Covid-19: pandemic forces major shift for global business community
JOANNE HARRIS
Following the first reported cases in Wuhan, China, in December 2019, Covid-19 – a new illness caused by the coronavirus – has been carried by travellers to almost every country in the world. On 11 March the World Health Organization declared the outbreak a pandemic; since then many countries have closed borders and enforced a lockdown of citizens.
The impact on global business – and on law firms serving those businesses – has been rapid and significant. British airline Flybe went into administration in early March, before the pandemic was confirmed, citing Covid-19 as one cause. Many other airlines are also grounding planes and cancelling flights. Retailers and culture and hospitality companies are facing a similarly uncertain future as they are forced to halt trading.
A global recession is now seen as a certainty by economic experts, as all the major stock indexes have seen values plummet from previously record highs.
‘The market reaction has confirmed our expectation that it was vulnerable to a shock. There are now embedded options structures in markets which mean volatility feeds on itself,’ says Helen Thomas, Chief Executive Officer of London-based financial risk consultancy BlondeMoney. ‘In terms of the global economy, it shows us that globalisation has made our supply chains vulnerable to a supply shock. Trade is now of the utmost importance for every single country.’
A wave of insolvencies worldwide is expected. Some jurisdictions are already trying to mitigate this, through measures including slashing interest rates and introducing economic stimuli.
Germany’s federal government is suspending the usual three-week deadline to file for bankruptcy until 30 September 2020. The aim is that companies in trouble will have extra time for financial help to reach them. Germany has said it may extend the law for a further six months if needed.
Law firms are already having to adapt to a changing flow of requests for help from clients.
‘The establishment of new companies and new business has diminished to a very low level,’ says Jonás Bergstein, Vice Chair of the IBA Healthcare and Life Sciences Law Committee and a partner at Bergstein Abogados.
This has been replaced by other work: Bergstein reports queries about employment law, contracts, insurance and taxation issues.
‘We anticipate work in the bankruptcy area. It’s probable that certain companies are already considering whether filing some kind of Chapter 11-type protection against bankruptcy is advisable,’ he says.
‘Tax and employment are busy. Litigation won’t decrease, compliance won’t decrease, antitrust won’t decrease. Definitely insolvency will increase,’ agrees Benjamin Grebe, Co-Vice Chair of the IBA Latin American Regional Forum and a partner at Prieto Abogados.
The other area set to see growth – and possibly an increase in international cooperation – is the healthcare field.
Cécile Théard-Jallu, Newsletter Officer for the IBA Healthcare and Life Sciences Law Committee and a partner at De Gaulle Fleurance & Associés, says the crisis has forced a rapid increase in the use of apps and other digital tools to help prevention, diagnosis and patient care.
‘With the crisis I think that this will explode. Not all companies or states are at the same level but it’s a global movement,’ says Théard-Jallu.
In order to keep business moving right now, millions of office workers – including lawyers – are now operating remotely, in perhaps the first real test of how far flexible working can be taken. Encouragingly, most firms have reported a smooth transition.
Théard-Jallu suggests that the pandemic could force a lasting shift in the way business is done globally, finding a middle ground between the need to generate and maintain relationships with clients and the likely acceptance that travelling and site meetings are no longer necessary in the proportions we know today.
‘There will be a collective acceptance that remote work, when adapted to the context, can both help businesses grow and be good for the planet,’ she adds.
This, lawyers argue, is not necessarily the end of globalisation, but more a shift.
‘Everyone should take this as an opportunity to improve communications, not to stop globalisation – to prove that we can work without being connected physically all the time,’ Grebe suggests.
BlondeMoney’s Thomas suggests that the economic and social impact of the Covid-19 crisis is likely to last well beyond the point where we are all able to get back to ‘normality’. ‘This sudden stop will take a long time to reverse and will cause permanent changes to the way we live and work. Some for better, some for worse,’ she says. ‘But the key thing to remember is that this recession has been caused by a reduction in the velocity of people. As long as that remains impaired, the potential growth for the economy will be impaired.’
Thomas notes the argument that globalisation cannot be reversed as we are all now more interconnected. ‘But this crisis is yet another – if not the biggest – challenge to that equilibrium,’ she says. ‘We won’t go backwards but we will evolve. Humanity always adapts to overcome.’
A message from the IBA President
Dear friends,
We are living in extraordinary times. I send you my sincerest greetings and profound wishes that you and your families are safe and well.
