Category: News Feeds

The ongoing COVID-19 pandemic has affected pretty much every aspect of daily life for most Americans. Indeed, walks outside, trips to the post office, and other routine tasks are dramatically different today than they were just a few months ago. As this website has detailed at length, the ongoing pandemic has also impacted many law firms, and numerous shops are adopting work-from-home programs and using virtual means to conduct work for clients. COVID-19 has also impacted the attorney-client relationship and how law firms develop business with new and existing clients.

Of course, under normal circumstances, business development with prospective clients usually occurs during face-to-face meetings. Some institutional clients typically prefer attorneys to conduct a formal pitch for a portfolio of work, and this usually involves traveling to a client’s office and giving a presentation on a law firm’s offerings. Other clients prefer to discuss prospective business in a more casual setting. Normally, attorneys and prospective clients may meet up for coffee, dinner, baseball games, or other events. This allows attorneys and clients to talk shop without the pressure of a more formal business setting.

However, face-to-face meetings between prospective clients and attorneys are extremely difficult right now. Many people are justifiably concerned about being exposed to COVID-19, and are trying to interact with as few people as possible. In addition, restaurants, coffee shops, and other venues where attorneys and prospective clients often meet to talk business have been closed in many parts of the country due to the ongoing pandemic.

As a result, attorneys must connect with prospective clients through virtual means more often in the “new normal.” Many lawyers have been using Zoom and other apps that they are using to collaborate with each other to facilitate talks with prospective clients. Although such conversations lack the personal feel that may distinguish an attorney in front of a prospective client, these virtual interactions are increasingly becoming the norm.

In addition, more clients than ever are retaining lawyers without having met the attorney in person. Indeed, clients are increasingly relying on online resources to find an attorney with which they would like to work without following up this research with in-person contact. As a result, attorneys should try to improve their virtual presence, since online resources are more important than ever to originating new business.

Many attorneys are already engaging their clients online in ways that they probably would have never considered just a few months ago. For instance, an increased number of law firms are establishing law firm blogs and posting content to their websites. Blogs are a great way to improve a firm’s search engine traffic, which can lead to additional leads for a law firm. In addition, blog articles can be shared on social media, which can increase a firm’s presence in front of new and existing clients. In addition, blog articles can also form the basis for “client alerts” that can be sent to individual clients who may have specific needs. Blogging can often be a somewhat technical process, and it is impressive how many law firms have embraced this virtual presence in the “new normal.”

The ongoing pandemic has also impacted how law firms develop business from their existing clients. Many attorneys have regular in-person meetings with key clients to discuss ongoing matters and any new legal work that might need attention. At such meetings, attorneys and clients can go over legal papers that have been served, talk about documents in person, and solve issues facing clients face-to-face. Such meetings also help show that an attorney is committed to serving their clients and can help strengthen bonds between clients and attorneys.

However, it has been very difficult to meet with clients at regular intervals in the current environment. Although many such meetings take place at a client’s office, most people are working from home right now, so face-to-face meetings are largely out of the question. Attorneys have had to adapt and conduct such regular meetings via Zoom, Skype, or other means. Such meetings may lack the personal touch of face-to-face interactions, but they still permit clients and attorneys to maintain contact given the ongoing pandemic.

Many small and large law firms have also been embracing pro bono work in ways not seen since the Great Recession. It makes sense that firms would want to keep busy with legal matters when work may have dried up due to COVID-19, and it is great that clients who cannot afford legal services are getting help from some leading law firms. Of course, firms have altruistic motivations for completing pro bono work, but such work can also help firms develop new business. Indeed, pro bono work can help firms increase their profile and build connections with individuals and companies who may be paying clients in the future. This is a great “win-win” situation that represents the best the legal industry has to offer, and hopefully, such pro bono offerings will continue for as long as the ongoing pandemic affects individuals and businesses.

Every industry has had to adapt in order to contend with COVID-19, and the legal industry is changing its methods as well. Law firms are implementing different practices to develop business from new and existing clients that allow attorneys and clients to connect while social distancing guidelines remain in place.

