Covid-19: Asian law firms turn attention to post-pandemic world

Stephen MulrenanThursday 23 April 2020

With much of Europe and North America in varying degrees of state-imposed lockdown, many residents and businesses are closely monitoring developments in Asia for signs of a feasible exit from the disruption caused by Covid-19. Unfortunately, any hopes may be somewhat premature.

In early April, China, the initial epicentre of the virus, recorded no Covid-19-related deaths for the first time since the country’s National Health Commission began publishing daily figures in January. There remains, however, significant concern about asymptomatic cases and a second wave of infections brought in by foreign arrivals.

This is also true of Hong Kong, which was hailed for its success in managing the initial outbreak but which appears to have re-imported the problem via returning students and workers from abroad.

Singapore and South Korea have been commended for their management of the crisis, specifically their proactive approach to tracing and testing for cases. And yet in Singapore, local transmission is now increasing.

In South Korea, the fear now is one of complacency, with the warmer weather challenging rules around social distancing.

Elsewhere, the Japanese government has declared a state of emergency. Finally, India remains in lockdown with real fears that its under-resourced public health system could be swamped by patients.

‘The government intervention in India was urgently required but it also meant that the legal market immediately felt the shift in clients’ priorities and a slowing down of many work-streams as a reaction to the lockdown,’ says Ashish Razdan, Working Group Liaison Officer – India, of the IBA Asia Pacific Regional Forum and a partner at Khaitan & Co in Mumbai.

Similarly, in South Korea, the government’s emphasis on social distancing in response to the outbreak has negatively impacted the overall economy, especially the services and manufacturing industries, says Sky Yang, Co-Chair of the IBA Asia Pacific Regional Forum and a partner at Bae Kim & Lee in Seoul. ‘Consequently the timid inclination towards domestic and international investments in those affected industries caused related M&A activities to either be suspended temporarily or in some cases permanently,’ explains Yang.

However, in many other areas of law, clients have been quick to seek counsel on the likely impact of Covid-19 on their businesses. In the employment area, for example, client queries include those around workforce terminations, pay-related liability issues for employers and issues around furloughing.

Real estate concerns include the impact on lease payment obligations under lease agreements. Banking clients, meanwhile, have enquired about the effect of moratorium on loan repayment obligations, and the refinancing and restructuring of debt and related obligations.

Disputes around commercial contracts are also on the rise, particularly over the impact of the virus on long-term supply contracts, the suspension of obligations and other commercial considerations in the face of force majeure. Speaking about the situation in India, Razdan says, ‘The introduction of the lockdown and subsequent statutory and regulatory modifications, relaxations and moratoria announced by the government immediately meant that we had to be conversant with the changing landscape on a daily basis.’

Law firms in Asia were also the first to have their business continuity plans tested – particularly their obligations around the health and safety of staff. Japanese firm Atsumi & Sakai disseminated information on infection countermeasures at the end of January and introduced staggered commuting hours for staff, before then enhancing an established remote working system that ensures data security. ‘No one at our offices has been infected, and because countermeasures were taken from an early stage, no particular inconvenience has arisen,’ says Hiroo Atsumi, a senior partner at the firm.

Immediately following the initial outbreak, many law firms in Asia established a form of outbreak working group/response team and management committee, responsible for epidemic prevention and control.

The measures taken by such groups reflect the unique conditions of the region’s many jurisdictions. For example, in China, firms are gradually resuming office work following compulsory remote working for the last few weeks. But with the move comes various control initiatives such as daily entry and exit registrations. Some firms are reserving protective materials for staff, including masks and gloves.

Although business travel to China’s Hubei Province remains suspended, employees of King & Wood Mallesons (KWM) are required to strictly follow procedures for travel reporting and approval by recording their travel information online. ‘The pandemic requires our firm to regularly monitor and assess the situation in order to adjust our policies with regards to remote working and business trip restrictions,’ says Ariel Ye, Vice-Chair of the IBA Asia Pacific Regional Forum and a partner at KWM.

Unsurprisingly, many firms are investing heavily in their IT infrastructure. Given the immediate nature of India’s lockdown, Razdan says his firm’s technology platforms, cloud-based services, integration of financial and administrative tools and remote access to them, were tested without much notice and at full capacity.

South Korea avoided the more stringent lockdown measures seen elsewhere but has extended its social distancing rules. As a result, the measures taken by Bae Kim & Lee include a work-from-home system for staff on a rotating basis.

Although the scale and duration of economic disruption caused by Covid-19 remain uncertain, Asian legal business continues albeit in a different way. Having ridden out the initial waves of the pandemic, law firms in Asia are turning their attention to functioning in a post-Covid-19 world – one where there is greater client receptiveness to digitisation and automation and greater staff inclination toward remote-working arrangements.