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Front line strategies for responding to the COVID-19 crisis: Experiences from legal team leaders around the world

Front line strategies for responding to the COVID-19 crisis: Experiences from legal team leaders around the world 1

By Diane Dix – General Counsel, Total Safety, Marc Michael – Chief Counsel, Global Dispute Resolution, AES Corp, Tim Williams – Senior Counsel, Dispute Management, Wärtsilä Corporation, Susan Dunn – Founder and CEO, Harbour Litigation Finance, Tamer Nassar – Managing Director, Eternal Energy, Derrick Dale QC – Fountain Court Chambers

A crisis like Covid-19 has presented a highly unusual set of challenges for global business.  Whilst, for any business, ensuring the immediate health and safety of its workforce is paramount, a coordinated and considered crisis response strategy is also essential.  Any such response strategy should include the in house legal function to mitigate litigation risk, assist in managing the dialogue with counterparties in business-critical contracts and to horizon-scan for legal and compliance risk which may develop from the crisis.

In this article, London-based Winston & Strawn litigation partner, Ben Bruton, speaks to 4 senior in house leaders, a leading Queen’s Counsel and the founder of a prominent third party funder to draw on their experience of managing their teams through previous crises and to share their perspectives on the legal challenges which businesses are encountering arising out of COVID-19.

BB: First of all, thank you to all of you for agreeing to share your experiences from managing your teams through the pandemic.  As we all worked through the global financial crisis in 2008 onwards, I thought we could start by comparing the consequences of the current pandemic with consequences of the financial crisis.  Do you see similarities?

DD:  When lockdowns commenced around the world, we were better prepared than we were in 2008, in part because this crisis came on gradually so we had time to consider the possible scenarios and plan for them. We spent several weeks ensuring we had business continuity and crisis response plans in place, developing a communications plan and reviewing contracts for force majeure and other relevant provisions. We did not have that luxury in the 2008 financial crisis. What makes this crisis different is that it has significant health and economic impacts, and it is truly global, both of which create a very different dynamic from prior crises. And our response strategies have been much more employee focused.

SD: The main difference between 2020 and 2008 we have seen (as a litigation funder), is that we did not see litigation emerge seeking funding until a very long time after 2008.  It seems people were assessing their position and knew they had, typically, 6 years to bring a claim, and therefore focused on re-building, not litigation, initially.  This time round we have already seen people contacting us for funding of claims because they have to act right now to save their businesses.  This is the big difference.

The other big difference is that litigation funding was less widely used and understood in 2008.  In 2020, it is used by every type of client including those who might well have used funding in 2008 but were not being advised by their external lawyers that it was an option.

TW: The global financial response to COVID-19 was, I think, significantly influenced by the lessons learned from the previous financial crisis: governments moved quickly to signal and implement stimulus and offer support (including direct action on evictions and so on), which I think can only help.

MM: Unlike with the 2008/9 financial crisis, our first priority has been health and safety.  Everyone is concerned about maintaining the safety of our workforce and customers. This has forced us to change the way we work at the plants and corporate offices.  We really did not have to change our methods of working during the previous crisis, although we did worry about the financial wherewithal of certain counterparties.

TN: Whilst the 2008 crisis was financial in nature and the 2020 crisis heath related, the risks to business brought about are surprising similar.  Once again we have been looking at developing strategies to save businesses, save jobs and adjust to what appears to be a new normal.  Now, as then, we are looking at various strategies to reduce costs such as remote working, cutting travel and other related expenses, shedding value-add services such as consultants and the like and renegotiating pricing with vendors.

BB: The circumstances have obviously put supply chains and contractual relationships under significant pressure.  What strategies have you deployed for engagement with contractual counterparties?

MM: The workload in the legal team increased dramatically.  We received literally hundreds of notices claiming force majeure and/or change in law relating to the pandemic or the governmental response to it.  Construction contractors have sought relief in meeting milestones given the disruption to travel and the difficulty in procuring supplies, for example.  Fuel suppliers warned that stay-at-home orders and possible social unrest could impair their ability to deliver fuel to our facilities.  We made an effort to compile and analyze these notices so that we could provide consistent guidance to all of our affected businesses.

SD: From the litigation funding perspective, a key issue is of course the solvency of claimant counterparties and defendants alike.  We always pay close attention to that factor, regardless of these current circumstances. The number one question we always ask of any new matter is how do we and the claimant get paid if the case is successful.  Inevitably there may be some impact on the businesses of particular defendants so we are paying even closer attention to this factor.  And if claimants need putting into administration in order to protect and preserve their claim we will look to protect them in this way.

TN: On the whole, we sought to accommodate our clients’ requests to suspend contracts or otherwise terminate them outside of the scope of the actual terms of the agreement (e.g. notice periods, etc.).  in many cases, we also advised our clients to do the same, such that they are not perceived as being opportunistic in their dealings with clients and vendors.  Suffice to say, we have not been running straight to the contract in these trying times, but taking a rather pragmatic view of things.

