BLT: April 2020

     

    Featured Articles

    Business & Corporate

    When COVID-19 Impacts Your Deal: Evolving Impact on M&A Practices and Provisions

    Wilson Chu, Jenny Hochenberg, Michael G. O'Bryan, Rita-Anne O'Neill, William M. Monat

    On March 24, 2020, the ABA Business Law Section presented a webinar regarding rapidly evolving developments in M&A deals due to the influence of the COVID-19 pandemic.* Among other topics, the panel discussed considerations related to MAE definitions, COVID-19-focused representations, interim operating covenants, and the response of the representation and warranty insurance market to the current crisis.

    Business & Corporate

    Don’t Just Do Something—Stand There! A Modest Proposal for a Model Standstill/Tolling Agreement

    Jonathan C. Lipson, Norman M. Powell

    As we write, the COVID-19 pandemic is having a profound, and profoundly unpredictable, effect on the economy.* We profess no knowledge as to what lies ahead, or the timetable on which it will unfold. Indeed, this unknowing is precisely what led us to produce the model standstill and tolling agreement we describe below (and which you can access here in an annotated version and here in a version without annotations).

    Business & Corporate

    What’s Ink Got to Do with it? Enforceability of E-Signature in Commercial Lending Documentation

    Tracy Springer, Kiriakoula Hatzikiriakos

    In today’s digital economy, lenders are eager to implement innovative technological solutions to service clients’ needs faster and more efficiently while reducing costs. E-signature is one such potential solution that is currently receiving significant attention within the commercial banking industry. Replacing wet ink signature with electronic signature in a paperless process can save time and money for both lenders and their customers, reducing document handling time and expense, as well as the need for post-closing re-execution of loan documents to correct mistakes made when originally signing and dating the documentation.

    Business & Corporate

    Protected Series Under the Uniform Protected Series Act (2017), Draft for Public Comment

    Permanent Editorial Board for the Uniform Commercial Code

    The Permanent Editorial Board for the Uniform Commercial Code acts under the authority of the American Law Institute and the Uniform Law Commission (also known as the National Conference of Commissioners on Uniform State Laws). In March 1987, the Permanent Editorial Board resolved to issue from time to time supplementary commentary on the Uniform Commercial Code to be known as PEB Commentary. These PEB Commentaries seek to further the underlying policies of the Uniform Commercial Code by affording guidance in interpreting and resolving issues raised by the Uniform Commercial Code and/or the Official Comments.

    Business & Corporate

    Taking Your Mediation Practice Online in the Face of COVID-19

    Leslie Ann Berkoff

    Having served as a mediator for twenty-plus years, I am generally a proponent of having the mediation take place in person, with all decision makers physically present. I have always believed it was important to be able to see people during the mediation in order to secure trust and develop rapport, and also to read and evaluate micro-expressions during the process. Humans by nature connect and evaluate one another in various ways, including through eye contact and body language, both of which are visual cues, as opposed to voice inflection, which can, of course, be detected over the phone.

    Business & Corporate

    Push the Pause Button? Contracts and COVID-19

    Mark P. Henriques

    COVID-19 is having a dramatic effect on everyone’s lives. Our thoughts go out to all those who have been infected and their loved ones. While health has to be the first priority for everyone, this situation also raises significant economic and business issues. Businesses are seeing interruptions in supply, and many contracts can no longer be performed. Businesses are trying to decide whether and how to “push the pause button.” Others are unable to perform their contractual obligations and are trying to determine their legal rights. This article discusses some of the legal issues that inform the decision-making process.

    Business & Corporate

    Insurance Implications of COVID-19 in Mexico

    Thomas F. Morante, Yani R. Contreras

    No country appears to be immune from the spread of coronavirus. COVID-19 is now impacting individuals and businesses in Mexico, as it has impacted many of their trading partners in recent weeks. According to Mexican health authorities, coronavirus is not likely to peak in Mexico for a number of weeks, but precautionary measures are now being implemented. Just as Mexican individuals are adapting to the need for social distancing, so too are Mexican companies assessing how to lessen the impact of this pandemic, including reviewing the coverage afforded by insurance policies.

