Contributing Author: William Lalor
Whatever the predictions about COVID-19 and what it holds for daily life in the U.S., business and legal considerations are no longer hypotheticals. Disruptions are already happening and will continue for an indefinite period. They will likely take place on a significant scale, especially in urban areas.
Companies in the entertainment industry — whether they be production companies, theater chains or event management companies — may feel uniquely dramatic impacts and should take steps now to consider their resources and strategic options for loss prevention, mitigation, and response. Aside from the usual due diligence, entertainment companies should — right now — consider a few basic issues:
Your employees. All employers owe basic duties of care to their employees with respect to workplace safety and hazards. This is generally true anywhere in the U.S., but the nature of your duties to employees depends on what your firm does, in addition to local, state and federal law. Regulatory standards are not the only articulation of an employer’s duties, but they can be used to support tort or other employee claims in the event of work-related injuries. If there are unique COVID-19 risks to your employees, they should be addressed. Further, handbooks and workplace policies including COVID-19 updates should be unambiguous and clearly communicated.
Insurance. Entertainment businesses should prospectively revisit their existing insurance program including event cancellation (which may cover promoters, entertainers, sports teams, event venues, etc.), liability, first-party/property, business interruption, health and workers compensation. Internal claims reporting protocols should be established now to facilitate timely reporting, and insurance reporting provisions (which are time-sensitive) should be reviewed. It is also worth noting that to the extent coverage contains potentially applicable exclusions, some categories of coverage responsive may be available under new policy forms issued by the Insurance Services Office, or otherwise. Your insurance brokers can be a helpful resource for insurance questions.
Contract review. All contractual arrangements potentially impacted by COVID-19 (or by the resulting disruptions and mitigation measures) should be revisited. For example, those standard “force majeure” clauses you didn’t read or ask counsel to review before signing the event-related contract should be reviewed by counsel now, not after contract obligations are not honored.
Crisis/PR. It won’t feel like this, but COVID-19 is affecting many firms of all varieties. This will include high-profile firms with sensitive and similarly high-profile relationships in public view. All communications must be disciplined, clear and credible, and backed by steps that are consistent with the communications.
Every business is different, and this article offers only some garden-variety issues entertainment companies should consider. The very bottom line for any business is to proactively consider all risks associated with the ambiguous COVID-19 risks.
William Lalor, attorney at Early Sullivan Wright Gizer & McRae, represents diverse groups of high-profile individual and commercial clients in litigated and other matters involving complex insurance coverage, employment, business disputes, regulatory matters, and other subject areas. He has litigated cases in federal, state and specialized courts throughout the United States, including “CNA” insurers and the Lloyd’s of London insurance market.