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Covid19- Implications And Opportunities For Legal Fraternity

Prakhar Dixit & Rose P. Sajan
16 July 2020 7:06 AM GMT
Covid19- Implications And Opportunities For Legal Fraternity
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What could explain Covid-19 pandemic better than words of Japanese Finance Minister Taro Aso "The spread of the new coronavirus is a public health crisis that could pose a serious risk to the macro economy through the halt in production activities, interruptions of people's movement and cut-off of supply chains".

Besides its devastating effects on human lives, claiming over 543,605 lives and infecting over 11 million people all around the world, the novel coronavirus (COVID – 19) has significantly knocked down not just the Chinese economy from where it emerged but also the global economy. Kristalina Georgieva, Managing Director of the International Monetary Fund has officially confirmed that we have entered into a recession as bad as or even worse than that of 2009. There is hope for the economy to revive in 2021, provided we contain the virus at the earliest. With deaths increasing in Italy, confirmed cases spiking up over 1.4 million in the United States and the UK bracing up for a 6 month long lockdown, this seems like a far blown possibility.

To understand the plausible damage due to the virus we should analyze three disrupted channels: demand, supply and finance. On the demand side declining income; fear of contagion; reduced working hours; possible layoffs; absence of vaccine has detrimental effect especially in the service sector. On the supply chain a sudden stop of manufacturing activity in the most affected regions will cause bottlenecks in global value chain. China is the main supplier of intermediate supplies for manufacturing companies abroad and account for 20% of Global trade. When Chinese factories were shut down, it caused immense manufacturing delays in the rest of the world. Now as China is reopening its factories, the manufacturing companies abroad are finding it exceedingly difficult to purchase products in and ship them out of China. Just as Covid-19 is posing an unprecedented Global Public Health emergency, it is also creating financial distress in the form of drying up of liquidity, providing credit and meeting contractual obligations.

As a matter of fact, demand, supply or financial disruptions, might not directly affect but have a profound indirect effect on the legal field. After the 2008 Global economic crisis and the 2013 economic crisis in India it's a fact known to the Indian legal fraternity that phrases like 'law is recession-proof' do not hold water anymore. The last two decades have seen an exponential growth in the legal field. As per the Vision Statement 2011-2013 of the Bar Council of India( apex body of Indian Legal Professionals) the Indian legal profession consists of approximately 1.2 million registered advocates, around 950 law schools and approximately 400-500 thousand law students across the country and high numbers are seen across the world. For instance, in the United States of America, there are 203 law schools that are approved by the American Bar Association (ABA) to confer the Juris Doctor (J.D.) with a total of 132,684 law school enrollment for Fall 2019 which is an increase of 2 per cent compared to the previous year. As of 2017-18, 26,655 UK students and 8,845 overseas students applied to study law at undergraduate level in England and Wales. At 31 July 2017, there were 139,624 solicitors with practicing certificates (PC) and 181,968 individuals in the total on the roll of solicitors. The number of solicitors with practicing certificates was 2.5per cent higher than a year earlier. According to a survey conducted by the Council of Australian Law Deans, there were 39 law schools across Australia and the total number of Australian Law Graduates in 2018 were 8,499. While the supply side of the legal education remains almost the same year after year, barring minor changes, the ensuing recession will surely contract the manufacturing and service sector. Thus, the demand for the new entrants in the legal industry might observe a sharp fall.

LESSONS FROM THE PAST

How the legal industry will be affected by this recession? One way to predict the future is to examine the past. How the legal industry was affected by the events of 2008 tells us a lot, as to how it will brave the 2020 recession, as the contours of legal landscape look more or less the same. Since the beginning of the 2007 recession, in the US more than 40,000 legal service jobs have disappeared. Over one particularly hectic ten-day stretch in February 2009, over 2,500 positions were wiped out completely. Cravath, Swaine and Moore's whooping $80,000 offers to incoming lawyers in 2009 and then deferring their joining dates by a year shook the legal industry. Hence, the impact of an economic recession on the legal profession has been disastrous with layoffs, hire freezing and salary decreases and rendered an overwhelming amount of law school graduates unemployed.

WHAT THE PRESENT HAS TO OFFER

The last decade has seen methodical changes, remoulding the legal field and a tremendous shift of power from the hands of providers to the hands of consumers; multi-disciplinary problem solving; new skillset; technological adoption; rise of data and digital transformation; law firm dominance and an emerging global legal community. Who exactly will be the winner or loser post this turmoil is still unknown. Analyzing the industry trends, it is easy to predict which category of lawyers will fare better or worse during this covid-19 scenario and the consequent economic downturn.

  • AREAS OF LAW

People/Businesses will always require trained legal professionals in the long run. Certain areas of law will be in great demand in comparison to others. With increasing health crisis all over the globe, there will be a great requirement for health care lawyers. High value mergers and acquisition areas of corporate law may dry up. Attention will turn towards restructuring, insolvency, bankruptcy and litigation work. Firms with varied practice areas are more likely to perform better during recession. Policy lawyers will be in favour as new companies will aggressively invest on policy lawyers to move far ahead from traditional industries. With business downsizing, decline in job market and hire freezing there will be a lot of scope for Public Interest Litigation/Class Action, Labour and Employment lawyers. Global Environmental Catastrophe is not far away and Environment will be a highly litigated issue. Thereby creating a need for efficient Environmental and Animal Right Lawyers. As part of Alternative Dispute Resolution, Conciliation, Mediation and Arbitration are effective ways of resolving a dispute. Parties to the dispute will lack the means viz., time and money to pursue litigation post the covid-19 pandemic and will prefer arbitration, mediation and negotiation. International Arbitration is facing challenges during the coronavirus pandemic due to travel restrictions but, even with inhibiting factors of the currently available technology the post covid phase will see tremendous growth in usage of technological methods for dispute resolution i.e., online dispute resolution; video conferencing; chats; teleconferencing etc. Lease disputes will burst at the seams, tenants are already serving notices invoking Force Majeure clause. Hence, Property Law will have scope for development. There is an alarming increase in the rate of Domestic Violence against Women and Children, all around the World. The UK's largest domestic abuse charity, Refuge, has reported a 700% increase in calls to its helpline in a single day. Indian Child Protection Fund reports that between March 24-26 Pornhub servers have experienced 95 per cent increase in overall traffic in India coupled with a rapid increase in online search for child pornography.

