, expensive is relative. I know of a company that went into Chapter 11 because the CEO said the wrong thing to a Wall Street Journal reporter. If I had had a 15-minute conversation with him beforehand to advise him on what to say, what is that worth? Is it worth $125 or $150 or whatever it comes to? You bet it is.

Q: Well, it's not too often that a 15-minute conversation prevents a company from going into bankruptcy.

A: No, but it's that expertise that you're buying. The other thing is, our rates are competitive with the one or two comparable firms there are that do the kind of things we do. Fortunately, the only other firms that do it are in New York, but our rates are actually less than our major competitor.

Q: It seems that your role is a lot like that of a defense attorney, with maybe one difference: The defense attorney doesn't want to know if his client is really guilty, but yon have to know.

A: If we ever find that a client has lied to us, we resign the client. We work very much like a lawyer; we first investigate the facts, do due diligence, gather the information, put it together in a form where we can present it in a persuasive way, and if we're successful we win by having the article or the constituents react the way we want them to.

Q: But there must be times when yon investigate a client and find that they genuinely did something unethical or immoral or illegal. Have you ever had moral qualms about being the paid advocate for those people?

A: Well, no, because we wouldn't take the client unless they would take corrective actions. We've had cases that are controversial and once in a while someone feels uncomfortable working with them, so I say, "Fine, you don't have to."

Q: So you just assign someone else to the client?

A: Sure. But most of the time, companies that do something wrong say, "What do we have to do to fix it?" So a lot of times you can right a wrong. The best public relations is doing good, you're fixing things. I know that sounds a little corny. I don't want people to think I'm a nice guy, that would destroy my image, but I really do think it's true.

Michael Sitrick

Company: Sitrick & Co.

Born: June 8, 1947

Education: University of Maryland, B.S. business administration and journalism, 1969.

Hobbies: Cars, photography

Career turning point: Changing careers from a reporter with a Baltimore radio and television station to public relations

Personal: Married, three daughters