Smith Haughey Rice & Roegge (SHRR) has been helping clients overcome challenges since 1941. Despite all our shared experiences over the decades, it is unlikely any event has had a more collective impact on our clients and our practice than COVID-19.
SHRR responded early on by establishing a COVID-19 Resource Group, staffed by attorneys with a broad range of legal experiences. The Resource Group is committed to helping our clients get through this pandemic with timely advice while continuously monitoring and gathering information on COVID-19.
Here are some recurring themes we have observed:
1: More of the Iceberg is Under the Water: The Michigan Supreme Court ruled on October 2, 2020 that the Governor’s Executive Orders were unenforceable under Michigan law. It then became apparent that many businesses are not aware of the other bodies of law pertaining to COVID-19, such as Emergency Orders by the Michigan Department of Health and Human Services (MDHHS). MDHHS subsequently issued new Emergency Orders containing restrictions on gatherings, masks, and other items. In addition, other agencies, such as Michigan’s Occupational Safety & Health Administration, may view a lessening of restrictions in a place of employment as a possible violation of an employer’s general duty to furnish a workplace free from recognized hazards. There are also now local governmental authorities and departments issuing their own health and workplace requirements. Simply, in this environment, it is prudent to understand the full scope of the legal landscape.
2: Protect Your Most Important Resource: Employers are continuing to navigate their business in a COVID-19 environment to protect employees while maintaining operations. More recently, we have seen employers evaluate return-to-work policies while also considering remote work policies in the event of a change in circumstances. Employers also continue to adapt to the Families First Coronavirus Response Act and the various leave requirements within that Act, with new challenges, such as unanticipated childcare needs as result of school closures or intermittent school closures now requiring attention. Other areas of focus continue to be on preparedness and response plans, CDC guidance, and the CARES Act. We also anticipate there may be additional employment legislation passed in Michigan in the coming weeks. Although this has been an incredibly difficult time, we have observed that some employers are able to advance workplace culture by focusing on thoughtful policies and good communication.
3: Fault Is Not the Same as Responsibility: With COVID-19, there are situations where a party simply cannot perform as previously agreed. Historic “boilerplate” protections are now in the legal spotlight. “Force majeure” clauses essentially excuse certain non-performance when not due to an act or omission of the non-performing party. In addition, common law performance defenses such as failure of condition precedent and impossibility of performance are also being examined. We have seen this most frequently in landlord-tenant and construction agreements, but other plans and major life events have needed to be postponed or cancelled. Circumstances and precise contractual language are critical to a successful claim or defense impacted by COVID-19.
4: Be Creative in Resolution: Court dockets are still backlogged, cases slow to proceed, and there may still be limitations on legal recourse. Many are turning to proactive alternative resolution strategies prior to litigation, that, historically, may have been ordered in litigation. For example, agreeing now to a voluntary mediation might allow a third-party, often an outside attorney or former judge, to provide a level of risk analysis and neutrality into a dispute so that an amicable resolution can be reached. Parties are usually free to engage in such voluntary mediation. Or, possibly, a more binding form of arbitration or some other form of settlement mechanism could be available and should be considered.
5: Plan for the Future: Coupled with uncertainty about the future of the economy and the political climate, it is not surprising that there has been a renewed focus on estate planning (wills, trusts, durable powers of attorney, and patient advocate designations) and business planning (succession plans, buy/sell agreements, and updating corporate governance and compliance). Our clients have been gaining peace of mind by reviewing their old estate plans, revisiting strategies to preserve the health and value of their businesses (including reviewing guidance from the SBA in connection with changes in ownership of businesses that received Paycheck Protection Program (PPP) funds) and engaging in assessments of their opportunities and risks.
This article is general in nature and should not be construed as legal advice or creating an attorney-client relationship. Consultation with legal counsel is recommended for specific situations.