In-house legal teams across the globe are currently facing the daunting task of organising contract reviews during the coronavirus pandemic. It is relatively uncharted territory for most, but now in-house counsels are suddenly expected to be experts on the contractual impacts of COVID-19.
This is not an unfamiliar position for many – in a survey by Gartner before the virus emerged, it was found that 64% of general counsels 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 in their 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, to find force majeure clauses and determine whether they will protect the business against claims of non-performance.
Force majeure is a contract feature that has been discussed at length during the pandemic. Does COVID-19 count as force majeure? What broader language would cover the virus in the clause? While these are certainly circumstances beyond our control, how much of the contract performance should be excused?
With the coronavirus and force majeure, it appears that the assertion of the clause heavily depends on the specific language of both the provision and the anticipated circumstances. For example, broader contractual terms such as an ‘Act of God’ or ‘Impossible Circumstances’ could potentially cover the virus outbreak. Realistically, terms focused around diseases are thought to be more viable and more widely accepted by courts. However, even this is uncertain, as it is an unprecedented situation.
It is thought that contracts with force majeure clauses are not all guaranteed to be covered from the impact and effects of the coronavirus, which makes it even more vital for legal teams to be both quick and thorough in their contract reviews. The sooner the relevant parties can be notified, or actions can be put into place, the less potential damage there will 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 at the same time.
With the government and public health guidelines on the coronavirus outbreak being regularly updated, in-house legal teams must examine how their own corporate governance aligns with them. It 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.
All of these clauses are likely to have been affected in some way by the coronavirus outbreak, and it is possible that they will be continue to be affected for the foreseeable future. There is no doubt that COVID-19 will impact how contracts will be written going forward, and in-house legal counsels will be expected to stay ahead of the curve with these changes.
Disrupted Working and Huge Workloads – How Can I Stay Ahead?
During the pandemic, in-house legal teams are now expected to complete these extra contract reviews and tasks, while maintaining the huge workload they already had. Organising and carrying out contract reviews, or even checking work from junior legal counsels, can take a significant amount of time when carried out manually. Unfortunately, in the current environment, even more contract reviews are needed, and the results are required quickly.
Many will also be working from home due to COVID-19, and while for some the flexibility is welcome, others have a less than ideal 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 having all contracts stored in one place simplifies clause searches.
Software also is particularly beneficial when working from home, as it often provides a way for work to be shared and implemented remotely. This collaboration is even more vital now, due to the unfamiliar territory being covered by the coronavirus – strategic decisions should be made by collaborations of teams, bringing different knowledge and experience to the table.
COVID-19 will dramatically affect the way that contracts are written and how contract reviews are carried out. Not only could legal tech help with this in the future, but it could also help in-house legal teams now. Despite the massive workload and expectations set on legal counsels currently, legal tech can alleviate this and ensure that despite the current global uncertainty, contract reviews are completed quickly and efficiently.
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