As the novel coronavirus (2019-nCov, “Covid-19″) spreads at speed beyond Wuhan, China and other Asian economic hubs, to the Middle East, the Americas and Europe, the global community faces worsening economic repercussions and the threat of imminent pandemic.
Given its increasing impact on the global supply chain, the economy, and the people who make the world turn, it is less about whether organizations will be affected, and more about when and how?
Legal departments in all organization types must be proactive to mitigate the effects of this crisis.
Our global clients across the spectrum of industries are facing an almost unprecedented impact or threat to their global operations. Factories in China either remain closed or are working at a fraction of their total capacity, frequently less than 10 percent. Shipping containers are stacking up at ports or are facing rerouting as dock workers stay home. Trucking routes across China are severed due to quarantine measures. Many countries have suspended flights to and from virus-hit regions, reducing air freight capacity. Factories in Vietnam, Thailand, Japan, Korea, Mexico, and the United States are also reducing capacity due to shortages of input parts from China, a trend likely to continue as the crisis continues.
Further, retail, restaurant, and tourism industry are devastated as people stay home to avoid the virus.
Regardless of sector, our global clients are impacted by delayed or aborted corporate transactions (and a general slowdown in M&A and IPO activity in certain regions); sharp decreases in corporate earnings; increasing concerns over commercial viability of contracts; increase in the use of force majeure to cancel orders; cancellation of major public and private sector leisure, cultural and sporting events; and public relations issues.
We have set out below how lawyers in global organizations can implement a thoughtful and streamlined approach to leading through a global public health crisis.
Global public health crises such as Covid-19 are, thankfully, relatively infrequent—SARS (2003) and the Ebola crisis (2014-2016) are the most recent similar examples—but this can mean that response protocols within organizations receive less attention than those for more frequent crisis types and that companies lack experience in responding to these incidents.
Even the most prepared organizations may face significant challenges managing these events because staff, including lawyers and senior leadership, are unable to work effectively because of remote work protocols or they are unwell, quarantined, or stranded overseas.
As a result of Covid-19, organizations face significant potential legal issues, including:
If Covid-19 has or might have an impact upon an organization’s people or operations, the organization should take swift steps to assemble an incident response team and, where necessary, external legal advisors, to best adapt to the rapidly-developing situation.
Employees, customers, and the public all expect competent leadership in tough times. To achieve this, organizations should ensure that they:
By devising and following a strategic plan that covers these steps, lawyers in affected organizations have the opportunity to lead them through this crisis and to ensure that they are equipped to emerge stronger, more resilient and better prepared for the next unforeseen event.
Lillian Hardy is a Partner at Hogan Lovells in Washington D.C. where she heads the firm’s multidisciplinary, global crisis management practice, the HL Crisis Leadership Team. Benjamin Kostrzewa and Byron Phillips are attorneys in the firm’s Hong Kong office.