    Business & Corporate

    Civil Needs Unmet: The Latent Demand for Legal Services

    Hugh Logue

    A February 2016 Deloitte report, “Developing Legal Talent: Stepping into the Future Law Firm,” predicted that 114,000 jobs in the UK legal sector are likely to be lost to automation by around the year 2020.[1] In my view, while the report correctly states need for change in the legal services sector, I disagree that automation will lead to overall net job losses. Deloitte’s hypothesis, echoed by many others, assumes that all the legal needs in society are currently met by the legal services industry, and that as artificial intelligence and other technologies continue to grow they will take this work away from legal professionals.

    Business & Corporate

    Three General Counsels on Diversity and Inclusion

    Meredith Ritchie, Faith Anderson, Lisa Washington, Jacquelyne Belcastro

    Meredith Ritchie, general counsel and chief ethics and government affairs officer of Alliant Credit Union and co-chair of the Governance Subcommittee of the ABA Credit Union Committee, sat down with three accomplished general counsels to discuss the issue of diversity and inclusion. Faith Anderson is general counsel of American Airlines Federal Credit Union and is former chair of the ABA Credit Union Committee. Lisa Washington is SVP and chief legal officer of WSFS Bank. Jacquelyne Belcastro is VP and general counsel of Hydro Extrusion North America.

    Business & Corporate

    The Coronavirus Pandemic Could Mark the Dawn of the Virtual Office Revolution in the Legal Industry

    David Lawson

    The coronavirus pandemic has caused millions of people to work from home and forced thousands of companies to adapt to an environment where all or most of their employees are working remotely. For the legal industry, this unexpected and sudden transition to a virtual office model is likely to have a lasting effect. Before the pandemic, most law firms had little or no experience with a virtual office component to their business. Now these firms, and their attorneys, paralegals and staff, are experiencing the virtual office environment first-hand.

    Business & Corporate

    “ABA Free Legal Answers” Connects Clients and Pro Bono Attorneys Online

    Tali K. Albukerk

    A Florida man found himself in danger of becoming homeless and needed immediate legal advice. He submitted his legal question on ABA Free Legal Answers and quickly received a response from a qualified pro bono attorney licensed in Florida. This attorney’s advice allowed the client to better understand his legal rights and options. As a result of the advice, he was able to return to court with his required paperwork in order and received an extension of time, resulting in a far less dangerous living situation.

    Business & Corporate

    Changing Hallway Behavior: How to Interrupt Implicit Bias

    Ellen G. McGinnis, Jennifer Reddien

    Law firms and in-house legal departments have moved past mere recognition of the importance of diversity and inclusion (D&I) to implementing widespread programs aimed at curbing biases that can stand in the way of diversity goals.[1] Formal training programs can only go so far, however. Law firms and legal departments also need employee buy-in on the necessity of giving and receiving real-time prompts aimed at thwarting biased behavior before it takes effect.

    Business & Corporate

    The Evolution of Mentorship in Legal Professional Development

    Rafael X. Zahralddin-Aravena

    Lawyers have different professional development obligations at each stage of their career.[1] Despite that evolutionary arc, there is one constant: the best lawyers are engaged in life-long learning. Many firms have formalized the elements of the traditional training that young lawyers historically, and often organically, received from partners and other more senior lawyers within the firm. Whether by such internal training methods or going outside the firm to hear from special consultants such as law professors or industry experts, or to participate in bar and trade associations, firms develop their lawyers in a variety of ways. In addition, seasoned lawyers equally benefit from helping to train other lawyers, whether inside or outside their firm.

    Business & Corporate

    Delaware and the SEC Facilitate Virtual Stockholder Meetings as the COVID-19 Outbreak Spreads

    Lisa R. Stark, Sean M. Jones, Sara M. Kirkpatrick

    As concern over COVID-19, the novel coronavirus, increases and restrictions are being imposed on public gatherings, U.S. public companies have been weighing risks associated with holding in-person annual stockholder meetings. While the vast majority of U.S. public companies continue to hold annual stockholder meetings at a physical location, in light of the COVID-19 outbreak, many corporations are now considering whether to hold the meeting solely by means of remote communication or to hold a hybrid meeting in which stockholders may choose to participate either in person or remotely.

