It doesn’t take a prophet to see that the COVID-19 pandemic is going to have lasting consequences on our lives and the way we do business. The nature of these changes, however, is less clear. What will the impact be on law firm operations?
Each organization and industry will respond differently. Some will find that the pandemic spells the end of their operations, while others will be forced to adapt and grow. For law firm operations, the pandemic can serve as an impetus for change. Many firms that had been getting by on the status quo are finding now that they’re being forced to adapt and evolve. Embracing these big changes is critical to law firm operations, and is the key to not just surviving, but thriving during and after the COVID-19 pandemic.
Big Change #1 in Law Firm Operations: Crisis Teams Are a Must-Have
Younger or luckier firms probably haven’t considered forming an internal crisis team until now. The COVID-19 pandemic, however, has underscored the importance of having a group of individuals assigned to spearheading your organization’s response to crises.
Every crisis is different, of course — what’s appropriate for the coronavirus pandemic will be different than what’s appropriate for, say, armed conflicts or natural disasters. Although the details of your response will differ, any crisis management plan breaks down into four phases:
- Mitigation: Actions to reduce the likelihood and negative effects of a future crisis.
- Preparation: Actions to plan for and organize your response for crises that can’t be mitigated.
- Response: Actions taken to directly manage the crisis.
- Recovery: Actions to rebuild and return to normal after a crisis.
Develop a team of key individuals within your organization to plan for crises around these four phases. You can adapt your plan to fit generic types of crises, whether that be a global pandemic, a natural disaster, a terrorist attack or any other general threat.
This group of individuals should meet regularly, perhaps once a quarter, to review and update their contingencies. It should consist of members of leadership, public relations/communications, your legal team, as well as operations. This team will lead the charge in crisis management activities. Although it’s a little late to mitigate the coronavirus pandemic, their first task can be organizing and executing your organization’s preparation, response and recovery.
Big Change #2 in Law Firm Operations: Being tech-enabled will be expected
The pandemic has driven workers from their office buildings to their living rooms, home offices, and guest bedrooms. Most businesses today have been forced to embrace cloud technology and video conferencing software like Zoom or GoToMeeting — and they’re finding that it’s not so bad. Maybe even better.
After this pandemic ends, accommodating remote workers will become more commonplace. But this doesn’t just mean that law firms should adopt video conferencing software. Without a physical presence in the office, it will be more important than ever to embrace digital transformation.
Without having to be physically present in the office, many law firms will find their lives both during and after the pandemic improved by embracing technology like e-discovery solutions, contract management systems, and AI tools to fill in the gaps. Since the pandemic is forcing you to adapt now, fully commit to implementing and using advanced tools at your firm to make life easier post-crisis.
Big Change #3 in Legal Operations: The recession will keep lawyers busy
With millions applying for unemployment benefits and a plummeting stock market, it’s clear that we’re in for troubled economic waters. While many will be seeking work, legal professionals will have a surfeit of it.
Coming economic difficulties will force legal teams to re-negotiate contracts with elements of their organization’s supply chains, restructure or refinance debt and defend against numerous litigations as counterparties try to get out of their contractual obligations. Preparedness means identifying high-risk counterparties early and talking to your HR department about potentially hiring more general counsels or identifying consultants that can be brought on board to assist with labor-intensive or unusual cases.
Big Change #4: Force majeure — not just an afterthought
Force majeure clauses excuse a party from their contractual obligations and liabilities due to an event outside of either parties’ control — such as a global pandemic. For many organizations, the COVID-19 pandemic may be the first time they’ve had to invoke their force majeure clauses or respond to a counterparty’s invocation.
Some organizations may not even have force majeure clauses built into all of their contracts. Without one, your organization may need to follow the common law doctrine of your relevant jurisdiction(s), which vary considerably and may not be advantageous for you. It’s a little late to implement force majeure clauses for the COVID-19 pandemic, but you can always be prepared for future crises and to deal with those contracts that do include these clauses.
In general, most force majeure clauses can be invoked if three criteria have been met:
- The triggering event was unforeseeable
- The event materially affected the party’s ability to perform its contractual obligations
- The event was outside of the party’s control
Each contract is different, however, so the exact nature of the clause will differ commensurately. Most, though not all, contracts with a force majeure clause will also stipulate that the invoking party must give notice to the counterparty. Typically, notice has to be given within a certain time frame from the triggering event and in a particular format — if the notice doesn’t meet these criteria, then the party may not be able to take advantage of the clause even if there is a valid triggering event.
Take stock of and evaluate your organization’s force majeure clauses, identify which counterparty’s are likely to invoke these clauses or common law and prepare a defense. On the other hand, you might need to invoke a force majeure clause yourself. If that’s the case, make sure you’re following its stipulations to the letter.
If you’re struggling to review a high volume of contracts, Exigent can help. With a complimentary contract review, we’ll help you answer questions such as:
- Which of my contracts allow either party to invoke force majeure?
- Does the coronavirus qualify as a force majeure event?
- Do resulting acts of government qualify as a force majeure event?
- What are the notification requirements, and related rights and obligations?
Adapting to the new normal
Although life will return to normal after the COVID-19 pandemic runs its course, the word “normal” won’t mean exactly the same thing as it did before. Crises like these are transformative to all aspects of a society; and law firm operations are no exception. Recognizing the need for change and embracing it are key to successfully navigating the pandemic and flourishing once it’s over.