Legal Implications of Coronavirus on Your Business

I sent an email to my list about three weeks ago that had more responses than any other email that I had previously sent.

I didn't want to send it (it was about the coronavirus), but my job is to support entrepreneurs and help those that I serve avoid or limit risk in their businesses wherever possible. I want to see them succeed. Even through the hard times.

And so I sent it.

This was early March, and at that time, so many people were still metaphorically keeping their head in the sand regarding the coronavirus and its likely impacts, including on their businesses. Avoiding this topic feels like the safe path for many people.

So many that I spoke with were continuing their plans for events, whether hosting or attending. While I was having to cancel all of my upcoming travel (which was all for business) for the foreseeable future.

Things changed quickly here in Seattle, as we were ground zero in the United States for the virus. Luckily, we have had state leadership that is taking this issues seriously and trying to do all they can to *flatten the curve.*

But elsewhere, so many people that I was speaking with (I have clients and colleagues around the nation and around the world) were continuing to say "this will turn out to be just like a flu." Clearly that is not the case.

In the span of a day or two, my phone started ringing off the hook, with the same question over and over, largely around contract interpretation having to do with cancellations. The tidal wave had begun.

Which is why I emailed my list on this challenging subject.

In the space of a few hours,

• I had cancelled my attendance and my role as a featured speaker at several events during March & April.
• One client called to discuss that he was receiving multiple cancellations for a live event he was planning to host in the next couple of weeks.
• Another client, whose business depends solely on live events, had numerous clients cancel their events in their entirety and ask for a refund of their downpayment due to the coronavirus.
• Another client was having difficulty even securing a location for an event 4 months away because the facility was citing likely impacts of the coronavirus.

Additionally, here locally at the time:

• Public gatherings in Seattle and a wide array of local business events were being cancelled daily.
• All school extracurricular activities, field trips and outings had been canceled for the remainder of the year, and the public school system was about to be closed.
• Parents were being given the option to keep their children at home (which I did, even before school closures).
• Certain health care providers were shuttering their offices (yes, closing their doors) for the foreseeable future - especially those that were not considered essential.
• I heard an employee at the post office telling the customer in front of me that there was even talk of closing down post offices in the Seattle area.
• That week alone over one hundred thousand employees at local cornerstone companies were directed to work from home.
• My husband's workplace made a similar move, transitioning all "non-essential" employees to working from home for the foreseeable future.
• Certain products became unavailable at local stores and online.
• A friend reported that her husband, who manages an AT&T location, told her that they have no cell phones to sell at their location (because they come from China), and they won't be available again until mid to late this year.
• In addition to daily emails from the Public School District, and updates from King County, Governor Inslee was beginning to discuss supply chain interruption and various additional impacts that were being assessed due to this quickly evolving situation.

Things have continued to evolve rapidly since this initial update.

Including that more and more of my clients have reached out for support in regards to impacts to their businesses.

Even up until a few weeks ago, I wanted to believe that the coronavirus scare, which remained largely in China at that point, would somehow blow over.

It's not. This is just the start for us here in the U.S.

And as I began investigating further by watching videos put out by leaders at the World Health Organization, including by people on the ground in China who monitored as this scenario unfolded, it became evidently clear that we are astonishingly underprepared for this event in the West. China and neighboring countries have systems and unified approaches in dealing with and attempting to control outbreaks like this.

But in the United States, we have 50 un-coordinated local state governments, and a CDC that is woefully underfunded. We still do not yet fully understand how it will change things for the near future.

Why am I reaching out to talk about this?

Two reasons. First, because I feel the weight of social issues heavily, and I feel like we all have an obligation in this scenario to do our best to keep our neighbors and society as safe as possible. (And this will require drastically changing the way we do things for some time until we get this thing figured out).

And second, because it will most certainly impact all of us who rely on events and social gatherings to deliver services, support our business growth and share our message.

Let's talk first about our collective social obligation to each other.

In watching several videos this morning put out by leading world epidemiologists and leaders at the World Health Organization, (including some on the ground in China who have first-hand experience with this virus and its impacts), a single statement stood out to me that went something like this:

"The mistake that we are going to make is that healthy people who are not at the greatest risk will want to continue life as usual. They will minimize the potential impacts, and in so doing, will cause the spread of this disease so that it does reach those who are most at risk."

This landed very heavily with me.

Because we as humans do have a tendency to want to minimize or ignore risk. But we can't in this scenario, minimize the risk to the elderly and to those with underlying health conditions, as well as the healthy who may also be adversely impacted. We have to collectively take responsibility for the solution.

And even if we don't want to, we are likely to be forced to face its impact anyways, like my clients who are already feeling it in their bottom line, and not by choice.

I realize we all get to make our own decisions as we face this unknown territory together. I care that we all come out the other side healthy, collectively stronger, with strategies that we can better deploy in the future when we face such challenges. And I care that you, and your business do well in the meanwhile.

