Imminent disputes keep law firms busy in closing
Chennai: Oddly enough, Nivesh Khandelwal, founder of the medical lending platform LetsMD, had consulted with the law firm Burgeon Law as a precautionary measure to see if disputes with providers could arise during the normal course of business. . Customer defaults can arise, which can develop into disputes with suppliers for non-payment.
People at this point are quite understanding and we are just waiting for future disputes that we are looking at the legal implications, he said.
It is a busy time for boutique law firms during closing. Given that economic activity is being affected, impacting cash flows, breaching contracts and non-payment of wages, these companies are working overtime to resolve disputes. Law firms such as Burgeon Law, Ikigai Law and Madhavan Srivatsan's law office are seeing a 30% increase in demand. They are a focused clientele: startup founders contemplating invoking a force majeure, as many face an existential crisis. “Once the blockade is lifted, we expect an increase in breaches of contracts and litigation around this. In some cases, we have seen investors trying to withdraw from venture capital deals after signing term sheets. Promoters are seeking advice on this, ”said Anirudh Rastogi, founder of Ikigai law.
Roma Priya, founder of Burgeon Law, adds that individual angels who have lost money in the public market have paused their investments. They are postponing the closing of the deals and asking companies to comply with them after the closing. There are also disputes between employers and workers over layoffs and pay cuts. At the end of the shutdown, some recovery suits may come out. At this time, however, the parties are trying to mitigate the problem and deal with the situations, he said.
Rastogi said the law firm is seeing disputes between investors and companies, especially in sectors that are heavily stressed, such as travel, hospitality and nonessential consumer goods. In most cases they involve renegotiating the terms of the contract, evaluating legal options or preparing a possible lawsuit, he added.
Some companies are reaching out to law firms to see if it's legal to fire or cut their employees' wages. Madhavan Srivatsan, founder, Law of Madhavan Srivatsan, said this situation will also reduce the valuation of the funds startups raise in the future. Companies are feeling the sting and would not want to raise money at a reduced valuation, he said. While an increase in business is seen, law firms are helping with pro bono inquiries. While Madhavan Srivatsan offers a free 2-hour consultation on Tuesdays and Saturdays. Burgeon's law has a document made for those companies looking to raise money or are dealing with a loss of business during the coronavirus pandemic.