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Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

As we noted earlier today, not even the Biglaw firms with the most impressive financial performance are immune from the economic ravages of COVID-19. We’ve learned that Mayer Brown — a firm that came in 17th place in the latest Am Law 100 rankings, with $1,484,000 in gross revenue in 2019 — will be implementing extensive austerity measures firmwide.

We’ve been told that not only have partners been taking reduced monthly draws, but they’ve also suspended their distributions for the first half of the year. Today, Mayer Brown announced that effective May 18, salaries for all non-equity lawyers and staff (who make more than $200,000) will be reduced by 15 percent, and this will most likely last until the end of 2020. All other staff will have their salaries reduced on a graduated scale, with no reduction for those making less than $30,000. The firm has also created a voluntary leave program, where those who take advantage of it will receive 25 percent of salary and benefits for up to 12 weeks leave, plus 10 percent more if they complete a certain number of pro bono hours. Last, but not least, the firm will be postponing the start date for their incoming first-year associates to January 2021.

Here’s a statement we received from a Mayer Brown spokesperson on the firm’s plans:

Mayer Brown is in a very strong financial position, with excellent capitalization and record financial performance in recent years, including the first quarter of 2020. We have always managed the firm conservatively, and the extent of the pandemic’s impact on our clients, and therefore on our business, remains impossible to predict. Accordingly, we have adopted a series of cost-saving and cash-management measures that will enable us to prepare for the remainder of 2020. In designing and adopting these measures, job preservation and providing seamless service to our clients are our top priorities.

In March, our equity partners agreed to a 20 percent reduction in monthly draws and the suspension of their distributions for the first half of 2020. Today, the firm announced a 15 percent reduction in salaries for our other lawyers, as well as business services staff who earn more than $200,000. Salaries for business services staff who earn less will be reduced according to a graduated scale. Because these reductions are for just over seven months of the year at most, the 15 percent cuts calculate to an annualized reduction of just under ten percent.

In order to protect the health and safety of our people, as well as uncertainty in the cities in which we operate, we are postponing the arrival of our fall associate class in the US to January 2021. We will provide a $5,000 monthly payment to our new colleagues for three months, starting in October 2020, and we are paying now our usual summer stipend of $10,000. In addition, we will cover the cost of premiums for medical and related insurance programs during the postponement period.

Finally, in acknowledgement of these challenging times, we are also offering more flexibility to our lawyers and staff with a program that will enable individuals to request up to 12 weeks of voluntary leave / sabbatical. Program participants will be paid 25 percent of their salary during this leave period, rising to 35 percent for those who handle pro bono matters during their leave.

We are grateful for the collective contributions of our great lawyers and business services staff, which will ensure we navigate this period and emerge from this crisis an even stronger global law firm.

On the bright side, Mayer Brown has established a firm-funded Mayer Brown COVID-19 Relief Fund to help employees who have suffered “undue economic hardship” as the result of the pandemic. Plus, sources say the firm is strongly committed to rewarding high billables during these tough times through 2021 bonuses.

(Flip to the next page to read Mayer Brown’s memo on salary cuts.)

If your firm or organization is slashing salaries, closing its doors, or reducing the ranks of its lawyers or staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).

If you’d like to sign up for ATL’s Layoff Alerts, please scroll down and enter your email address in the box below this post. If you previously signed up for the layoff alerts, you don’t need to do anything. You’ll receive an email notification within minutes of each layoff, salary cut, or furlough announcement that we publish.

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

What’s the newest depressing news about COVID-19? Just kidding! It’s time for a little mental break from coronavirus news to focus on more important things … like celebrity gossip and assisted reproductive technology law.

Congratulations, Anderson Cooper!

First, congratulations to world-renowned reporter Anderson Cooper on becoming a father to surrogate-born baby boy, Wyatt Morgan Cooper. In a sweet and moving announcement, Cooper shared with the world how as a child who knew he was gay from a young age, he thought he may never get to experience being a father. Thanks to advancing assisted reproductive technology and surrogacy, the impossible is now possible. Cooper also generously shared that he is “eternally grateful to a remarkable surrogate who carried Wyatt, watched over him lovingly, tenderly, and gave birth to him.”

