Legal Opportunities in consultancy and advisory in COVID-19 Pandemic

Author- Atreyi Agarwal
College- Amity Law School, Noida.

Abstract

The Coronavirus outbreak marks a major blow for consultants. However, like any crisis, it could also present an opportunity, according to the leaders of four global strategic consulting firms. The COVID-19 challenge is unprecedented, both for the economy and for aspects of the legal opportunities. Law-firm leaders must prepare for a wide range of scenarios, the likelihood of which will depend on the effectiveness of both public-health- and economic-policy interventions.

The consulting industry has already been noticeably impacted by the COVID-19 in a number of ways. Legal opportunities in pandemic have suffered a lot. Consultants are regular travelers, making them particularly susceptible to the virus’ spread, while the financial downturn the pandemic seems almost certain to provoke will likely have a large impact on their revenues. Indeed, the last financial crisis of 2008 saw demand for consultants drop sharply, bringing many firms into a contraction they would spend the last decade recovering from.

This time, however, the leaders of the German wings of four leading strategy consulting firms say that the mid-term outlook for the consulting market is rosier than during the financial crisis. In order to understand the best practices under pandemic legal opportunities, some of the major heads are dealt with in this white paper.

Key words: Legal Opportunities, Legal Consultancy, Legal Advisory, Pandemic, COVID-19.

Introduction

This pandemic has some negative as well as positive outcomes also. When we talk about the opportunities it gone to such an extent where many people have lost their jobs, and at the same time, many have gained jobs due to online services. You never should let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before. American politician Rahm Emanuel put it aptly. India has been proactive and leadership has been courageous to go to extremes.

What we have is the biggest ever lockdown in the history of mankind. There is an opportunity to do things we could not do before.[1] The pandemic crisis of Covid-19 has brought legal opportunities of professionals on their toes to assess the risk and guide business houses as to how to be in a damage control mode. The assessment would revolve around pre-COVID-19, during Covid-19 and post Covid-19 stages since, at present, if the implications are not anticipated correctly, it can invite unforeseen & huge liabilities.[2]

The broader concept of pandemic legal opportunities for any business requires a holistic view for employees, customers, Government compliances, liabilities, settlements, declarations, finance, obligations, etc. In order to understand the best practices under pandemic, legal opportunities, some of the major heads are dealt with in this white paper.

From advising employers on how to respond when an employee tests positive for coronavirus to counseling employees afraid of catching it at the office, lawyers are working around the clock to help clients navigate the uncharted legal waters sparked by the rapidly spreading COVID-19. As legal opportunities, some law firms have created multidisciplinary task forces to assist clients, both domestic and international, in tackling the myriad challenges posed by the pandemic.

These lawyers and firms are helping others at the same time they are grappling with the significant effects of coronavirus on their own operations, such as the need to close their offices and require employees to work remotely. Firms are also bracing for the pandemic’s long-term economic impacts that could boost demand for some legal opportunities services while depressing the market for others.[3]

COVID-19 a blow for consultants, but also an opportunity

Reinforcing the expected rebound for consultants is the fact that digitization is a trend that is here to stay. In today’s rapidly digitizing world, organizations can no longer disregard automation and the adoption of technologies, and digital is key for any business to survive in a post Coronavirus world. While the pandemic may delay the trend, digital will remain the largest business driver of consulting spend.

“Many companies are wondering how to deal with the situation and the economic consequences. And that’s why consultants are still in demand.”

Meanwhile, Covid-19 also brings legal opportunities for the Corporate law sector in restructuring or cost-cutting programs – something consulting firms have already been enjoying plenty of amid a sustained economic slowdown. At the same time, the strains placed on businesses in terms of human capital means that HR consultants specializing in employee benefits will be called upon due to the heightened importance of employee leave.[4]

Work in e-commerce (particularly relating to food) is also receiving a boost and in the supply chain landscape, clients are tasking consultants with examining and reorganizing their global supply chains as they seek their dependence on COVID-19-vulnerable suppliers. Similar to the employees of their clients, the large majority of consultants are now working from home. This however is not stopping them from remotely serving their clients.

