Law firms gear up amid outbreak
Law firms are gearing up for a wave of business amid the COVID-19 outbreak with insurance, bankruptcy/restructuring and real estate practices among the practice groups poised to advise clients.
Louis J. Terminello, a partner and chairman of the Hospitality, Alcohol and Leisure Industry Group at Greenspoon Marder, outlined some topics that business leaders should put on their list.
First is looking at insurance policies, particularly those that include business interruption provisions. A key question is whether a pandemic is covered.
“That’s the question. Every policy is a little different. The wording is a little different. If you ask the insurance companies, they are going to say no. If you ask those of us who represent industry, we are going to say yes. It really depends on the wording of the policy,” Terminello says.
Many landlords require a lease to have business interruption insurance because they want to be first in line to be paid, Terminello notes.
Coronavirus-related claims are unlikely to cause the property damage needed to trigger business interruption coverage, says Anita Byer, president of Setnor Byer Insurance and Risk in Plantation. “Even if facilities (offices, warehouses) or inventory (raw materials, fish, produce) are rendered unusable by COVID-19 contamination, business interruption coverage would be unlikely because standard policies typically contain exclusions for bacteria, viruses and other pollutants.”
In the future, businesses might want to look at insurance that covers supply chain interruption, although that can be costly.
Greenspoon Marder is coordinating among its practice groups to make sure clients have access to the right legal talent. For example, a hospitality client might need one of the firm’s litigators to argue that an insurance claim should be paid.
A second issue is leases and language about allowance of payment deferrals for acts of God or force majeure, which means a contract can’t be honored because of reasons beyond the control of a signee.
Terminello is ready to argue that the pandemic does fall under force majeure. Hospitality clients may be referred to the firm’s real estate arm to review leases and negotiate with landlords about rent abatements and deferrals under the lease. “If not appropriate, we will beg,” he says.
Determining whether a force majeure clause can be invoked is a fact intensive inquiry, as it depends on the specific language of a contract, a briefing on the Akerman law firm website says. Generally, force majeure clauses are interpreted narrowly.
Under Florida law, a party seeking to invoke a force majeure clause must show that the force majeure event was unforeseeable, and that the force majeure event occurred outside the party’s control, the Akerman briefing says. This means that the claiming party must show that the event could not have been prevented or overcome, and there additionally cannot be any fault or negligence on the part of the claiming party.
One question might be how flexible a landlord can be if they also have to pay a mortgage on the property housing a tenant.
Terminello is looking at the situation from a national standpoint because Greenspoon has hospitality lawyers in major cities, including New York, Las Vegas and Los Angeles, but it’s also affecting his own business. He owns Martini Bar in Doral, one of the thousands of bars ordered closed in the state.
“Our 80 employees are out of work and that bothers me every waking moment,” he says.