Finally some happy news these days! If you want to hear more about this story and my interview with WNYC, check out this link.

The Ex As A Donor.

Turning to other celebrity assisted reproduction news, Khloe Kardashian (the tall one; not the one married to Kanye or the one who used to be with Scott Disick) recently publicly shared her efforts to preserve her future fertility options.

Kardashian has one daughter, True, with ex-Tristan Thompson. She was going through an ova (egg) retrieval procedure, and considering whether she wanted to freeze just her eggs alone or combine them with sperm to be preserved as embryos. While egg freezing technology has improved in recent years, frozen embryos still have higher pregnancy success rates.

In considering the embryo option and who would provide the sperm, Kardashian spoke with her family about her potential choice for a sperm donor to form such embryos. The donor she had in mind, to their surprise, was her ex and the father of her daughter, Tristan Thompson!

Legally speaking, is having an ex as a sperm donor a good idea?

I spoke with California assisted reproductive technology attorney and sperm legal expert, Amira Hasenbush, about the potential legal risks. Hasenbush explained that under California law, even if a sperm donor and the donation recipient did everything right before the birth — including signing a contract – a sperm donor can still be found to be a legal parent to a child if he later cares for the child by taking him into his home and holding himself out as the natural father. Hasenbush points to the case of celebrity donor-dad, Jason Patric (for those who remember the ‘80s and The Lost Boys — the vampire one).

In that case, Patric agreed to help his ex-girlfriend conceive, and indicated in writing that he would just be a sperm donor. However, after the baby was born, Patric and his-ex got back together, and Patric ended up spending a substantial amount of time with the child. And, significantly, he made a room in his home for the child and held himself out as the child’s father. After the couple broke up again, a legal case ensued where Patric argued that despite originally being a donor, he was entitled to legal recognition as father of his child. The courts ultimately agreed.

Of course, in Kardashian’s case, the situation is even slightly more complex, since Kardashian and Tristan already have one child together. While by itself that isn’t a legally significant fact, it may naturally lead to greater legal risk on both sides. When Thompson spends time with his daughter, True, he may naturally end up spending time with any child resulting from his donation. Both parties may quickly find Thompson in a position to be legally determined a “presumed” parent, where he could attempt to assert parental rights, or Kardashian could attempt to assert parental and financial responsibility.

Hasenbush explained that she frequently counsels clients who naturally face increased legal risk regarding their family structure, and that turning to an ex as a sperm donor is not an unheard-of proposition.

Hasenbush noted that the law favors black and white, while the reality for many families falls in the in-between gray. When her clients are looking to pursue an especially risky family path, Hasenbush often recommends that they seek counseling or talk to a mental health professional to make sure that they are clear with their intentions before proceeding. However, Hasenbush takes pride in empowering and protecting families that might not fit a traditional mold to the greatest extent possible under the law.

So, should Kardashian have her ex donate sperm? True is, after all, absolutely adorable. But Kardashian may want to think long and hard about the inherent risk of unintended parental rights and responsibilities that would accompany such an arrangement. And she should definitely talk it through with an expert attorney like Hasenbush first.

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Ellen Trachman is the Managing Attorney of Trachman Law Center, LLC, a Denver-based law firm specializing in assisted reproductive technology law, and co-host of the podcast I Want To Put A Baby In You. You can reach her at babies@abovethelaw.com.

We’ve long suspected that even the Biglaw firms with the most impressive financial performance weren’t going to be immune from the economic ravages of COVID-19. Now we’ve learned the Hogan Lovells — a firm that took in $2,246,050,000 in gross revenue last year, making an impressive 8th on the latest Am Law 100 ranking — has instituted salary cuts for attorneys.

