A black swan has arrived – the Pandemic of 2020 and with it a bear market. As with previous black swan events, experts and leaders are in learning mode, with the facts and events evolving hourly. As my financial advisor told me, this event cannot be modeled. Nonetheless, there are lessons learned from past crises – we are facing not just a health crisis uprooting lives and businesses, but also we can expect significant economic impact. The event will have effects longer than initially predicted or imagined.
In such circumstances, what should be on in-house lawyers’ and leaders minds at financial institutions, other than personal and family safety? A few quick thoughts:
Understand the external facts. The CDC has a coronavirus website; so does the NIH. Your outside counsel, vendors and consultants will be under staffing and economic strain as quarantines continue to take effect. Customers are under stress as they cope with economic and personal challenges. Engage with them and the teams engaging with customers.
Understand the internal facts, including stressors and issues from both a legal department management and client perspective.
Mass movement to working remotely will stress and reduce the efficiency of the legal function and its clients. Machines will be under stress, from home connections to firm servers and networks designed for partial work at home, and will be under extreme pressure when an entire department or firm needs to be online at once. Video connections add to the load.
People will be under stress – in addition to worrying about the virus, many employees, not accustomed to working in close quarters and possibly simultaneously with a spouse or roommates while juggling childcare or parent care demands and needs – will be distracted and stressed. Staff, including paralegals, document clerks and assistants may not be able to operate off premises, due to system and department policies. Efficiency and quality will suffer.
All will require empathy and a greater focus on governance and control. We will need to consider creative management and staffing solutions.
Understand regulatory expectations. The legal department COO or another appropriate lawyer/staff member should review the recent FFIEC and FINRA guidance on pandemic planning and response. The FFIEC has specific expectations for lawyers. See pages 5 and 6. The federal banking agencies (the OCC and the Board) have also issued statements on encouraging financial institutions to meet the financial needs of customers and members affected by the coronavirus. They also commit to being responsive to questions from banks that arise.
Take advantage of industry, outside counsel and bar association resources. The ABA is offering a series of coronavirus specific CLEs. Moore & Van Allen is available for immediate consultation.
Expect clients to seek ever more prompt and creative legal advice. The pandemic will drive continuous legal issues, including privacy and cybersecurity, and workout strategies as customers struggle, employment issues as work from home and internal stresses mount and third parties’ performance suffers. Force majeure and MAC clauses will need to be reviewed and opined upon.
We can succeed as lawyers if we remain calm, thoughtful and professional. Maintaining governance and control, and most importantly, operating as a collaborative team, despite the need for urgency, will serve us well. As we learned in past crises, now is when and where we can do our best work. I have the highest faith in our profession and its ability to be there when our clients need us most.
Ed O’Keefe, former Global General Counsel of Bank of America Corporation, advises and represents financial institutions. Having also headed or served as a senior executive with Bank of America’s compliance, technology, human resources and operations functions, O’Keefe’s broad experience includes all aspects of investigations litigation, regulatory compliance, governance, cybersecurity, risk management and compensation. O’Keefe’s practice includes advising on all aspects of regulatory compliance, including BSA/AML, anti-bribery/anti-corruption, resolution planning, stress testing and responding to regulatory inquiries. He also advises General Counsel and their leaders on law department management, including engagement with regulators and control functions. A former Deputy General Counsel for Deutsche Bank AG and Chair of The Clearing House Association, O’Keefe has represented financial institutions before the U.S. Congress and the U.K. financial regulatory authorities, global agencies and courts, as well as the Federal Reserve, the Department of Justice, the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation and the Equal Employment Opportunity Commission. View Mr. O’Keefe’s full bio.