Employment Concerns

The biggest challenge which the companies are facing during the pandemic era, especially when countrywide lockouts have been declared, is contractual obligations between the employees and the employers. The deliverable aspects of employees’ and employer’s financial obligations are the bedrock of the concern. The contractual workmen further add woes to this in as much as such workers at the factory level are in thousands or lakhs for companies having operations at different plants in India.

The notification issued under the Disaster Management Act, 2005 has created various new repercussions and new legal twists. The white-collar employees have to be further suitably instructed with a newly drawn module for working from home with restrictions and policies of reporting to their employer as well.[5] The social media conduct policy is another area where the employers are worried since they have no control over the manner of usage of the net and the online behavior of the employees while they are working from home.[6]

Under normal times, the government’s hands are tied by fiscal prudence and danger of inflation. Now is the time the government is unshackled. Even if fiscal deficit goes up to around 5% in such times, neither economists nor critics would mind it.

As we deal with recession and deflation, there is no threat of the specter of inflation either. Some leeway from fiscal deficit and $50 billion windfalls from lower oil prices can allow the government to put together a stimulus plan of $100-120 billion, unprecedented but justified for the worst-ever crisis. When things are uncertain like prevailing during Covid-19, it is advisable to communicate on a regular basis wherever any untoward incident seems to be occurring or may be triggered.[7]

We have had experienced over the years that email communication can do wonders including a dispute wherein it prevented a sure short damage claim getting substantiated in international arbitration. Never miss small things as they matter the most when it comes to damage control. In other words, the simplest tool for damage control is simple communication, and choosing your words very carefully.

Litigation Probability

It’s time to realize that companies are heading towards a new series of pandemic litigation! Every company may be having hundreds of commercial litigation but would have no litigation cropping up during the pandemic business cycle. We anticipate that the post-pandemic Covid-19 could also bring pandemic litigation as the business cycles of every industry have been badly hit. We are going to cover exhaustively on litigation probability under the Legal opportunities Series-COVID. Have you included correct factors while carrying out a risk assessment under Pandemic Legal opportunities? Time to realize that the unforeseen legal opportunities can be on par with the nature of COVID-19.[8]

The crucial factors need to be identified and addressed in the most effective manner during the pandemic crisis. The broader picture may be the same but the intrinsic factors may vary from industry to industry. The pandemic era can add disputes and liabilities for your company, are you really prepared? Law firms have continued assisting clients with addressing the coronavirus even as they are seeing their own operations greatly impacted by COVID-19.

Law firms and other legal organizations also are bracing for a possible recession—potentially a lengthy one—sparked by the fallout from coronavirus. The cancellation and postponement of major conferences, trade shows, and other large events will also generate legal opportunities in law-related work extending beyond the coronavirus pandemic.

Certain courts have also limited the number of functioning benches and the number of advocates and litigants permitted in the courtroom. Physical filing windows have also been shut in certain forums, such as the National Company Law Tribunal (“NCLT“) and the National Company Law Appellate Tribunal, although the state High Courts and the Supreme Court appear to largely permit such filings so far. In relation to the statute of limitations, the notification issued by the Delhi High Court keeping filing facilities opens clearly states that the period of limitation would continue to run.

However, there is no clear indication of whether the time period during which filing facilities are not available would be excluded from the period of limitation. As a general rule, unless expressly exempted by legislation, when the period of limitation has once begun to run, no subsequent disability or inability to institute a suit or make an application stops/extends the period of limitation.

The NCLT expressly allows for online filings (in states where it is available) or through an e-mail to the registrar in cases where the limitation period is nearing expiry. In the event filing windows are shut without any express provision for online filings, parties should nonetheless attempt the filing by e-mailing or couriering the registrar to ensure that their claim does not become barred by limitation.