As international lawyers – servants and agents of the global economy – we are witnessing our economy being closed down with unprecedented speed. In an extremely brief time, our lives and ways of working have been completely transformed.
As international lawyers – servants and agents of the global economy – we are witnessing our economy being closed down with unprecedented speed. In an extremely brief time, our lives and ways of working have been completely transformed.
The way that lawyers and law firms everywhere have rapidly responded to such a range of new challenges – to yourselves and your clients – has my deepest admiration. This profession should be enormously proud of itself and its people, who have achieved this while also wrestling with accompanying health and societal anxieties.
I am sure we all share the sense that we are only just beginning to understand and respond to all the consequences of our new environment. It is already clear that every specialism of law and facet of justice has been affected – from the operation of courts to the defence of fundamental freedoms and the rule of law.
Our constituencies, committees, excellent officers and superb staff – all of whom I would like recognise here for their dedication and skill – are already at work to find ways to guide members through this challenging period; guidelines are being written, papers drafted and webinars and podcasts planned. A webinar by the IBA Law Firm Management Committee on Covid-19 crisis management attracted a large audience last week (and is available to watch here), and you will see more early fruits of this work soon. If you have any ideas in your specialism to contribute, please raise them with your committee leaders. As always at the IBA, it is the power of our collective effort and members’ generosity with their expertise that will provide us with so many valuable insights for the new road ahead.
I also give you my commitment that during these difficult months the IBA will continue to honour its founding purpose of advocating for, and defending, the rule of law. The challenges in this mission were already profound, but now we are seeing governments taking new powers to deal with the emergency. We are all aware that such powers have sometimes been taken without full legal or democratic scrutiny, or without returning to it within rigorous timetables – we intend, with your help, to be part of that scrutiny. This global pandemic clearly demonstrates that every one of us shares a common humanity in this closely integrated world. We will continue to work for greater justice and the full protection of rights.
We hope that we can all enjoy each other’s company again before too long. Let us all work together to return to that revived global life and to continue to be proud of the contributions the IBA makes through you, our members. Keep safe and well, and let our hopes conquer our fears.
Yours,
Horacio Bernardes Neto
President, International Bar Association
Podcast: women and the justice system
This IBA podcast examines the various ways in which legal and judicial systems around the world continue to fail victims of sexual harassment and violence. In the wake of the Harvey Weinstein trial and revelations about the widespread abuse of non-disclosure agreements, this podcast looks at how the justice system is not currently set up to support vulnerable women and where significant changes may need to be made.
The podcast discusses legal action against the Crown Prosecution Service following claims it dropped ‘weaker’ rape cases in order to hit internal targets and boost conviction rates.
It explores the importance of redefining consent, and suggests that nuanced laws and definitions are urgently needed in order to tackle common myths surrounding rape and abuse, as well as public attitudes towards consent itself. The podcast also notes the significance of tackling everyday sexism as a way of promoting a wider recognition of harassment.
Also addressed are deterrents for women coming forward. The trial process itself can be extremely intrusive and traumatic. Coupled with a lack of funding and resources – especially in the context of legal aid cuts in the UK – a system is created that lets victims down and prevents women from getting justice.
The podcast concludes with an acknowledgement of the progress made so far and looks ahead to further wide-scale jurisdictional changes that need to be implemented on to ensure that concerns are addressed as soon as possible.
To listen to the podcast, visit tinyurl.com/WomenJusticePodcast
Webinar: Covid-19 crisis management for law firms
On 19 March, the IBA Law Firm Management Committee presented a webinar on the internal and external aspects of Covid-19 crisis management for law firms. The webinar explored what firms should be doing for themselves and their clients during the outbreak.
Routine operations for lawyers and their clients have been affected by the Covid-19 outbreak – which was declared a pandemic by the World Health Organization on 11 March. Technology has gained new importance as a large number of lawyers and other professionals find themselves working outside of the office on a daily basis.
The webinar, which had a live audience of over 300 participants, was hosted by a panel of highly experienced law firm leaders from around the world. It focused on pressing issues, including the immediate steps law firms should take in order address employee safety, agile working and budget adjustments. Another prominent issue covered was the role law firms now play in terms of services provided to clients, including advice on employment law and force majeure.
