The short term impact of Covid-19 on people, businesses and markets applies across sectors and market segments, and requires a range of immediate actions, while positioning for the strongest possible future. Consequently, in legal terms, Covid-19 is sector agnostic.
Business needs to take its legal obligations into account when developing its strategy and tactics to help protect the health of its workers and the stability of its business, especially as the move to virtual or remote working increases and the business is required to more actively manage workforce levels. The need to communicate, collaborate and ensure continuity of business is likely to create a new world of client-business-worker skills and relationships.
Equally, businesses should be seeking to more actively manage their business, and their commitments, rights and entitlements, than ever before. Changing contractual commitments, the impact on supply chains, the deferral of M&A activity and the financial impact of market disruption, may result in a business being unable to meet all of its commitments, or have others’ commitments to it being met. Being aware of, and understanding, the contracts that create the foundation of a business is critical, as is the ability to quickly find and analyze them. A business which has invested in its legal department, with an effective digital contract management system, technology-assisted analysis and contract automation, is likely to be ahead of its competitors in effectively managing the risks and opportunities of existing commercial relationships and navigating the creation of new commitments and relationships as the business climate evolves.
The same applies to managing any business fragility, in terms of reduced levels of business activity, cash flow management issues and supplier risk, as well as obligations to government and other authorities for tax and other payments. Taking a proactive and informed stance with key counterparties on the legal implications of any downturn on your business or need for restructuring, and the approach to maximizing the performance of your commitments, will create a better solution. A similar position should be taken for commitments due to a business by its key counterparties.
The legal industry, and the legal function within many businesses, is at an early stage of transformation. The impact of Covid-19 on business will change this. It will show that a business needs to be able to assess its legal obligations and exposures, and strategically align technology, systems and processes to enable simple things like finding and analyzing legal contracts quickly and efficiently, rather than relying on the human capital of its internal or external lawyers. It will help drive transformation of the ‘operating model’ for the delivery of legal services – from the way teams are structured, how they operate and the architecture of systems and tools that support the delivery of services. These changes will be enabled by the availability, and broader use of, a range of different providers of those services, as advisory, tech-enabled products and insourced and outsourced solutions come together to provide business with a “portfolio” approach to providing legal support to business.
At its core, business will better appreciate that legal is an essential business function that helps to support and drive customer engagement and experience, simplicity and efficiency of functions and processes and the ability to drive revenue, as well as helping to reduce cost and manage risk.