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COVID-19 & Contract Reviews – The Expectations for In-House Legal

COVID-19 & Contract Reviews – The Expectations for In-House Legal

By
Zoe Peterkin, BSc Hons.
April 2, 2020

In-house legal teams across the globe are currently facing the daunting task of organising contract reviews during the coronavirus pandemic. In-house counsels now have to be experts on the contractual impacts of COVID-19 despite it being uncharted territory for most.

This is not an unfamiliar position for many. In a survey by Gartner, 64% of general counsels stated they regularly have to provide guidance on risk areas and business opportunities that they are unfamiliar with. However, the coronavirus brings a new type of challenge for legal teams; not only around contract reviews but in their own working lives too.

Finding The Force Majeure Clause

Due to the current situation, many in-house legal teams are now reviewing any contract that could face disruption. It is important to find force majeure clauses and determine whether they will protect the business against claims of non-performance.

Throughout the pandemic, force majeure was discussed at length. Does COVID-19 count as force majeure? What broader language would cover the virus in the clause? While these are circumstances beyond our control, how much of the contract performance should be excused?

COVID-19 And Force Majeure

The assertion of force majeure heavily depends on the specific language of both the provision and anticipated circumstances. For example, broader contractual terms such as an ‘Act of God’ or ‘Impossible Circumstances’ could potentially cover the virus outbreak. Diseased-focused terms are considered more viable and widely accepted by courts, but even this is uncertain. It is an unprecedented situation.

There is no guarantee that every force majeure clause will provide protection from the pandemic. This makes it even more vital for legal teams to be both quick and thorough in their contract reviews. The sooner relevant parties can be notified, the less damage there is likely to be.

Don’t Forget The Other Clauses!

While force majeure is at the forefront of many legal teams’ minds, there are several other crucial clauses that should be investigated simultaneously.

For example, Legal teams must examine how their own corporate governance aligns with the public health COVID-19 guidelines. This could involve revamps on office etiquette policies and working environments, or even contractual hours now that many employees are working from home.

There are also potential insurance policies for business interruption that need to be investigated, alongside notice periods and dispute resolution.

Many clauses have been affected by the coronavirus outbreak, and it is possible that they will continue to be affected for the foreseeable future. There is no doubt that COVID-19 will impact how contracts are written, and in-house legal counsels will be expected to stay ahead of these changes.

Disrupted Working And Huge Workloads – How Can I Stay Ahead?

In-house legal teams are now required to complete additional contractual tasks to keep up with the changes caused by COVID-19. But they already have a pre-existing workload.

Organising and carrying out increased contract reviews, or even checking work from junior legal counsels, can take a significant amount of time; especially when carried out manually. But in the current environment, contract reviews need to increase and the results are needed quickly.

Many will also be working from home due to COVID-19, and while for some the flexibility is welcome, others have a sub-optimal workspace. For some legal counsels, it could cause significant disruption to their work and may only add to the pressure of the role.

The legal industry has been sluggish in taking up legal technology. But now more than ever is the time to do so. Many legal teams have been turned off legal tech due to concerns about difficult implementation, which there is no time for in the current environment. However, most tech companies understand the importance of fast, effective integration and many will offer a demo or a free trial to see how it could work for each individual team.

Legal technology can play a huge part in managing workloads by automating previously manual processes, speeding up tasks and often reducing the likelihood of human error. Hours spent on contract reviews can suddenly become minutes, and storing contracts in one place simplifies clause searches.

Legal tech software allows work to be shared and implemented remotely. This makes it ideal for the new norm – working from home.

Collaboration is also of crucial importance, due to the unfamiliar territory covered by the coronavirus. Strategic decisions should be made by collaborations of teams, bringing a range of knowledge and experience to the table.

The Future

COVID-19 will dramatically affect contracts. Not only could legal tech help with these changes, but it could also help in-house legal teams now. Despite workloads and expectations for legal counsels, legal tech ensures that (even in the current global uncertainty) contract reviews are completed quickly and efficiently.