So what is to be done?

I will discuss thoughts on legal implications below, and then share some practical thoughts about what quick pivots may need to happen to create greater sustainability for the next year or more while we collectively address this scenario.

Thoughts on the Legal Implications of the Coronavirus.

If you, like so many of my clients, are asking "What do I do when a client wants to cancel their contract, their attendance at an event, or when an event I have planned is cancelled by the facility?" then this next section is for you.

Examine your contracts. What do they say regarding cancellations?

Also, is there a Force Majeure clause? Force Majeure refers to a clause that is often included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations. ("Acts of God, war, weather" etc).

It is unlikely that the legal system will be able to address the losses that will come with this event. It is also equally unlikely that they will not find such an event to fall within the protections offered by a force majeure clause if one exists. Obviously these clauses can be drafted well, and poorly, depending on the circumstance, so this is not a one size fits all. But Force Majeure clauses are generally designed to protect parties during Force Majuere events.

Further, even without a Force Majeure clause, individuals can be protected by the Doctrine of Impracticability which is a common law doctrine that protects someone from liability for the failure to perform under certain circumstances.

Impracticability means the excuse in performance of a duty. Under the common law of contract, impracticability is a defense that can be relied on when the duty to be performed becomes unfeasibly difficult or expensive for a party who was to perform. The doctrine of impracticability arises out of the occurrence of a condition which prevents him/her from fulfilling the contract.

Beyond the legalese, and in the absence of any language that covers this event, what type of business decision with an aim towards fairness feels doable for you? You might need to have open ended conversations with clients in these scenarios about what feels fair.

I want to be clear that businesses bear unusually high risk in the current circumstances. There is no way around this.

But I am a big believer that we can all come up with solutions when parties are focused on what feels like a fair and reasonable outcome.

Absent that, your clients, event venues, and other parties with whom you engage in your business are likely to be excused for any cancellations or terminations due to Force Majeure or the Doctrine of Impracticability.

Which is why I am highly recommending some pivots, if you haven't considered these already.

This first one is hard for me, because I love people. I have a big caring, feeling heart for people. And I love FACE TO FACE time with people, including at events.

Pivot #1. Go Online in an even Bigger Way.

I, by the way, still have yet to do this well. I have built both my businesses through building relationships the old-fashioned way (via telephone and face to face). I will still be doing LOTS by telephone, but I will also be shifting my focus to showing up online and serving in a bigger way, which I have wanted to do for several years.

This is going to be a year (or more) where social distancing is responsible, and in many circumstances mandated.

But this doesn't mean we have to be disconnected. Be online. Show up. Serve. Give. Collaborate.

I realize that connecting online is different, and doesn't allow us to hug. (I'm a hugger). That part will be sad. And again, it will also be socially responsible.

Pivot # 2. Connect Regularly via Phone & Video.

Reach out! I am an old-school phone user. It is a powerful tool in business! Pick up the phone and nurture connections with a power hour every day (phone & video calls). If you have connected with me via LinkedIn, then you very likely have received a message from me inviting you to connect via telephone. Not everyone does. But for those that do, it's really powerful! I have some phenomenal connections made right here on LinkedIn that are now "real life" connections and not just online profiles.

Pivot #3. Rescheduling or Rethinking Live Events.

I would highly recommend that you have alternate strategies in place if you rely on in-person events for your business growth. You are likely to feel the impact whether or not you pivot, but especially if you don't. Take your live events online. There will be some advances in this area this year without a doubt. There is often no greater motivation than necessity.

Pivot #4. Get creative.

Creativity is the lifeblood of an entrepreneur's business. So is change. It's the nature of things. Collaborate. Get creative. Create entirely new ways of doing the thing you have always done. Come up with new services or new ways of serving people. Change your methods given the changing landscape. Creativity will serve you well in these unusual circumstances.

Pivot #5. Explore Insurance Options and Business Loans.

If you don't already have insurance in place for your business, now may be the time to consider implementing it to help you face some of the financial risks that are arising in the current environment. Connect with a recommended (local) business insurance broker to determine your options. Get referrals from other business owners if you don't know anybody in the insurance world. And if your bottom line suffers despite these pivots, you may explore a business loan to float you through the challenging times. I would recommend seeking approval for a business load or line of credit before the full economic damage is felt, whether or not you fund the loan. Having the option will help you rest easier.

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I have to believe there will be a time to return to greater in-person connection.

In the meanwhile we have to think differently and do differently. And that includes thinking about our neighbors. And taking care of clients and our businesses in a new way.

I really hope that collectively we can minimize the impacts we are likely to experience.

I want good health, and a thriving business for you.

Sending so many wishes for you and everybody that we can pivot, and continue to serve each other, and show up in the world with our brilliance, while also keeping each other safe.

Sending love from Seattle,

Heather, The Legal Website Warrior®