    Business & Corporate

    RegTech: How Technology Can Revolutionize Compliance

    Myron Mallia-Dare, Brandon Meyer

    Highly regulated industries like the financial services industry have faced ever increasing regulatory compliance obligations. Technology, such as artificial intelligence (AI), that can be utilized to innovate the manner in which these organizations operate can lead to additional challenges for regulatory compliance, and the regulatory environment can drastically impact innovation in these sectors.

    Business & Corporate

    COVID-19 and Data Privacy: Health vs. Privacy

    Theodore Claypoole

    The Black Death stole people’s identities. Sweeping through Europe and Asia periodically from the 14th to the 18th century, the disease erased entire cities, and individual graves were traded for huge trenches with scores of nameless bodies. Spread by traders and human travel that brought disease carriers everywhere, people were reduced to numbers, as not only the sick disappeared but so did everyone who might have remembered them.

    Business & Corporate

    COVID-19 and Data Privacy: Health vs. Privacy

    Theodore Claypoole

    The Black Death stole people’s identities. Sweeping through Europe and Asia periodically from the 14th to the 18th century, the disease erased entire cities, and individual graves were traded for huge trenches with scores of nameless bodies. Spread by traders and human travel that brought disease carriers everywhere, people were reduced to numbers, as not only the sick disappeared but so did everyone who might have remembered them.

    Business & Corporate

    Online Ticket Seller Faces the Music on Extra Fees

    Lisa R. Lifshitz

    On February 13, 2020, the Canadian Competition Bureau struck another blow against so-called “drip-pricing” ticket selling tactics when it slammed the deceptive online advertising, marketing, and selling practices of StubHub Canada Ltd. and StubHub Inc. (collectively “StubHub”) for failing to display the real price of the entertainment and sporting events tickets they sold upfront, instead augmenting prices through the addition of quasi-hidden mandatory fees.

    Business & Corporate

    Comment Concerning Use of Electronic Signatures and Third-Party Opinion Letters

    TriBar Opinion Committee

    Parties to business transactions and their counsel seldom gather in the same location to exchange manually-signed agreements and other documents; virtual closings have been and are the norm.* The COVID-19 crisis has resulted in increased focus on the widespread practice of giving opinions on the execution of agreements signed electronically. This Comment explains the legal basis for the conclusion underlying those opinions that the electronic signatures on those agreements have the same legal effect as manual signatures.

    Business & Corporate

    Update on Border Searches of Electronic Devices

    Keith Fisher

    Early in 2018, Business Law Today published an article of mine dealing with the legal ethics implications of border search policies of the Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) relating to portable electronic devices. The article adverted to a then-recently filed lawsuit in federal court in Boston challenging the validity of these policies as a general proposition (i.e., not related to any issues of professional ethics). Nominally brought on behalf of 11 travelers whose smartphones and other electronic devices were searched without a warrant at the U.S. border, the case was funded by the ACLU, the Electronic Frontier Foundation, and the ACLU of Massachusetts.

    Business & Corporate

    Drafting Earnout Provisions to Manage Litigation Risk

    Nicholas D. Mozal

    Disagreements between parties over the purchase price in an acquisition often can be driven by their differing views of the selling company’s future performance and cash flows. To get to “yes,” parties may bridge their valuation differences by agreeing to an earnout, meaning they set agreed-upon metrics regarding the company’s post-closing performance and measure those metrics after closing. The seller then “earns” additional payments if the post-closing performance validates its valuation position. Parties must carefully define the details of how they will measure the earnout payment. The 2019 ABA Private Target Mergers and Acquisitions Deal Points Study (which examined 151 deals valued between $30 million and $750 million from 2018 and the first quarter of 2019) found that approximately 27 percent of those deals included earnout provisions.

    Business & Corporate

    SEC Announces Conditional Relief for Companies Affected by Coronavirus

    Mark L. Johnson, Sean M. Jones, Coleman Wombwell

    On March 4, 2020, the Securities and Exchange Commission (“SEC”) issued an order (the “Order”) providing conditional relief to reporting companies affected by the novel coronavirus disease, or COVID-19. In recognition of the potential disruptions to transportation and limitations on access to facilities, support staff and professional advisors caused by COVID-19, the Order provides reporting companies with an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, 2020, subject to certain conditions.

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