Day-to-Day Business Contracts

Under the Indian Contract Act, 1872 (the “Contract Act”), if a contract becomes impossible or impracticable to perform, parties can avoid contractual obligations either (i) on grounds of force majeure (“FM”) under Section 32 of the Contract Act read with the FM clause in the relevant contract, or (ii) on grounds of the frustration of the contract under Section 56 of the Contract Act. These two remedies are mutually exclusive: where the contract has already provided for FM events, parties cannot rely on an FM event to frustrate the contract under Section 56 of the Contract Act.[9]

Typically, FM clauses excuse one (or both) parties to a contract from the performance of their obligations, in whole or in part, following the occurrence of unexpected or unforeseen events outside of that party’s control. While some contracts may expressly list “epidemic” or a synonymous term as an FM event, other contracts may have more generic references to ‘acts of god’ or ‘events beyond the control of the parties’ as FM events.

Counterparties could argue that COVID-19 constitutes an FM event excusing them from their obligations under the contract. In this context, an office memorandum dated February 19, 2020, issued by the Procurement Policy Division, Department of Expenditure, Ministry of Finance has expressly clarified that the disruption of supply chains due to the spread of COVID-19 in China or any other country should be considered a natural calamity and that the FM clause may be invoked with respect to the Manual for Procurement of Goods, 2017.[10]

While COVID-19 could be considered as an FM event, it is important to remember that the party claiming an FM event would also need to establish that it prevented or hindered such party from discharging its obligations under the contract. Courts apply a high threshold in such matters and have held that a contract will not be discharged merely because it has become more onerous, or expensive, for one party.

Workplace Operations

Several state governments have notified their own state-specific COVID-19 regulations with wide powers to take appropriate measures for controlling the pandemic. As a result, orders, regulations, and advisories have been issued regulating the conditions of workplaces in various states to prevent transmission of the virus. Employers are expected to adopt a proactive approach in educating and securing their employees by apprising them of preventive measures, while also ensuring that strict hygiene-related protocols are installed at the workplace.[11]

Certain states have sought to achieve social distancing by encouraging offices to allow employees to work from home. In certain states such as Maharashtra, the government has mandated a complete shutdown of private sector organizations until further notice. However, no elaborate governmental guidance has been issued in relation to the implementation of work from home measures.

Further, there is minimal guidance for organizations that lack the optimal infrastructure to effectively enforce work from home measures.[12] While we witness companies reducing wages or imposing leave without pay during this period, certain state governments have encouraged the prevention of such reduction or non-payment of wages. Karnataka requires employers to provide 28 days of mandatory paid sick leave to employees infected with COVID-19.

Law firm’s weather downturns are better than the overall economy does. Of the past three downturns, only the global financial crisis of 2008–09 resulted in a decline in aggregate Am Law 100 revenue (Exhibit 1), in part because of countercyclical practice areas and prices continuing to advance (see lessons two and four). But the current downturn may turn out to be unprecedented in the post-war era, so law firms must prepare for a wide range of scenarios.

There will be a wide spectrum of demand responses across legal sectors and practice areas. It is natural to expect that litigation and restructuring practice areas will do well while other transactional practices will suffer, but the reality will be more nuanced. While there are unprecedented near-term slowdowns in some court systems, over time, dispute and investigation practices are indeed less correlated with the rest of the economy than transactional practices.[13]

Priorities for law-firm leaders

Based on the lessons learned from previous downturns, current demand outlook, and our experience in a professional-service firm, we suggest six themes for law-firm leadership to consider. These through-cycle priorities aim to sustain value in the near term and build value over the long term. This is the time to be there, truly, for your clients. Their business context has shifted dramatically, presenting unprecedented challenges.