The panellists, some of whom were from jurisdictions severely affected by the virus, discussed their experiences of Covid-19 and its implications so far. They explored crisis management and how law firms can best equip themselves to provide advice on crisis-related matters. Hwa Soo Chung, Chair of the Health Practice at Kim & Chang, explained that while it appears ‘business as usual’ for clients, internally, law firms are having to take ‘unprecedented measures to ensure there is no disruption’. Rosario Zacca, Co-Managing Partner at Gianni Origoni Grippo Cappelli & Partners, said his firm established a team of lawyers early in the outbreak to assist clients with labour, corporate, contractual and litigation issues.
The webinar concluded with an emphasis on communication and trust-building within firms as a main facet of crisis management, and the need for greater investment in technology going forward.
Watch this webinar at tinyurl.com/Covid19CrisisManagement
Webinars to analyse innovative agriculture practices and ethical law firm management
The IBA Agricultural Law Section will present a one-hour webinar on 22 April entitled Law, Climate Change, and Agriculture: legal tools in the arsenal. It will focus on the role innovative agriculture practices and technologies play in greenhouse gas (GHG) mitigation and adaptation in climate change, and highlight the legal, policy, and institutional changes that will encourage innovation in developing countries.
Agriculture is a significant contributor to global GHG emissions, with farming reportedly responsible for a quarter of total GHG emissions. By contrast, the share of farming on global gross domestic product is approximately four per cent, indicating that farming is highly GHG-intensive.
The webinar will cover topics including the role of innovative agriculture practices in combatting climate change; how one can best jump-start innovation through legal, policy, and institutional changes; and the role of the modern legal practitioner in addressing climate change in the agricultural sector.
Another upcoming webinar, hosted by the IBA Professional Ethics Committee, will take place on 12 May. Entitled 'Law Firm Management and Ethical Considerations,' it will consider how to approach law firm management and organisational aspects to ensure compliance with ethical rules and regulatory standards.
Lawyers make ethical decisions every day when deciding how to defend or represent a client. The codes of professional ethics guide a lawyer’s behaviour, but so do the lawyer’s personal standards. For instance, lawyers must know rules and guidelines governing client confidentiality. Another ethical challenge may arise if a large law firm selects a non-lawyer to be their Chief Executive Officer, since non-lawyers cannot give legal advice.
The one-hour webinar session will focus on these and other issues involving law firm management from an ethical angle and perspective.
To register for these webinars, please visit tinyurl.com/AgricultureWebinar and tinyurl.com/EthicalLaw respectively.
PRIME finance wins prestigious award
Jaime Carey
The IBA is pleased to announce that PRIME (Panel of Recognised International Market Experts) Finance Foundation’s judicial training programme has won the prestigious Halsbury Rule of Law Award at the LexisNexis Legal Awards 2020. The IBA has been a key supporter of this programme for years. It was set up in 2008 in the wake of the global financial crisis, to ensure that the best expertise was available for the settlement of complex market disputes. Willem Calkoen, a member of the Advisory Board of PRIME Finance Foundation, said ‘we are enormously grateful for the support of the IBA. It has made a huge difference to the reach of our training.’
The IBA would also like to congratulate Jaime Carey, Managing Partner of Chilean law firm Carey, who has been named as Law Firm Leader of the Year by the news organisation Latin Lawyer. Carey has been a valued IBA officer for many years. He has held a variety of positions, most recently as a member of the Legal Practice Division Council. He is recognised for pushing Chile’s largest firm to innovate and achieve success.
Nominations open for the IBA’s annual awards
The IBA is calling for nominations for its three annual awards: the IBA Award for Outstanding Contribution by a Legal Practitioner to Human Rights, the IBA Pro Bono Award and the IBA Outstanding Young Lawyer Award. The deadline for receiving nominations is 2359 BST on 19 June 2020.
The awards, sponsored by LexisNexis, are free to enter and open to all lawyers, IBA members and non-members alike.
In 2019, the awards were presented at the IBA Annual Conference in Seoul. The joint winners of the IBA Award for Outstanding Contribution by a Legal Practitioner to Human Rights were Dr Margaret Ng and Martin Lee SC JP; the IBA Pro Bono Award was given to Cecil Rajendra; and Elif Goksen was awarded the IBA Outstanding Young Lawyer Award.
