Legal Resilience in the wake of Covid-19

What can businesses learn from a legal perspective as the pandemic and its series of lockdowns starts to unwind?

Covid-19 is the latest crisis but it will probably not be the last global crisis in our working lives. Indeed, they may be more frequent as the expontential age accelerates.

Inevitably the pandemic, like all crises, has put stress on contractual relationships either because one party struggled to perform its obligations or because the orginal arrangement no longer made economic sense.

Whether we like it or not, we are all in the business of crisis management. Over the last 20 years, businesses have had to contend with various macroeconomic and geopolitical shocks including 9/11, the global financial crisis, Brexit and now the Covid-19 pandemic.

If we can recognise the legal risks that are common to these crises, we can focus on preparing for those risks with a view to reducing their impact before the next crisis hits.

One risk worth thinking about is what would happen if there were no internet – even for a short period. This is not our idea but something we heard this time last year when Jane McGonigal talked about it in her chat to Shane Parrish on the Knowledge Project. She talks about “government mandated internet shut downs” (from 47:50) but any sustained interruption to the internet for any reason would cause significant problems for all of us.

Things to think about:

1/ Understand and manage your contractual landscape

It is always good to have an overview of your contractual exposure. This allows you to make decisions quickly. It also means that new contracts benefit both from a drafting perspective and also to make sure you know what could happen if a crisis hits.

2/ Review the “crisis” clauses within those contracts;

Force majeure and other crisis clauses have taken on more significance and are no longer contract “boilerplate”. Think about more specific and tailored risk allocation arrangements in new contracts. Along with what the business can do in a crisis and what can be done to improve the position.

3/ Reassess the choice of law and forum in the event there is any dispute

The governing law of the agreement and the court or tribunal where any dispute might be heard really do matter. Making the right choices can reduce the risk of litigation significantly and provide some degree of proetction from the applicaton of potentially unhelpful laws. And reduce the risk of disputes.

4/ Manage any legislative change.

In times of crisis, there is often a deluge of legislative and regulatory change. You need to make sure you understand it and act on it quickly.

5/ Build in contractual flexibility

Contractual flexibility allows more room for manoeuvre in the event of any sort of crisis. But the benefits of this approach must be weighed against the potential downsides of the loss of certainty that will inevitably come from such an approach. Especially where any contractual flexibility is mutual. The thinking here is that you can have the ability to mandate changes in roles, service provision or location all of which are desirable, along with the ability to terminate or revisit costs.

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Mark

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