DD:  We reviewed all of our key contracts to ensure we understood our contractual rights and obligations so that we were prepared to act swiftly where necessary. We were also very proactive in engaging with our largest customers and suppliers to anticipate any disruption in services. And where projects have been delayed, we have been in regular communication about scheduling to ensure that work could resume as soon as possible. In some cases we have been asked for price concessions and we have asked our suppliers for price concessions. Our experience has been that our contractual counterparties generally are acting in good faith and trying to work together to get through this crisis.

TW: We have been working hard to keep customers, suppliers and stakeholders informed and involved, and to offer both short-term alternatives (such as remote monitoring of the equipment) and medium- to long term business continuity (how long will your safety spares last?). We have found that there have been fewer shutdowns in the supply chain than slowdowns, and we have been humbled by the responses of our individual employees who were prepared to keep going to work to keep the lights on.

BB: What are the key legal issues you have been contending with as a consequence of the pandemic and the government response?

TN: We have had to consider contract terminations and suspensions, generally predicated on force majeure; non- and late payments; employment terminations and furloughs; unilateral price revisions from clients; and disruption to the supply chain in terms of non- and late delivery.

DD: The legal issues have been numerous. We reviewed the various government aid packages in North America, Europe and the Middle East to determine which of them apply to our business; we monitored the state and local shelter in place ordinances to determine whether we are an essential business and can continue operating; we reviewed privacy laws globally in connection with actions to take concerning the health of our own employees as well as evaluating new commercial offerings such as coronavirus screening; and we reviewed contractual recourse, among many other issues.

TW:  Along with everyone else, a priority has been to balance our duties as an employer to provide a safe workplace with compliance with applicable law, changes of law, the practical challenges of restrictions on movement (we have a significant field service offering) with the flurry of force majeure notices, and of course the follow up contract notices that address events of delay. We have not sought to rely on frustration and impossibility to end contracts as we are in long term relationship businesses. We expect to see the impact of hardship to come in terms of insolvency events and possibly even foolish calls on performance bonds, and we have worked hard on alternative sources of supply, logistics and transportation.  The key words have been continuity and cash flow. We need to keep getting paid, and paying our bills.

DDQC: In terms of commercial contracts the main focus has been analysing force majeure, frustration and termination rights under contracts. In terms of insurance claims, analysing the scope of the cover for business interruption claims has been centre stage and I suspect that in addition to coverage, issues of causation and loss will all be highly contested.

MM: In addition to force majeure and change of law issues, we’ve had to consider whether official governmental action in response to the virus may require us to provide to relief to utility customers or may even impair our rights.

BB: You are all responsible for managing teams.  As a final question, based on your experience of the last few months, what guidance would you give in relation to how to manage a team remotely in an effective manner?

TW: If you are not already used to managing teams remotely, get used to the technology, use it, and use it often to stay in touch. Make sure your networks and infrastructure are robust. It also helps to use video where your network supports it to improve the quality of communication. No one wants to spend all day talking to their own screen. Virtual coffee breaks or even lunch breaks can help bring us together, especially if you have ‘lone wolves’ in your team.

MM: We’re a very collaborative organization, with frequent scheduled and impromptu in-person meetings throughout the day.  Over the last few months, that has not been possible, because many of us have been working remotely, so we’ve had to rely heavily on technology to keep us connected.  Videoconferencing has been very helpful with this, and in the Legal group we established guidelines to ensure that people are able to work productively at home and keep in touch with their colleagues.  We also established a weekly call for the global Legal group, and a weekly virtual “happy hour” for the corporate Legal group so that we can connect with our colleagues more socially.

TN:  We found that an effective method of remote team management has been to schedule weekly individual calls to set weekly objectives and review the prior week’s accomplishments.  Communication in between those calls ought to be sparse and generally initiated by the team member, rather than the manager.

DDQC: Ensuring good levels of communication and teamwork within any litigation team is always essential and during the lockdown period we had to double up on this as solicitors and barristers navigated our way through gearing up for remote hearings, which seem to be the new norm for the foreseeable future. In our world ensuring that we have the requisite IT support to do this at all times has been essential. At Fountain Court, we have set up our large conference rooms so we can use them to dial into remote hearings and have leaders and juniors in the same room whilst the hearing is going on as well as having the IT support on hand.

DD: I have led a global team based across various jurisdictions for many years, so I’m very comfortable managing a team remotely. It has been a bigger challenge for colleagues who are accustomed to in-person engagement. They have learned to take advantage of video tools and grown more patient with background noise (children, dogs). As a leadership team, we have focused on frequent communication with our employees, being as transparent as possible about the state of the business and actions we are taking to address the challenges, and we have taken time to joke with one another and have a little fun. I find that when a team is working remotely, especially during a crisis, maintaining camaraderie and a positive outlook is very important.

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