To view the nomination forms and related criteria, visit tinyurl.com/2020IBAAwards
Labour shortages prompt immigration reform in Japan
JENNIFER SADLER-VENIS, IBA MULTIMEDIA JOURNALIST
Last year, Japan turned to immigration reform to combat the ongoing labour shortage threatening its economic growth. The reform package, effective April 2019, was brought in to boost the number of workers in 14 blue-collar sectors by opening up immigration to foreign workers with ‘specified skills’. Working visas had predominantly previously been granted to high-skilled professionals such as lawyers and doctors.
In late 2019, as a result of Japan’s shrinking working-age population, there were 1.5 vacancies for every job applicant and many stores and companies had to reduce their hours and services for lack of human resources. Estimates suggest 6.4 million workers will leave the workforce by 2030 – when the percentage of the population over 65 is set to reach 30 per cent. The losses are likely to be from the blue-collar sectors specified by the recent reform. Japan also faces a stagnant birth rate of 1.4, significantly lower than the sustainable replacement rate of 2.1.
Yumiko Murakami, Head of the Organisation for Economic Cooperation and Development’s Tokyo Centre, says although ‘there is a very strong resistance to immigration in Japan’, the real need to secure labour has created a ‘strong economic incentive on the part of businesses and on the part of policymakers, and that’s why there was a big revision in the government’s stance on immigration’.
The amendment to the Immigration Control and Refugee Recognition Act, pushed through by Prime Minister Shinzo Abe’s ruling Liberal Democratic Party in late 2018, is Japan’s most comprehensive reform of immigration policy since the 1990s. It comprises a set of policy guidelines and two amendments to existing legislation, creating two new visa statuses for foreign workers: Specified Skilled Worker (i) and (ii). Workers in the first category can stay up to five years in total, cannot bring their families, and must work in one of 14 specified industries, including construction and nursing. Those in category (ii) are only accepted in the construction and ship-related industries, but have no limit on their visa renewals and are permitted to bring their spouses and children.
Policy guidelines have been introduced, including requirements for employers to pay foreign workers equal wages to Japanese workers and to provide support for the workers to secure accommodation and undertake Japanese language classes.
The reform may suggest a significant shift in perspective for the Japanese government and for Japanese society in general, which has traditionally been conservative. However, the reform faced significant resistance. Murakami highlights that Prime Minister Abe had to clarify that ‘this is not immigration law, this is facilitating guest workers who will all return to their countries after a specific period of time’.
The Japanese government has also considered implementing ongoing checks on the status of the labour shortage, so that the influx of foreign workers does not create an excess of labour.
But for Anne Frances O’Donoghue, Co-Chair of the IBA Immigration and Nationality Law Committee, ‘given the falling birth rates in Japan and the projected decline in their population, there should also be encouragement of permanent settlement for foreign workers.’
Murakami says ‘the reality is the birth rate has been going up in countries where immigration has been a major factor, but what may actually have even more significant meaning to the economy and society, is this idea of diversity of thought, which is key for innovation.’
Discussing countries like the US, which has begun to block immigration by certain ethnic groups and nationalities, Murakami notes that ‘Japan struggles in a big way to promote innovation and entrepreneurship, and much of that is because people tend to have a very homogeneous background, the way they look at the world is very similar, because it’s a very homogeneous society.’
‘When you have a tight immigration policy, that narrows the type of people in your society and that’s going to have an impact on the innovative start-up space’, she adds.
Although the reform package should bolster the Japanese economy with an influx of 350,000 workers, commentators have highlighted the emphasis on short-term immigration as problematic. The reform is reminiscent of Japan’s Technical Intern Training Program, established in 1993, which allows companies to import foreign, temporary workers. The Program has raised concerns – including from the Japanese Justice Ministry – about workers’ rights.
Hideaki Roy Umetsu is Vice-Chair of the IBA Asia Pacific Regional Forum and a partner at Mori Hamada & Matsumoto. He hopes that the recent reform will tackle these issues by protecting foreign workers’ pay, ensuring workers can move between companies and blocking companies with previous labour law violations from hiring foreign workers on the Specified Skilled Worker statuses.
O’Donoghue, who is also Managing Director and Principal Lawyer at Immigration Solutions Lawyers in Sydney, stresses the importance of workers’ rights being protected with the reform package: ‘These measures not only need to be implemented, but strongly enforced and administered. Forced labour and modern slavery still persists today in global supply chains and migrant workers are a vulnerable group’.