  • SUPPLY CHAINS MOVING OUT OF CHINA

Due to existing trade war between USA and CHINA and the pending legal suit against China for the spread of covid-19, hedging the risks multinational corporations are mulling, moving their production out of China. The ongoing pandemic has only worked as a catalyst to this process. Japanese, South Korean and Taiwanese multinational companies have already started moving their Chinese production facilities to countries with favourable business policy regime and friendlier International relations viz.Vietnam and other South East Asian Countries. The warm ties between India and the US pegs India as a potential production hub. In case of such an eventuality Asian transactional lawyers will benefit tremendously.

  • TECHNOLOGICAL ADVANCES

Providers that have embraced technological advances have a sure shot at succeeding through the recession period. The Supreme Court of India has started hearing urgent matters through video conferencing. The UK Supreme Court is hearing all cases and delivering judgements through remote hearings. The government has also passed the Coronavirus Act to aid in greater use of audio and video hearings. Civil Courts are also conducting remote hearings following the 'Protocol for Remote Hearing' utilizing telephonic, audio and video hearing technologies. The US Supreme Court has announced that in May it will hear oral arguments remotely in relation to a few cases that came up for hearing in March and April but had to be adjourned due to the pandemic. The Coronavirus Aid, Relief and Economic Security Act (CARES Act), allows the use of video conferencing in certain judicial matters. The Singapore Courts had an existing practice in place that enabled lawyers to make applications by video link. The Singapore court is also quite used to parties or witnesses appearing in court by way of video link. Insofar as the Supreme Court is concerned, hearings are continuing. Hence, the role of judiciary in upholding the Rule of Law; Human Rights, during such circumstance is vital for the survival of democracy. E-filings make the courts productive as it saves time from lengthy paperwork. Such circumstances will give young; techno savvy lawyers an edge over the established lawyers.

  • JOB

Post Covid-19 phase will open the doors for a lot of young lawyers as well as experienced lawyers who are open to the idea of juggling between different practice areas. Senior lawyers who are otherwise experts in their respective fields but not adept at using technology will now be forced to employ younger and technologically savvy lawyers in their traditional offices. The legal process analyst will have the job of analyzing a piece of legal work, subdividing the assignment into meaningful and manageable chunks, and identifying the most appropriate supplier of services for each. This task requires deep legal insight and experience. This individual will often be employed within an in-house legal department, rather than at a law firm. Legal Risk Managers will emerge who will have to anticipate a problem and propose solutions. AI/Algorithm/Blockchain Dispute Resolution will emerge to deal with matters related to Motor Accidents or Consumer Compensation etc. Virtual law libraries will emerge and the experience of senior lawyers will be necessary for writing monographs and book reviews. Online Legal Services will throw open lot many new practice areas for lawyers, who were till now, practicing their skills using traditional methods.

CONCLUSION

We are living in an era of revolutionary changes, consider how paradigm shifts in information technology; biomedical research; genetic discoveries; biotechnological advances and nanotechnology have changed our world. Observe, how deeply has globalization influenced exchanges of legal and other professional services. This has led to homogenization of cultural trends and consumption patterns across the world. What more, even the viruses of both biological as well as software kinds have become all pervasive. Above said has resulted in reduction of mortality rates across the country, as a by-product of which we are experiencing massive population growth; global climate change; acute scarcity of resources and mass migration of humanity in search of better pastures. These shifts each day generate fundamental questions, answers to which will alter the shape of the human experience. It is certain that lawyers will play an indispensable role in tackling the issues raised by these developments and harnessing opportunities to secure orderly change and enhance human welfare.

The period of Economic Downturn is critical for every field. It has a huge impact on global healthcare facilities and legal profession around the world. Though, the legal profession is more resilient to recession than many others but it hops in the economic downturn. The law firms and individual practitioners who widen their horizons by welcoming the opportunities will adapt to and triumph the current situation. The Obama administration had recognized the crumbling of the economy as an opportunity for radical regulatory reforms, the legal profession must grasp the opportunity of transformation and building foundations of more prosperous future during the current crisis. The legal profession should take advantage of the ongoing paradigm shift to develop liberalized business structures that allow firms to build sustainable, competitive practices in the evolving market for legal services.

Martha L. Minow, Dean of Harvard Law School in an interview said, "Although historians will surely devote much ink—or bytes—to the financial crisis, I believe that this time will be known as an inflection point in world history because of huge revolutions under way in the world—changes that make this an electrifying time to be in the legal profession."

Till date no panacea exists for the situation at hand unless there is an immediate containment of the disease and invention of the vaccine, the world as we know it will never be the same again. This will not only require targeted and active macroeconomic measures but a series of medical policies as well. Until a permanent solution is found, the legal fraternity has to proactively explore the fields of law for upcoming opportunities and sow seeds of progression, which will bear fruits for the generations to come. "When the wind of Change blows some people will build walls, others build windmills." So says the Chinese proverb, the legal fraternity will take the call to build walls or to harness the energy and propel itself into a new era.

Views are personal only.

(The article was co-authored by Prakhar Dixit, Partner Sync Legal, India and Rose P. Sajan, Intern Sync Legal, India)

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