Six months into the pandemic, law firms in Asia are still looking for ways to cope with COVID-19 and its impact. While firms are rolling out various initiatives to ensure smooth working and keep morale up, there is the realisation that things will never be the same.
Starting from the first quarter of this year, almost every jurisdiction in the Asian region has experienced a complete or partial lockdown for at least some period. With offices shut and people stuck at home for long periods, there has been an unsurprisingly negative impact on business, and as a result, on legal work as well. Deals have been held up as parties have been unable to accomplish a number of things they took for granted, such as doing due diligence or even showing up in the same place to negotiate and sign documents. Add to that the phenomenon of companies slashing external legal spend, and law firm leaders have had a lot on their plate to deal with.
While many of these challenges, brought about by COVID-19 and more, need a long-term strategic rethink, law firms have for the most part been engaged in the initial months in fighting the most immediate fires – keeping staff safe, ensuring business continuity, and generally exuding a sense of normalcy. With lockdowns prevalent across the region, firms were forced to move quickly to remote working, and ensure that they had the technology to back it up.
“Across the region, we made a successful transition to full remote working in response to coronavirus and maintained high levels of productivity,” says Peter Scott, managing partner for Europe, Middle East and Asia at Norton Rose Fulbright. “We continue to prioritise the health and safety of our people and our clients. In some jurisdictions, we have started a gradual and phased return to working in our offices and in line with government recommendations. In the medium to long term, and following a survey of our staff in Europe, Middle East and Asia, we are planning for a new model of working which includes greater flexibility of working from home alongside office-working as it becomes safe to do so.”
David Cho, Asia co-managing partner and head of Hong Kong office at Dechert, says that the firm had robust business continuity plans already in place, having conducted extensive crisis planning exercises in recent years. “This meant we were able to respond quickly to the pandemic, implementing an early work from home arrangement for our people and ensure we had the necessary processes and structures in place to best support our clients and the situations they may face,” notes Cho.
He adds that the firm is currently engaging with its people extensively on matters such as the re-opening of offices at global, regional and local levels, and offering flexibility in choosing a work arrangement that best suits each employee’s circumstance. “We value each person and the contributions that they bring to the company and we have embedded gratitude as a practice into our culture so that people feel recognised and appreciated,” Cho. “We have given our business professionals glob-ally an extra day of annual leave – a ‘Day to Thrive,’ and recently introduced an e-version of our hard copy Dechert gratitude cards to send a thank you to any colleague anywhere in the world. We were extremely pleased to see more than 1,000 cards were sent in the first week that they were introduced.”
WORK IMPACTED
There is no doubt that the pandemic has been a blow to corporate legal work. Take M&As for example. The total value of deals regionwide fell 20 percent from the same period a year earlier to $381.2 billion, according to data from Refinitiv. Reuters reported that the virus, which has led to nearly half a million deaths globally, has caused demand to plummet across industries such as retail and travel, making it difficult for many firms to raise new capital.
But it hasn’t been all gloom of late. Psyche Tai, head of Hong Kong at Norton Rose Fulbright, says that the firm’s activity levels have remained “resilient,” with the Chinese corporate team in Hong Kong taking on five IPOs in recent weeks and currently working on 13 in total. “We are also seeing more demand for restructuring advice and over time, we expect to see distressed acquisitions in the M&A space,” notes Tai. “Our regulatory investigations team in Asia has been busy over the last year in particular and we anticipate that to continue. We also expect to see increased fraud and related litigation as well as disputes related to force majeure and business interruption.”
“We have seen an uptick in litigation, particularly in pandemic-related litigation, including cases against universities, nursing homes, manufacturers, and transportation companies,” he says. “We expect additional cases to be filed against life sciences companies and others as the plaintiffs' bar expands its focus to other industries. We have seen an increase in life sciences patent litigations filed, especially with COVID-19 related therapies.”
-- David Cho, Dechert
Cho feels that while undoubtedly COVID-19 and subsequent lockdowns have greatly impacted the global economy, there are a number of other factors such as the upcoming U.S. Presidential election, Brexit, China’s increasing economic development and global influence, growing protectionism by governments and a general sense of international political uncertainty, that have presented a range of challenges for businesses. “We have seen an uptick in litigation, particularly in pandemic-related litigation, including cases against universities, nursing homes, manufacturers, and transportation companies,” he says. “We expect additional cases to be filed against life sciences companies and others as the plaintiffs’ bar expands its focus to other industries. We have seen an increase in life sciences patent litigations filed, especially with COVID-19 related therapies.”
Similarly, in the international arbitration sector, parties are regularly invoking force majeure clauses, while other parties are seeking to terminate or significantly alter their contractual arrangements, Cho notes. “In securities litigation and enforcement, plaintiffs’ firms continue to file securities litigation cases arising from COVID-19, and we expect this trend to continue,” he says. “Numerous claims have been filed asserting violations of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 (Exchange Act) arising from alleged false statements or omissions relating to known risks arising from the pandemic, as well as overstatements regarding a company’s ability to thrive in this environment.”
In addition, Dechert is seeing COVID-19 related M&A litigation. “We also expect an increase in derivative cases, particularly those alleging a failure of oversight, as we proceed through and emerge from the pandemic,” says Cho. “Additionally, we expect a rise in fraud cases related to COVID-19 and in the product liability sector, we are seeing plaintiffs’ counsel trying to push courts and defendants toward remote discovery and even remote trials.”
NEW WAYS OF CLIENT SUPPORT
In this “new normal,” law firms have found that they need to go the extra mile to service clients. “We are drawing upon the knowledge acquired advising clients through previous market upheavals and we are also providing support in new ways,” says Tai. “For example, in Hong Kong, we recently hosted a series of virtual legal clinics about legal and regulatory issues for FinTech start-ups including corporate, restructuring, commercial arrangements and financial services.”
Jasmine Kaur, director of business development, marketing and communications for the Asia-Pacific at Baker McKenzie, says that businesses are being tested like never before, with multinational companies often facing a lock-down in one market while relaunching operations in another, all while keeping employee safety paramount. “The impact of the pandemic has also significantly varied by sector for companies, leading to sharp declines and business disruptions for some sectors and an increase in demand and new growth opportunities for others,” she says. In response, Baker McKenzie has launched its the Resilience, Recovery and Renewal (3R) framework, a three-phased approach resilience: dealing with immediate implications; recovery: stabilizing their business operations; and renewal: trans-formation of business models and strategies post COVID-19.
Firms themselves are also taking this time to rethink and restrategise their approaches to the region.
“We plan to develop our contentious and non-contentious capabilities in key centres including in China and Singapore. We will also continue to leverage our strength in Australia across the Asia Pacific region including in inter-national arbitration, restructuring and insolvency, and projects,” says Scott at Norton Rose Fulbright.
Kaur says that Baker McKenzie is regularly conducting virtual hearings, closing multi-jurisdictional deals and engaging in complex client discussions and advice, across multiple time zones, over its video conference systems and via its legal tech platforms. “While it’s too early to know what parts of this remote work we will adopt as regular practices in the longer-term, it is important that the technology infrastructure and processes are in place to facilitate our work and client service, regardless of our location,” says Kaur. “As we move to a different balance of in-person and virtual business interactions, we will also keep in mind our target of reducing our carbon footprint.”
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