Morrison & Foerster’s global survey of 110 in-house GCs looks at impact and perceived challenges of pandemic over next 12 to 24 months
NEW YORK (April 2, 2020) – Morrison & Foerster, a leading global law firm, today announced the results of its coronavirus (COVID-19) business impact survey. Morrison & Foerster surveyed 110 in-house general counsel from global corporations to understand how this unanticipated health crisis is impacting their businesses now and over the long term, and what they perceive to be their biggest business challenges over the next 12 to 24 months.
As anticipated, the survey found that COVID-19 is changing businesses, with impact averaging 7.2 on 10-point scale (10 representing the most severe impact) and continuing near the same level (7.1) for the next six months. Legal counsel expect the impact level to decrease over the next 12 (5.7) to 24 (4) months, but do not see it completely dissipating. Although impact was not rated at the “severe” level (8 or higher) on average, more than half (52%) of companies rated today’s impact level at 8 or higher.
The survey highlighted variation of impact across different businesses. Seventy-nine percent of companies valued at $20 billion or more in revenue rate the impact of COVID-19 on their businesses at 8 points or higher — a 27 percentage point difference over companies in general. This difference may reflect the more global nature of $20 billion plus companies and the likelihood they felt the impact of COVID-19 earlier than other companies not as geographically dispersed.
“It is clear that regardless of the size or geographic footprint of a company, the COVID-19 crisis will have a long-term impact on the way business is done – affecting everything from the way workforces are managed and how global supply chains are configured to capital structures and corporate governance,” said David Newman, Morrison & Foerster partner and head of the firm’s Coronavirus (COVID-19) Task Force, who served as chief of staff of the U.S. Government’s Ebola response office in 2014-2015 while an official on the National Security Council staff.
Further, the survey looked at the impact on legal departments’ workload and the types of legal risks respondents identify as the most significant for their business. Approximately three out of five of respondents (62.7%) report that their current workload has increased as an immediate result of COVID-19, while one out of five (20%) report that workload has remained the same but changed, reflecting that companies are shifting their regular business priorities.
Employment/human resources (85.5%), contracts (67.3%), and supply chain disruption (56.4%) are seen as the top three legal risks posed by COVID-19, regardless of company size, reflecting the fact that this is first and foremost a human health crisis.
“Although it feels like we are in uncharted territory with regard to employees, the good news is there are some well-established legal principles in employment law that offer guidance on how to approach this issue,” said Morrison & Foerster Employment & Labor partner Janie Schulman.
By contrast, legal risk issues related to data security (29.1%) and privacy (18.2%) came in lower on COVID-19-related legal concerns.
“Security appears to be lower on the scale likely because the other risks are paramount at the moment,” said Miriam Wugmeister, co-chair of Morrison & Foerster’s preeminent Global Privacy and Data Security Group. “Unfortunately, the number of data security incidents is likely to rise in the near future which may impact many organizations.”
“These findings resonate with the broad range of the COVID-19-related business challenges we are assisting our clients to navigate,” added Mr. Newman. “It is critically important to mitigate the immediate crisis but also the long-term fallout. That’s why we are actively advising our clients on steps they can take immediately and long-term as this global pandemic continues to evolve.”
Find out more, including about some of the immediate actions and coping strategies in-house counsel have adopted to lessen the impact of the crisis on their business, by reading our survey report.
Morrison & Foerster surveyed 110 in-house legal professionals around the globe with organizational revenues ranging from less than $250 million up to more than $20 billion. The survey was conducted between March 20 and 24, 2020. The top three industries represented in the study include: finance and insurance (19.1%) followed by technology (12.7%) and manufacturing (10%).
Morrison & Foerster launched its Coronavirus (COVID-19) Task Force and Resource Center on March 2, 2020 to help address immediate questions and concerns from clients about planning and responding to the risks associated with the pandemic as it continues to evolve. Since its launch, the Task Force has advised dozens of clients – including leading U.S. companies in the retail, technology, finance, real estate, manufacturing, and pharmaceutical sectors – on their COVID-19 response efforts.
Our Task Force is led by Washington D.C.-based partner David Newman, the co-founder of the Firm’s Global Risk + Crisis Management Practice. Prior to joining Morrison & Foerster, David served in the White House Counsel’s Office and in various positions on the National Security Council Staff, where he helped coordinate the U.S. government’s response to the Ebola outbreak in 2014-2015. The Task Force is interdisciplinary in its approach and global in its scope, comprising of almost 50 attorneys (including almost 40 partners) from across the U.S., Europe, and Asia and spanning 17 practice groups.