How can businesses navigate a post-pandemic legal landscape?

Covid-19 | Covid-19 Advice | Legal

Clive Rich is Founder and CEO of Lawbite- the online legal Platform providing expert, accessible services to SMEs.

Here he gives Business Leader reader’s advice on business best practice going forward.

Since lockdown the business community has largely adopted an attitude of ‘we’re in it together’ as issues of non-performance or delayed payment have been worked through collaboratively.

However, as comforting Government support falls away and pressure mounts on businesses, attitudes will turn. To mitigate the risks of an increasingly hostile environment, SMEs will need to strategize with the following factors in mind:

1. Structure

Given the choice, structure your business as a limited company rather than a sole trader. Limited companies generally create limited liability for their owners if things go wrong, whereas sole traders end up responsible for their own debts.

2. Contractual risks

Where they are providing goods or services, SMEs can minimise risks against their own non-performance by:
– having a clear force majeure clause covering COVID
– having a cap on their liability
– minimising their warranties
– not agreeing an indemnity for non-performance
– excluding performance guarantees (eg sales targets)
– back ending any payments due

Where they are receiving the benefit of goods, services or payments, SMEs should employ reverse tactics to minimise the risk of non-performance by the other side.

3. Non-Execs

Many SME CEOs will have felt very lonely during COVID, handling enormous pressures in an unprecedented situation. The experience, connections and expertise of a Non-Exec can provide hope and practical assistance when SMEs hit troubled times.

A good Non-Exec, coupled with a well-crafted Non-Exec agreement to cover responsibilities and rewards, can make all the difference to small businesses.

4. Disputes

High numbers of disputes are likely in a post-COVID era as companies face increasing financial pressure and become less tolerant of their trading partners’ difficulties.

Taking only a day and boasting a 75% success rate, SMEs should use Mediation to resolve such disputes- a considerably quicker and cheaper option than resorting to litigation. Including a Mediation clause in their trading agreements will ensure Mediation becomes the contractual recourse if a dispute develops.

5. Utilising technology

Any analogue process that can be digitised or any commercial steps that can be automated/augmented with machine learning tools will leave an SME less vulnerable to the dislocating effects of a similar COVID emergency.

SMEs will need to be increasingly savvy in the way they review and negotiate agreements for licensing, using or developing software.

6. Employment

Employers will have to be mindful of ongoing COVID risks by fulfilling their ‘duty of care’ in keeping staff safe at work. Similarly, employers must not fall foul of employment laws designed to prevent unfair or constructive dismissal or discriminatory conduct when managing their workforce in response to changing conditions.

7. Commercial Property

The crisis has taught SMEs a lot about the desirability of remote working and they will want to make sure that any leases or other agreements for workspace give them the flexibility they need to suspend, terminate or adjust such arrangements.

8. GDPR

COVID has heightened the need for SMEs to regularly keep in contact with new and potential customers both for reassurance and to market to them to maintain revenues. But legitimate communication with customers is a function of an SME’s compliance with the data protection principles of GDPR. Ignoring those principles in a bid to bolster revenues risks sanctions from the ICO.

 

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