COVID-19 and Litigation Risk: How can businesses respond to Litigation or a Litigation-Precipitating COVID-19 Event?

Takeaways

  1. Involve counsel early, and often, to maintain privilege and reduce risk.
  2. Take key steps to mitigate risk, including preserving records, interviewing witnesses, and notifying insurers.

Summary:This last installment of the three-part series on litigation and COVID-19, covering risks, mitigation, and disputes, identifies key actions to consider in the event of litigation or a litigation-precipitating event, such as confirmation of COVID-19 on the premises.

Introduction

As the COVID-19 pandemic continues, businesses should consider developing an action plan in the event of litigation or a COVID-19 related litigation-precipitating event. As businesses slowly re-open, the potential for litigation persists and businesses should be prepared to address potential litigation flowing from the new risks presented by COVID-19.

This is the third blog post in a three-part series on litigation and COVID-19, covering risks, mitigation, and disputes. While we have previously written about the risks businesses might face and mitigation steps businesses can utilize, this last installment identifies key actions to consider in the event of litigation or a litigation-precipitating event, such as confirmation of COVID-19 on the premises.

In the event of a COVID-19 related crisis, consider the following:
 

  • Retain Legal Counsel and Experts: Legal counsel can provide you with strategic and legal advice. Legal counsel can assist in evaluating risk in potential litigation and help create and maintain privilege over sensitive records.

    An expert can provide useful guidance regarding key decisions, help negotiate with public authorities, and guide public relation statements. In future litigation proceedings, your business may benefit by demonstrating that business decisions were guided by expert advice. Legal counsel and experts may also play an important role in the other considerations described below.
     

  • Notify Your Insurance Company: Ensure you have a complete and current copy of your insurance policies, and consider retaining counsel to review your policies in light of current COVID-19 related risks. Your insurance broker can provide you with full copies of your policies and provide information on additional coverage that you may want to consider, including insurance for your company’s directors and officers. You should be aware of, and comply with, any obligations of the insured in your policies. If you become aware of a litigation-precipitating event or a claim, you should notify your insurer immediately, including to avoid any suggestion by your insurer that coverage has been voided by reason of delay of notice.
     

  • Avoid the Creation of Catastrophic Emails: Schedule a meeting with your team to discuss any sensitivities regarding written communications. To the extent your team members have questions regarding the management of litigation or a litigation-precipitating event, encourage verbal discussions instead of email correspondence. Alternatively, make sure legal counsel is involved early in order to increase the likelihood that such communications are privileged.
     

  • Review Applicable Contracts: Review key contracts and identify any relevant obligations, potential defaults, and notice requirements as a result of COVID-19. Legal counsel can also assist with such contract review, as well as any potential risk mitigation strategies.
     

  • Identify, Locate, and Preserve Records: Records that are relevant to the litigation or a litigation-precipitating event must be preserved. Preserving records is important, both because these records can aid in your defence and because even inadvertent destruction of evidence can lead to allegations of spoliation. You should be able to demonstrate diligence in identifying, locating, and preserving relevant records. Legal counsel can help identify which records are likely to be relevant, as well as draft and issue a litigation hold memorandum to particular document custodians describing which records should be preserved in anticipation of, or in preparation for, litigation.
     

  • Identify and Interview Key Witnesses: Once key witnesses are identified, detailed witness statements should be obtained while the information is fresh and available. Litigation can be a lengthy process during which key witnesses may become unavailable or develop an adverse interest to your business. Ideally, legal counsel participates in the witness interviews and drafting of the witness statements so that these records are protected by privilege.
     

  • Internal and External Investigations: Consider whether an internal investigation is warranted or an external investigation is mandatory. Regulatory investigations may be mandated, with specific notifications and procedures to be followed. You may also choose to conduct an informal investigation, which may involve legal counsel or other experts depending on the scope and goal of the investigation. Experts retained for an investigation, whether in connection to litigation or other regulatory proceeding, should ideally be retained through counsel in order to engage privilege.
     

  • Special Considerations for Multi-Jurisdictional Disputes: If your business operates in multiple jurisdictions, disputes in one jurisdiction may affect your business in another and may potentially make your business the target of a multi-jurisdictional action. It is important for your business to take a unified approach. In multi-jurisdictional actions, legal counsel and experts should coordinate and work together to identify potential issues and create a harmonized defence.

Conclusion

As the challenges facing businesses evolve and governments continue to issue COVID-19 specific regulatory obligations and best practice guidance, litigation-precipitating events related to COVID-19 will be an ongoing issue. Businesses should take steps to mitigate their risks and have a plan to address these precipitating events before litigation is formally commenced. Engaging legal counsel and experts prior to litigation being commenced can aid businesses in proactively and pre-emptively knowing and satisfying their legal obligations, which can in turn be less expensive and time-consuming than defending an action, and help protect your business’ reputation.

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