Looking to the post-COVID law environment

It’s no secret that we’re living in uncertain times. Though New Zealand has combated the COVID-19 pandemic in enviable fashion, it’s not been without impact – and that impact has extended throughout the legal profession. 
Mihai Pascariu and Paul Chambers are both keenly aware of the challenges that face them as they take up the position of directors with Anderson Creagh Lai. Aiding clients through the next 12 months or so as the New Zealand economy recovers and reshapes is of critical importance.  

Pascariu is cautiously optimistic. With considerable experience in commercial dispute resolution, restructuring and insolvency law – both in New Zealand and internationally – Pascariu is keenly aware of the multiplicity of factors that can play into these situations. Some of these factors could lead to business opportunities and Anderson Creagh Lai is well positioned to help its clients take advantage of these opportunities. 

Speaking prior to the announcement of the recent escalation of the COVID-19 alert level, Pascariu commented “There’s certainly a sense that it’s going to get worse before it gets better, but I’m not sure that’s justified.” 

“Indeed, there’s concerns about recession – and we’re seeing that reflected in the way businesses are clamping down on intellectual property rights or chasing old debt – but I think we’re much better-prepared than were in comparison to the GFC in 2008,” continued Pascariu. 

Pascariu believes that the real moment of truth is going to be when the government wage subsidy finishes. 

“As we move into 2021, I think we’re going to see some businesses folding, but I also think we’re going to see innovation as well,” says Pascariu. 

Of course, outcomes in the business world are inherently bound to the property space. Chambers has been with ACL since 2014, primarily focused on commercial property and property development, with clients ranging across individual entrepreneurs to large-scale developers and listed and institutional portfolio holders.  

“Development is going to be in an interesting space for the next few years,” says Chambers. “Existing developments will continue to be supported, although covenants may be under additional pressure as valuations become more conservative, but funding – particularly from banks – for new developments will be considerably more difficult to procure.”

Couple this with the fact that the COVID-19 pandemic has radically altered the way that employees work, and Chambers believes that many companies will be reassessing the way that they utilise office space. 

“Many businesses will have experienced lockdown as a petri dish of how they could operate in a way which differs considerably from their pre-COVID practices,” says Chambers.  “Lockdown has forced many businesses to adopt remote working practices including by the investment in the infrastructure required to enable that to occur.  Having made that mindset change and investment, many businesses will see no reason to revert back. There is likely to be a tangible reduction in demand for office space which is isn’t client-facing in order to save cost but also to respond to employees who have developed a preference for working-from-home.” 

Pascariu agrees, pointing to the potential for lease re-negotiations further down the track.  

“It’s going to be an interesting driver for both the commercial and property spaces,” says Pascariu. “We’ve seen a level of what I’d call “post-COVID exuberance” in retail and domestic tourism, but there are longer-term considerations at play. No-one can be too sure when international tourism – and its ancillary businesses – are going to recover, for example.”  

With this in mind, Chambers believes it’s important for businesses to be “tidying things up”. 

“It’s a good opportunity to bring in formality in areas of your business that might have been run with a bit more of a laissez-faire attitude previously,” says Chambers. “This will put businesses in better stead if they are subsequently faced with new levels of scrutiny by lenders or disputes during a tougher time economically.”  

Of course, taking on the mantle of director is about more than immediate concerns. Both men have plans for the firm into the future, and look to leverage opportunities for Anderson Creagh Lai as they present themselves. 

“It’s broad, but I think you could probably sum my approach up by saying that I want the firm to adapt as the economy changes,” says Chambers with a chuckle. “The important thing is to be able to actually identify how and when that’s happening.” 

“Over the next couple of years, I think the focus will be on developing our restructuring and insolvency practice,” says Pascariu. “Businesses are starting to look at what’s next – there’s lots of questions, and we need to be equipped to tackle them as they arise, and help them as New Zealand continues to evolve.”