⏩Victoria’s Secret lawyers saw the pandemic future before almost any of us
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This week: Why you should read any contract with Victoria’s Secret extra closely, the numbers that explain the drought in new legal actions and tips from GC’s on surviving the coronavirus crisis.
It may be hard to assign blame and praise when assessing who best prepared for the coronavirus. But here’s something we can all agree on: Victoria’s Secret saw the pandemic coming.
Parent company L Brands wanted to jettison Victoria’s Secret: The lingerie brand has been struggling for years because of the decline in brick and mortar traffic and controversies surrounding former company leaders.
L Brands found a buyer in private equity firm Sycamore Partners: And lawyers working for L Brands, who are in the law firm Davis Polk & Wardwell, inserted the most prophetic language you could imagine. They added a “pandemic” as an exception in the material event clause of the contract that would normally allow Sycamore Partners to adjust the terms.
The contract to sell was signed Feb. 20: That was one day after stock market indexes hit record highs and about two weeks before the United States began taking coronavirus seriously. Within a month, L Brands shares fell from $23 to under $10.
Victoria’s Secret didn’t quite win
L Brands ended up pulling out of the deal and will keep control of Victoria’s Secret. The decision came after Sycamore Partners threatened to withdraw. But if L Brands wanted to fight, legal experts say L Brands would’ve prevailed because of the prescient language about pandemics. “I’d say Davis Polk really earned its fee,” University of Delaware law professor Charles Elson told the New York Times.
Just remember the word pandemic next time you write a contract.
Feeling like there’s less legal work for you to do? It’s not just you. A new survey of legal consumers from the cloud-based company Clio shows how much the legal industry has been affected by coronavirus.
Here are some of the key stats:
The number of new legal matters opened each week has dropped 40% compared to late February.
56% of law firms report a decrease in requests for legal work. 14% of firms report an increase.
50% of consumers plan to delay needed legal work until after the coronavirus crisis has subsided.
Almost 22% of survey respondents believe lawyers have stopped offering legal services during the pandemic.
Finally, a tip: As some states reopen, you may want to consider the option of remote client visits even if you’re back in the office. 56% of consumers say they want to meet over video conference if they see a lawyer in the next two months.
It’s becoming clear we’re in this for the long haul. So here’s some advice from GC’s, as reported by Law.com, for overcoming challenges while workers are spread out.
“Encourage people to take care of themselves, be sensitive to how people are reacting [to working at home], encourage them to make it a peaceful, comfortable environment. Take time to go for a walk, or clean up around you if that’s what you need. And overcommunicate with teammates.” -- Christina Ibrahim, general counsel of Weatherford International
“We communicate exhaustively with our staff, clients, vendors, regulators, executive management and board. [It’s important] to ensure the human connection is maintained and enhanced during this strange period of social isolation.” -- Dave Hattem, chief legal officer of Equitable Holdings
“It’s helpful in some contract negotiations, when normally we would meet in person, to do conference calls to finish up the details. After the first week I suffered some “home fatigue,” and I realized I need to take regular breaks, put up some boundaries so I don’t start early in the morning and work late into the night, make sure I eat and go outside to take short walks. It made a world of difference.” -- Adwoa Awotwi, general counsel of LocumTenens.org
“One thing that is more difficult is doing a workshop to work through an issue with a multidisciplinary team. Virtual tools can be used but are not a substitute for face-to-face interaction. The advising in a negotiation setting or in brainstorming for product development and the like is not the same.” -- Richard Nohe, general counsel of BT Americas, Inc.
“Respect the fact that team members are moms and dads and spouses and children first. I made it clear that foremost they have to take care of themselves and their families, and then somewhere down the line they are members of this team.” -- Mark Smolik, general counsel of DHL Supply Chain
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