The coronavirus pandemic is no doubt an unprecedented event in the lives of most Americans today. Like U.S. businesses, the U.S. court system has been impacted by the seemingly draconian measures under which society is operating. Hearings are being postponed, deadlines are being pushed and extended, and jury trials have been cancelled indefinitely as potential jurors have been asked to shelter in place. Productivity is grinding to a screeching halt. At some point, the proverbial flood gates will open. Current litigants whose cases have been thwarted will be ready to speed back up and push towards a resolution, while a multitude of new cases overwhelm the court system. While it is likely that life and business as we know it will remain irregular for quite some time, companies can and should proactively prepare for the inevitable lawsuits the pandemic will spawn.
Officers and directors should take the following steps to be prepared:
Identify Potential Disputes.
Identify key contracts, operations, clients, vendors, pending letters of intent, and insurance policies that may be the sources of future disputes.
Take Steps to Ensure the Best Posture in Future Disputes.
Ensure that the company is providing required notices, documenting current conditions, and collecting pertinent data so that the company is prepared to face disputes that can be anticipated. This starts with an analysis of the key terms that will govern.
Seek Legal Advice on Best Next Steps.
Attorneys cannot change events of the past, but can help mitigate potential issues. Seek counsel now to ensure the company will be in the best position possible. While governing terms may seem clear, what law controls and how that law interprets an agreement will greatly impact best next steps. A simple example concerns “force majeure” clauses, which address how specific, and often unforeseen, circumstances will affect parties’ contractual duties to perform. How these clauses may affect businesses often depends on the specific contractual language at issue and a survey of court cases interpreting that language under similar or analogous circumstances.
Take Steps to Mitigate Future Disputes with Shareholders.
In summary, companies should not wait for the inevitable disputes to arrive. Rather, board members and corporate officers should take steps now to anticipate, prepare, and mitigate the risk of suffering negative impacts from the coronavirus. For more information about recommended steps, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the CDC and the World Health Organization.
