Seeking counsel over consequences of Covid-19 - Claire Francis

It is encouraging that companies are pausing before enforcing some contractual rights in favour of a collaborative, pragmatic approach to issues caused by coronavirus (Covid-19).

General counsels are turning to their Brexit plans to help with prioritisation, says Francis.
General counsels are turning to their Brexit plans to help with prioritisation, says Francis.

In advising a range of businesses on their response to the crisis, our experience is that companies are not rushing to strictly enforce every contractual right they have in response to coronavirus problems. We are seeing businesses work together in order to help resolve the issues they face and keep everyone going.

For example, we have seen some businesses decide they could serve legal notices but they don’t want to do so because there is the longer-term relationship with their customer, and they want to be seen to support that customer where they can. Those softer considerations are vital at this stage, there’s a longer-term view than just dealing with the emergency knee-jerk reaction of the disruption to businesses.

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Most companies are prioritising staffing and supply-chain issues, as without these elements in place no business activity can continue. One thing we have seen is general counsels (GCs) turning to their Brexit plans to help with prioritisation. Many of the issues with coronavirus are very similar: where am I going to get my labour from? Do I have labour shortages? How is my supply chain affected, and how can I move goods and services in an effective manner?

Pinsent Masons has launched a podcast, Brain Food for General Counsel, to help GCs face the big issues that will affect their business, and I was joined on the first episode by former UK Government minister and Pinsent Masons’ ­advisor Douglas Alexander.

He said the public policy response to the crisis would have consequences that nobody, not even those taking the ­decisions, will be able to foresee. He said: “This Covid-19 virus is going to change not just the way we work but the way a lot of our society and our economy is organised. I was in the British cabinet from 2005 until 2010, so I was with Gordon Brown as he led the British government’s response to the global financial crisis.

I would say, hand on heart, none of us fully appreciated the extent to which the post-crisis world will be fundamentally different to the pre-crisis world, and I have to say that is my sense in relation to the crisis that we’re in the ­earliest days of at this stage.

“The character of this crisis is somewhat different from the global financial crisis that was, if you like, the financial system having a heart attack that had real economic consequences for the rest of us. This is actually a heart attack for the real economy, which potentially has significant financial system consequences in the months and years ahead.

“A principal challenge of the government at the time of the 2009 financial crisis was to be the banker of last resort. It feels to me today that the government is facing a new challenge in this crisis, which is effectively to become the insurer of the last resort. There is no ­other institution with deep enough pockets and with the commitment to the public interest of the government, to be able to try and effectively underwrite and stand behind businesses that are in real jeopardy as the consequence of the very necessary steps that are being taken in regard to social distancing.”

The podcast also discussed businesses’ access to finance and loans and from a commercial perspective whether they still need to be paid or if there will be payment holidays. I think all of the banks and finance providers are working with their customers to try and work out how they can help. It is in their interest to do so and to keep those businesses trading throughout this period.

We have also obviously seen the government say it intends to provide some financial support to firms – very welcome news, but we are now eagerly waiting to get the next phase of that in terms of how people can apply for such support and exactly when it will be available.

– Clare Francis, partner and specialist in commercial law at Pinsent Masons.

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