The firm had previously announced they were delaying bonuses and 2019 profit distributions for all partners (income and equity). They also deferred UK and Asia Pacific salary reviews and discretionary bonuses for lawyers and for the majority of business services teams worldwide, which were scheduled for May 1st. Now the firm announced in an email (full version available on the next page) that, “April was better than we expected but it was still down both in relation to budget and last year. As far as the outlook for May, we expect further softening as some of the COVID-19 specific project wrap up and overall economic activity continues to be affected. Although the constraints affecting litigation will begin to loosen, we predict that it will be some months before we are back to pre-crisis levels.”

And if you guessed all that all that means the firm will institute salary cuts, well, you get a prize. The new salary cut scheme is as follows:

The series of measures which the firm is additionally enacting as of 1 June are as follows:

U.S. equity partners will reduce their monthly draws by between 15% and 25%. In addition, all equity partners will defer half of any profits for the first quarter of the year normally paid in August until November.

Non-equity partners will be taking a reduction from 1 June of 15% in their base compensation, equivalent to a cut of about 8.75% to their annual compensation.

Base compensation of Counsel, Associates, Attorneys, Specialists and Knowledge Lawyers in the U.S. is also being adjusted. For certain highly compensated Counsel and Specialists, the reduction will be 15% – an effective reduction of 8.75% for the year. For everyone else in these categories, the reduction will be 10% from 1 June onward – effectively 6% for the year. In addition, the firm will be reducing the compensation of Senior Counsel by 15%. There will be no reductions for those (including Senior Counsel) whose base compensation is $100,000 or lower.

Decisions on U.S. attorney bonuses will be made in the normal course at the end of the year.

HoLove CEO Stephen Immelt had this to say about the firm’s austerity measures and overall financial outlook:

“The firm’s overall position is very solid. We continue to see an uptick of work in the technology and life sciences sectors, our restructuring practice is very active, and we have successfully advised on headline-grabbing M&A deals. However, we are facing an uncertain environment and economic activity globally continues to drag. Complacency is not an option for us. We are therefore continuing with our policy of cutting back all non-essential costs and making measured adjustments to compensation. Our approach is to share the burden to protect both the business and our people so that we are well-positioned to meet our clients’ needs when the economy bounces back. We can always revisit and unwind some of these measures if the economy rebounds faster than expected, but otherwise, we plan to revisit these measures by the end of the year.”

If your firm or organization is slashing salaries, closing its doors, or reducing the ranks of its lawyers or staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).

If you’d like to sign up for ATL’s Layoff Alerts, please scroll down and enter your email address in the box below this post. If you previously signed up for the layoff alerts, you don’t need to do anything. You’ll receive an email notification within minutes of each layoff, salary cut, or furlough announcement that we publish.

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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

I never thought much of my third year of law school. I remember only two classes I took that year, and one of them did not require me to come to the campus at all. All I knew was that no matter what I did, nothing was going to affect my class rank or my employment outlook. Knowing this, I strategically chose my classes in order to minimize my time in school. In my final semester, I only went to campus one day out of the week.

So for my annual “legal education reform” column, I would like to look at the necessity of the third year of law school. Others here have written about this in the past but now that the coronavirus is forcing people to be more open-minded, it would be a good time to revisit this topic. And I think there is time to make this happen before the upcoming fall semester.

The traditional three-year law school curriculum started in 1906. Laws (and life in general) were simpler in those days. Back then, “main street” lawyers were usually trained through an apprenticeship. There were a small number of law schools in those days but the curriculum varied from 18 to 24 months. Also, law schools were considered to be a finishing school for the rich, political elite.

The three-year curriculum might have been appropriate in that era. Back then, Biglaw, the Cravath system, and the U.S. News Law School rankings were nonexistent. Most lawyers at the time ran their own practices and were generalists. Because of this, a three-year program could have been necessary to cover all of the basic legal subjects a generalist would need in order to effectively practice law. Also, the quality of apprenticeships varied widely, so a uniform, basic legal education could make up for a subpar apprenticeship. And until recent years, law school was relatively inexpensive, so some could use the third year to improve their class rank if they were in the fringes.

