Vol 18 (2021) - Issue 2

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Investigations and Litigation Landscape in the Context of the COVID-19 Crisis

Synopsis
Although now overused as a narrative, we are living in unprecedented times, and we may do so for quite a while longer. With businesses of all kinds feeling the pressure, senior management teams, especially CFOs and general counsel, are required to continuously assess the risks associated with COVID and what follows.
As with previous crisis moments affecting financial markets, and in particular banks and borrowers, we will likely see an increase in investigations relating to fraud and accounting misstatement and more regulator intervention. Combined with this, and due to the far-reaching and extraordinary aspects of COVID-19 (global and multi-sector), it is predicted that we will see more claims, disputes and litigation relating to areas such as:
- employment;
- supply chain;
- sales and marketing;
- insurance and insolvency;
- distress and lending.

Some of these areas will be explored later in the article. On reflection, it warrants specific time, thought and analysis to assess the risks of investigation areas and the likelihood of disputes - as claimant, a defendant or an associated party. To fully mitigate against risk presented by the pandemic, firms now need a properly constructed fraud and economic crime risk assessment specific to COVID-19, combined with a COVID-19 legal risk analysis. The nucleus of and those responsible for such an assessment is made up of three key groups:
(1) senior management, supported by legal, risk and compliance;
(2) the Board (and Board sub-committees) for sign-off and;
(3) external support from subject matter experts to provide independent and pragmatic advice.

The ability to navigate troubled waters is a vitally important skill. It requires some up-front investment and strategic leadership and support. In the long-term, it will protect the entity's value and reputation, which has to be at least one bright light at the end of the dark COVID-19 tunnel.