The Homewood Chamber is asking local experts for their thoughts on the Coronavirus crisis. Hugh Nickson, with Nickson Law, LLC, answered our first five questions:

1) What threats do you see for small businesses in the coming weeks in the legal world?

Fortunately (or unfortunately, depending on your perspective), the “legal world” moves far, far too slowly to pose any sort of threat in the “coming weeks.”  The legal system will be dealing with cases that involve COVID-19 that will not even be initiated this year, and may not be resolved for several years.  So the first thing to do is STAY CALM.  There will be many other priorities – your health, the health of your family, employees and neighbors, your financial situation and that of your employees, just to name a few, that should definitely be given a higher priority than legal considerations.  That being said, businesses should start to evaluate their legal risks and potential liabilities as soon as they reasonably can, so as to mitigate such risks and potential liabilities as much as possible going forward.

2) What legal implications should small businesses be aware of as we deal with COVID-19?

Before I even attempt to tackle this question, please be aware that none of what I say here should be construed as “legal advice.”  There are no one-size-fits-all answers to legal questions, which is why, when you ask a lawyer a question, the most common response is, “it depends…”  It is unwise, and often inappropriate, to attempt to give actual legal advice without understanding your client’s actual facts and circumstances, so keep in mind that all of these answers are extremely “broad brush.”

First, the legal environment for employment, disaster relief, and business continuity is in a state of upheaval.  For example, the Families First Coronavirus Response Act was signed into law on March 18, 2020, and it will generally become effective as of April 2, 2020.  It created a new paid leave benefit called “emergency paid leave” that will change how many businesses must administer their paid sick leave.  It is to be hoped that this legislation will generally improve things for individuals and businesses.  However, as is usually the case with legislation that is passed in such a compressed time frame, there will almost certainly be “unintended consequences” of this law and the other COVID-19 legislation that are barreling through Congress.   Therefore, it will be important for business leaders to stay in touch with the rapid legal changes and communications that we can expect from the state and federal governments over the next days, weeks and months.

Second, businesses that have “business disruption” or “business continuity” insurance should examine those insurance agreements closely. After the SARS outbreak in 2003, some insurance companies began to put in provisions that exclude coverage for “loss due to virus or bacteria.”   If you think your potential business losses are covered with respect to a COVID-19 disruption, now is the time to confirm that and plan accordingly.

Third, business leaders that have vendor or supply contracts may want to examine their various contracts with the parties from whom they buy or to whom they sell.  Provisions that may require close examination may include the termination provisions, the definitions of “default” and any “Force Majeure” provision.  These will be important provisions to understand as supply chains are disrupted and the lack of demand forces businesses that normally purchase certain goods and supplies to cease doing so.

However, depending on the particular business and its owner(s), completely separate legal issues might be paramount.  For example, estate planning, tax planning, business continuity planning or even initiating the sale of one’s business might be the most important consideration for a particular business leader or owner.  It really depends on the specific facts and circumstances of the business.

3) What advice would you give a small business owner in this climate?

Again, the most important immediate considerations will not be legal ones, so:

  • Stay calm;
  • Evaluate your financial situation, both short and long term;
  • Make contingency plans for a short term (3 to 6 weeks) disruption, a long term (3 to 6 months) disruption, and a recurring cyclical disruption over the next 12 to 24 months; and
  • Stay informed with respect to the rapidly evolving legal and legislative environment, which will hopefully provide a significant source of relief for small businesses.

And while I very much appreciate that three last bullet points may seem antithetical to the first bullet point, now is the time to make clear-eyed and realistic strategies for yourself and your business.  You should involve your financial advisor, your banker, your accountant, and perhaps even your lawyer when you undertake these difficult considerations.

4) Are there any legal opportunities you see in this climate?

Sudden upheaval, change and disruption always creates opportunities, but most of them will not be legal in nature.  Some of the primary legal considerations for a business might include:

  • Employment law considerations;
  • Contractual obligations;
  • Business Disruption insurance;
  • Legislative changes and opportunities such as government-sourced or government-backed aid in the form of loans and grants due to the significant and widespread economic disruption that will be caused by COVID-19; and
  • Certain (temporary) changes in the tax environment such as the ability to withdraw from a 401(k) without incurring the 10% excise tax might afford business owners the opportunity to add more capital to their businesses.

5) How important is it for small businesses to have access to legal advice in the COVID era?

In an environment of sudden upheaval and disruption, it will be important for business leaders to have a general understanding of the changes in the legal and legislative landscape in which they operate.  Fortunately, in our well-connected and highly-informed world, that information is relatively available and often free to access.  However, as I mentioned earlier, specific legal advice, if needed at all, must take into account the client’s specific facts and circumstances.  Fortunately, Homewood is well supplied with many capable attorneys that stand ready to provide that advice to their clients.

For more information, contact Hugh Nickson at https://www.nicksonlaw.com/ .

7 Hollywood Boulevard

Homewood, Al 35209

(205)-871-5631

 

 

 

 

 

 

7 Hollywood Boulevard

Homewood, Al 35209

(205)-871-5631