But recently, people have been questioning whether the third year of law school is necessary. More lawyers are specializing in one or a few practice areas so there may be no need for taking classes that may be unnecessary. And most importantly, law schools are starting to cost $100,000 per year, thus making the third year an expensive proposition, especially to underrepresented minorities who are likely to have a harder time paying back their student loans. CLE seminars are starting to sound more cost effective.

Many law schools tried to adapt by training “practice ready” lawyers. They offered classes on drafting legal documents. They also offered simulations on negotiations and client counseling. I took one of these classes in law school, and the experience wasn’t the same. Practicing adversarial negotiation with a classmate was like playing poker for fun where the loser buys everyone a round of drinks. Also, these practice-ready graduates did not necessarily make them more attractive in the job market.

The solution is to give upcoming third-year law students a choice. They can choose to finish their third year by taking classes or through a full-time job as a lawyer’s apprentice or intern.

Some may want to finish law school the traditional way for a number of reasons. They enjoy learning in a classroom setting, their prospective employer may require it, or it may be an opportunity to improve their class rank, to name a few.

But many third years would prefer to spend the final year getting real-world experience. At the moment, it might be more difficult to find a job but those who are able to should be allowed to substitute one year’s work experience for one year’s worth of academic credits.

Can this policy be implemented next fall? Most law schools already give academic credit for externships so I can’t imagine it will be too difficult to make this transition. Interested law students should contact their law school   and petition their state bar as soon as possible.

For $ome reason, I suspect law schools will be reluctant to cooperate. This is where the ABA and state bars should step in. State bars should consider implementing a rule allowing admission to those who have two years of law school academic credit and one year of supervised work experience so long as they pass the bar exam and meet character and fitness requirements. Law schools might respond by threatening to not award the JD degree to those who do this. It’s hard to say how students will react as everyone has different goals and circumstances. While a degree from an elite law school is probably worth its weight in student loan dollars, others might care more about getting a law license inexpensively.

Another possible solution is to have the employer pay the third-year tuition and costs. Schools that send most of their graduates to high-paying firms can make a lot of money doing this without putting their graduates into massive debt. On the other hand, law schools that have great difficulty placing students in high-paying jobs (or any job for that matter) will suffer financially.

Due to the coronavirus, legal education will undergo some changes in the near future. Most will be temporary while others might be permanent. Now is a good time to allow third-year students to finish their education in a professional setting. For most law students, the third year of law school is a waste of time and money, and they should be given the choice to opt out. If they are allowed to work, they will get paid, gain real-world experience, and they will be more likely to be employable in the future. But if law students want a shot at this opportunity next fall, they have to take the initiative now and contact their state bars. No one is going to do this for them.

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Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

A federal health official who said he faced retaliation over objections to the promotion of two unproven malaria drugs for Covid-19 alleges in a whistleblower complaint that his removal followed three years of tensions with Department of Health and Human Services leadership over contracts worth tens of millions of dollars issued on the basis of political connections rather than science.

Rick Bright, who was removed last month from his position as director of the Biomedical Advanced Research and Development Authority after serving in it since 2016 and transferred to a more limited position at the National Institutes of Health, formally filed an 89-page whistleblower complaint Tuesday with the Office of the Special Counsel. Bright is being represented by Katz, Marshall & Banks, a law firm specializing in whistleblower cases.

At the time of his removal from BARDA, HHS said the action was “part of a bold plan to accelerate the development and deployment of novel point-of-care testing platforms” and that he would be chosen to lead a “shark tank” effort to develop a Covid-19 test. However, Bright released a statement saying that it was over his insistence that government money be invested in “safe and scientifically vetted” solutions for Covid-19 rather than in “drugs, vaccines and other technologies that lack scientific merit.”

In the complaint, Bright alleges that he faced retaliation after resisting efforts to promote broad use of hydroxychloroquine and chloroquine on the basis of their safety problems and lack of scientific support for such use. The Trump administration had aggressively promoted the drugs as a “game changer” for the disease despite shaky data to support their use. Controversially, the Food and Drug Administration did issue a limited emergency use authorization for the drugs’ use in Covid-19, in response to a request by Bright, but subsequently stated they should not be used outside a hospital setting.

