The adage “uncertainty is the only certainty there is” feels more appropriate than ever. There are no easy answers about the ultimate severity of COVID-19 in the U.S. or the direction of the global economy.
That lack of predictability, however, is fueling immediate demand for attorneys in a broad range of sectors.
“Any time the world is filled with discomfort and uncertainty, then the lawyers are going to make out,” said recruiter Scott Love, founder of the Attorney Search Group.
Specifically, firms with highly regarded employment, cybersecurity, health care and insurance practices are fielding a surge of inquiries. And private equity, restructuring and tax lawyers can expect their phones to start ringing in the coming weeks. Dealmakers, meanwhile, can prepare for a period of unwanted calm.
Employers are grappling both with how to deal with workers who may have been exposed or infected with the coronavirus, as well as how to deal with a workforce that has no choice but to become more mobile.
“It’s unique compared to anything I’ve seen before,” said Andy Cripe, the chair of Polsinelli’s employment advice and investigations group. “It’s a crisis that raises a lot of employment issues and urgent requests coming in fast and furiously.”
Employers need to know what they can ask of workers who are manifesting symptoms and how to ensure pay and benefits continue to workers who have been asked to self-quarantine, while also avoiding long-term precedents that would be impossible.
“I think the real critical period is right now through the next month. This is when the containment measures and the mitigation measures are going into effect,” Cripe said. “People are doing this stuff for the first time.”
But there are longer-term implications too. In three months, after employers have mandated remote work, they’ll now need to figure out how to bring people back to the office.
All the while, Cripe’s team is focused on following the advice they’re giving to clients.
“We’ve had daily meetings with our practice group ourselves to make sure our people are taken care of,” he said. “We’re using Zoom and other technologies that allow us to stay on top of things.”
The flood in event cancellations and general disruptions to business as a result of the virus has businesses and organizations checking their insurance policies to see how they can secure relief.
That’s been a boon for lawyers like Mitchell Dolin, who co-chairs Covington & Burling’s global insurance recovery practice.
“There’s been a combination of actual claim work as well as forward-looking advisory work into the nature of the insurance asset and how it might respond to various scenarios,” he said.
The event cancellation scenarios started a little while back.
“But obviously, with the rapidly changing circumstances in the last 10 days, we’ve seen more activity and more questions running a much wider gamut,” Dolin added.
At Polsinelli, the insurance coverage lawyers are working on an interdisciplinary team alongside employment attorneys, health care attorneys and litigators.
“The question of whether you shut down is an important one if you have business interruption coverage. If you voluntarily shut down it’s possible you don’t see any coverage. If there’s an order by local health officials, you may have coverage,” Cripe said. “It’s a lot of stuff to think about in an extraordinarily short amount of time.”
Cybersecurity and Privacy
Moving employees offsite isn’t as simple as just sending them home and asking them to log onto their home computers. Baker & Hostetler partner Lynn Sessions said that in the last week in particular, clients have been looking for guidance into how to ensure the security of these remote setups.
Meanwhile, there’s concern that malefactors will attempt to take advantage of the situation.
“We expect that threat actors may actually increase their efforts as more people move home,” Sessions said, warning they will look to use communications from companies’ CEOs and HR leaders as potential phishing mechanisms.
Even legitimate coronavirus maps have had malware inserted inside. And other schemes are likely to follow.
“I think our team is going to continue to be busy, and to see some things that we may not have anticipated either.”
This all comes after privacy experts have been working with employment lawyers on what they can ask of employees who might be exposed.
Duane Morris partner Delphine O’Rourke started writing and speaking on preparedness for COVID-19 at the end of January, including presentations to 11 hospital associations. But she said she’s definitely seeing a spike in inquiries from clients.
“The focus then was clinical preparedness,” she said. “But it was in the last week that they were realizing that this was real.”
President Donald Trump’s declaration of a national emergency Friday afternoon is going to create even more demand. Clients will need to make sense of what they can and can’t do now that many of the laws and regulations governing the health care industry are to be waived.
Hospitals and health care providers are also going to have to confront supply chain issues and also determine how to balance caring for infected patients while serving the needs of those with non-coronavirus medical needs.
“I spent several days in health system command centers answering questions as they came up and looking forward,” O’Rourke said. “We’re still at ground zero right now.”
Demand in Weeks to Come
As the economic effects of the current crisis become more apparent, there will be opportunities as businesses stumble. Expect restructuring work to grow, particularly in industries like energy, tourism and hospitality.
Private equity investors, meanwhile, are sitting on a mountain of capital that’s been accumulating for years, said Zeughauser Group consultant Kent Zimmermann.
“There’s a perception that some of that dry powder is going to start getting deployed into the market when funds think the time is right,” he said. “Time is increasingly going to be right as there’s distressed deals and lower valuations.”
Increased litigation volume also seems plausible, in part as a response to the immediate disruptions of the last week and near future.
“Particularly if people try to call on force majeure to defend or justify a failure to perform,” said Rudy Aguilar, managing member of McGlinchey Stafford.
But it may also be true more broadly if the economy moves into a recession, where litigation has historically served as a valuable hedge in a downturn.
And the federal government’s response will generate opportunities for tax lawyers, presuming tax breaks are part of any stimulus package. When all is said and done, there may also be investigations at the federal or state levels to see where avoidable missteps were made and to seek accountability.
Mergers and Acquisitions
One group of lawyers who don’t benefit from uncertainty are the dealmakers.
Aguilar said that he’s representing a seller in the middle of a significant transaction. The buyers, however, want a pause. He said it could be because they have doubts about whether the business will rebound after this period of flux, or the money they were going to use is tied up.
“Whatever deals are in process are on hold right now,” he said. “Whatever deals were being thought about are on hold right now.”
And for those hardy souls willing to consider new transactions, language pertaining to the coronavirus is going to be a necessity.
“I don’t think there is a large appetite for brand new deals right now,” said John Reiss, global head of M&A at White & Case. “For those contracts already signed, it is really hard to change a [material adverse event] clause. Basically they are saying that you can’t get out of it, even because of coronavirus, unless the impact of the coronavirus adversely effects your company more than other companies in the industry.”
Additional reporting by Patrick Smith.