Are Corporate Counsel Being Too Cutthroat About Contract Enforcement During COVID-19 Outbreak?
Legal departments and in-house lawyers are in a unique position amid the coronavirus pandemic. They could take "strong, uncompromising positions" on contract enforcement, but that might be a losing strategy in the end.
April 13, 2020 at 03:06 PM
4 minute read
The original version of this story was published on Corporate Counsel
With all the hand-wringing over contract litigation and negotiation surrounding force majeure clauses, some in-house counsel might have lost sight of the importance of maintaining business relationships during the COVID-19 pandemic.
In a blog post titled "You Don't Always Win by Being Right All the Time," Rich Gorelick, president of consultancy firm General Counsel Strategies, warned about the dangers of taking a win-at-all-costs approach to coronavirus-related legal issues, particularly when it comes to the enforceability of contracts.
Gorelick urged corporate counsel to "consider what 'winning' means for your company at this time," when businesses throughout the world are struggling and unable to fulfill certain contractual obligations.
"At the end of the day, you want to get whatever your contract is for. You don't want damages," he said Monday in an interview. "My advice to everybody would be to help with the recovery. You have to be a self-advocate, but hopefully your clients can see the picture that perhaps winning is defined differently than maybe what it was before this."
Gorelick, who formerly served as the top lawyer and corporate vice president for medical tech firm Integra LifeSciences Holdings Corp., asserted that legal departments are in a unique position amid the coronavirus outbreak.
In-house lawyers and their companies could take "strong, uncompromising positions," ignore the plight of their foundering business partners and demand payment or performance under the black letter language in their contracts.
"Technically, you will be 'right' to adopt that course of action, especially if the contract does not have a force majeure provision that excuses performance," Gorelick wrote in the post.
Instead, Gorelick said corporate counsel should be focused not on winning contract disputes but on crafting "solutions that are meant to preserve and fortify relationships that will endure this crisis and crises in the future."
Tim Voss, senior vice president, chief technology officer and chief information security officer for The Estee Lauder Companies Inc. in New York, said firms that have a more "people-based, relationship-based" perspective are better positioned now and will have an advantage later over counterparts who have taken a rigid approach to contracts.
"I think at this point it's a matter of leveraging the relationships that you have and trying to maintain that relationship through this and beyond," Voss said. He agreed to share his personal opinions on the issue and was not speaking for Estee Lauder.
"Technology changes so rapidly … that you need to make sure you have fluidity in your agreements and you get that by having a relationship where you can work through problems and challenges together," he added.
Gorelick's post resonated with Ed Hansen, a partner at Nelson Mullins Riley & Scarborough in New York who is focused on deals that transform how companies do business. He said he has urged clients for years to be less ruthless about contract negotiation and enforcement.
"Mainly because of the types of deals that I do, the relationship that you form with the client is in all ways more important than the contract that you end up with," said Hansen, who is a member of a LinkedIn group called "Negotiating for Humans."
Hansen hoped that the pandemic would be a turning point and spur more empathetic contract negotiations. But, so far, he said the coronavirus seems to have "amplified everything that everyone was doing before this hit."
"If you're the type of company that's cutthroat with you vendors, this is an opportunity for you to really cut their throats," he said. "If you're the type of company that is more relationship-based in the ways that you worked with your vendors then this is an opportunity to work through it together."
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllThe Right Amount?: Federal Judge Weighs $1.8M Attorney Fee Request with Strip Club's $15K Award
Kline & Specter and Bosworth Resolve Post-Settlement Fighting Ahead of Courtroom Showdown
6 minute read12-Partner Team 'Surprises' Atlanta Firm’s Leaders With Exit to Launch New Reed Smith Office
4 minute readMorgan Lewis Shutters Shenzhen Office Less Than Two Years After Launch
Law Firms Mentioned
Trending Stories
- 1Indiana AG Accuses Big Pharma of Inflating EpiPens Price by 600%, Lawsuit Says
- 2Up-and-Comer Scores First Legal Chief Post With Baltimore Orioles, the Team He Cheered for as Kid
- 3Plaintiffs Allege Carollo Retaliated Over Bayfront Trust Accounting Discoveries
- 4Perkins Coie Lures Former Longtime Wilson Sonsini Tech Transactions Partner
- 5‘The Decision Will Help Others’: NJ Supreme Court Reverses Appellate Div. in OPRA Claim Over Body-Worn Camera Footage
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250