COVID-19 & Contract Reviews – The Expectations for In-House Legal

By
Zoe Peterkin, BSc Hons.
April 2, 2020

In-house legal teams across the globe are currently facing the daunting task of organising contract reviews during the coronavirus pandemic. In-house counsels now have to be experts on the contractual impacts of COVID-19 despite it being uncharted territory for most.

This is not an unfamiliar position for many. In a survey by Gartner, 64% of general counsels stated they regularly have to provide guidance on risk areas and business opportunities that they are unfamiliar with. However, the coronavirus brings a new type of challenge for legal teams; not only around contract reviews but in their own working lives too.

Finding The Force Majeure Clause

Due to the current situation, many in-house legal teams are now reviewing any contract that could face disruption. It is important to find force majeure clauses and determine whether they will protect the business against claims of non-performance.

Throughout the pandemic, force majeure was discussed at length. Does COVID-19 count as force majeure? What broader language would cover the virus in the clause? While these are circumstances beyond our control, how much of the contract performance should be excused?

COVID-19 And Force Majeure

The assertion of force majeure heavily depends on the specific language of both the provision and anticipated circumstances. For example, broader contractual terms such as an ‘Act of God’ or ‘Impossible Circumstances’ could potentially cover the virus outbreak. Diseased-focused terms are considered more viable and widely accepted by courts, but even this is uncertain. It is an unprecedented situation.

There is no guarantee that every force majeure clause will provide protection from the pandemic. This makes it even more vital for legal teams to be both quick and thorough in their contract reviews. The sooner relevant parties can be notified, the less damage there is likely to be.

Don’t Forget The Other Clauses!

While force majeure is at the forefront of many legal teams’ minds, there are several other crucial clauses that should be investigated simultaneously.

For example, Legal teams must examine how their own corporate governance aligns with the public health COVID-19 guidelines. This could involve revamps on office etiquette policies and working environments, or even contractual hours now that many employees are working from home.

There are also potential insurance policies for business interruption that need to be investigated, alongside notice periods and dispute resolution.

Many clauses have been affected by the coronavirus outbreak, and it is possible that they will continue to be affected for the foreseeable future. There is no doubt that COVID-19 will impact how contracts are written, and in-house legal counsels will be expected to stay ahead of these changes.

Disrupted Working And Huge Workloads – How Can I Stay Ahead?

In-house legal teams are now required to complete additional contractual tasks to keep up with the changes caused by COVID-19. But they already have a pre-existing workload.

Organising and carrying out increased contract reviews, or even checking work from junior legal counsels, can take a significant amount of time; especially when carried out manually. But in the current environment, contract reviews need to increase and the results are needed quickly.

Many will also be working from home due to COVID-19, and while for some the flexibility is welcome, others have a sub-optimal workspace. For some legal counsels, it could cause significant disruption to their work and may only add to the pressure of the role.

The legal industry has been sluggish in taking up legal technology. But now more than ever is the time to do so. Many legal teams have been turned off legal tech due to concerns about difficult implementation, which there is no time for in the current environment. However, most tech companies understand the importance of fast, effective integration and many will offer a demo or a free trial to see how it could work for each individual team.

Legal technology can play a huge part in managing workloads by automating previously manual processes, speeding up tasks and often reducing the likelihood of human error. Hours spent on contract reviews can suddenly become minutes, and storing contracts in one place simplifies clause searches.

Legal tech software allows work to be shared and implemented remotely. This makes it ideal for the new norm – working from home.

Collaboration is also of crucial importance, due to the unfamiliar territory covered by the coronavirus. Strategic decisions should be made by collaborations of teams, bringing a range of knowledge and experience to the table.

The Future

COVID-19 will dramatically affect contracts. Not only could legal tech help with these changes, but it could also help in-house legal teams now. Despite workloads and expectations for legal counsels, legal tech ensures that (even in the current global uncertainty) contract reviews are completed quickly and efficiently.

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