Law-firm partners should proactively connect with and really listen to clients and their needs. Even a two-line personalized email can send the right message. As client agendas and priorities shift, be ready to pivot your client-service agenda to match them—for example, by introducing new partners or expertise in a pertinent area. Invest significantly in relevant knowledge, crisis advisory, and other services that deepen trust.[14]

In line with the lessons from past downturns, outlines an early view on potential demand implications across both select practice areas and sectors over the remainder of 2020. Although some practice areas, such as labor and employment, will likely see consistent demand shifts across sectors, transactional practices, in particular, are likely to be focused on very different situations in more distressed sectors such as travel, transportation, and leisure than in areas such as healthcare. Every firm should develop a perspective on the demand outlook for the sectors, client types, and practices to which they have the greatest exposure.

Conclusion

As the COVID-19 situation rapidly evolves, organizations should:

  • closely track regulatory and legislative developments,
  • implement measures to ensure compliance with the various notifications, orders, regulations, and advisories being issued from time to time, and
  • Assess the risks to their key business contracts.

Note that an Invest India Business Immunity Platform has also been introduced for investors and the business community to access all relevant information on COVID-19, including the latest information and government announcements. It is quite likely that normalcy in operations will not be restored in the near future. Accordingly, all stakeholders should develop contingency plans for contract execution, regulatory filings and compliances, and litigation matters.


References:

[1] COVID-19: Coping With The Pandemic And The Changing Regulatory Regime In India- https://www.mondaq.com/india/contracts-and-commercial-law/909232/covid-19-coping-with-the-pandemic-and-the-changing-regulatory-regime-in-india

[2] The coronavirus and its consequences Legal impact on supply and production relationships – https://www2.deloitte.com/in/en/pages/risk/articles/legal-consequences-coronavirus-deloitte-germany.html

[3] Company law and legal advisory – https://www.rsm.global/india/service/company-law-and-legal-advisory

[4] Coronavirus to hit law firm revenue, with layoffs on the way – consultants – https://blogs.thomsonreuters.com/answerson/coronavirus-to-hit-law-firm-revenue-with-layoffs-on-the-way-consultants/

[5] Coronavirus outbreak: The legal implications – https://www.nortonrosefulbright.com/en/knowledge/publications/29747bbb/coronavirus-outbreak-the-legal-implications

[6] Coronavirus: Key Legal Issues For India Inc. With Covid-19 – https://www.bloombergquint.com/opinion/coronavirus-key-legal-issues-for-india-inc-with-covid-19

[7] 13 ways the coronavirus pandemic could forever change the way we work – https://www.cnbc.com/2020/04/29/how-the-coronavirus-pandemic-will-impact-the-future-of-work.html

[8] Coronavirus a blow for consultants, but also an opportunity – https://www.consultancy.eu/news/3973/coronavirus-a-blow-for-consultants-but-also-an-opportunity

[9] Six important legal M&A considerations during the global pandemic – https://www2.deloitte.com/global/en/pages/legal/covid-19/m-a-during-covid19.html

[10] The high demand for lawyers amid the coronavirus pandemic – https://www.abajournal.com/web/article/lawyers-and-law-firms-say-they-are-inundated-with-coronavirus-related-queries

[11] https://economictimes.indiatimes.com/markets/stocks/news/coronavirus-pandemic-a-bigger-opportunity-than-a-threat-for india/articleshow/74843364.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[12] COVID-19: Implications for law firms – https://www.mckinsey.com/industries/financial-services/our-insights/covid-19-implications-for-law-firms

[13] Covid-19 Fallout: Pressure on an hourly fee of top consultants, lawyers- https://economictimes.indiatimes.com/news/company/corporate-trends/covid-19-fallout-pressure-on-hourly-fee-of-top-consultants-lawyers/articleshow/75482898.cms

[14] The high demand for lawyers amid the coronavirus pandemic- https://www.abajournal.com/web/article/lawyers-and-law-firms-say-they-are-inundated-with-coronavirus-related-queries

If you have any query regarding this Article, feel free to Ask Us

You cannot copy content of this page