Nevertheless, while Bright’s objections and an anonymous interview he gave to a journalist may have been the final straw leading to his removal, the report states that HHS Secretary Alex Azar and Assistant Secretary for Preparedness and Response (ASPR) Robert Kadlec, Bright’s immediate supervisor, had already been “gunning” for his removal for complaints he had been raising well before the Covid-19 pandemic.

Bright alleges that around spring 2017, HHS leaders began pressuring him to award BARDA contracts on the basis of political connections and cronyism rather than the expert opinions of scientists, as it has historically done. He also clashed with Kadlec over an outsized role played by a pharmaceutical industry consultant who was Kadlec’s friend.

This included pressure from the consultant and ASPR staff to extend the contract for a company that an expert review had concluded should be allowed to expire, because the company’s CEO was a friend of President Donald Trump’s son-in-law and senior adviser, Jared Kushner. Bright was allegedly also told to direct $40 million to the Strategic National Stockpile to buy supplies of the generic flu drug oseltamivir from a company that was one of the consultant’s clients, and to award a contract to both Amgen and another of the consultant’s client companies for their radiation exposure drugs rather than to Amgen alone, as BARDA had recommended. Bright allegedly later learned that Kadlec’s office had given the consultant’s client company $55 million to be the sole source. And in the fall of last year, Bright states he rejected pressure to invest millions in a drug developed by a scientist at Emory University who was a friend of Kadlec’s that was promoted as a “miracle cure” for a multitude of viruses ranging from influenza to Ebola despite no controlled clinical trials to support that claim.

Subsequent to his removal as BARDA director – a position in which he seeks to be reinstated – Bright was transferred to a narrower position at the National Institutes of Health.

“Dr. Bright was transferred to NIH to work on diagnostics testing – critical to combating Covid-19 – where he has been entrusted to spend upwards of $1 billion to advance that effort,” HHS spokesperson Caitlin Oakley wrote in an emailed statement. “We are deeply disappointed that he has not shown up to work on behalf of the American people and lead on this critical endeavor.”

Photo: Mark Wilson, Getty Images

Adam Neumann knows a thing or two about brazenness. From calling massive, massive losses “investments,” to coming up with three different kinds of earnings adjustments to explain those away, to believing that such a company should go public, at less than half its valuation at its last private fundraise and after he personally cashed out three-quarters of a billion dollars, to attempting to redefine the mission of a soon-to-be-public company as “elevating the world’s consciousness” and making grand statements about morality while swimming in Saudi money, to complaining that maternity leave was a “vacation” while shooting tequila and smoking up on the job, the man has an inexhaustible supply of chutzpah.

* An attorney who shook his butt at an adversary during a mediation has avoided court sanctions. Maybe the lawyer was just showing off some dance moves? [Texas Lawyer]

* The New York Attorney General’s Office is questioning officials at NBC over sexual harassment allegations. [New York Daily News]

* HUD has agreed to pay $17,800 to settle a lawsuit about records relating to Ben Carson’s bible study. [Fox News]

* Adam Neumann, the founder of WeWork, is suing SoftBank for allegedly backing out of a deal to buy stock from Neumann and other shareholders. [New York Times]

* A woman who was arrested because her cotton candy mistakenly tested positive for meth has recovered no damages. The officers must have watched a little too much Breaking Bad. [Atlanta Journal Constitution]

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Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

The Law Society Statement on the Deferment of Rents and Mortgage Payments (SI 96 of 2020)

On the 3rd May 2020, the Law Society of Zimbabwe published a critique on the impact and legitimacy of SI 96 of 2020.  The Law Society’s critique is reproduced here with the kind permission of the Executive Director of the Law Society, Mr Edward Mapara.  Statutory Instrument 96 of 2020, inter alia, allows for deferment of rentals due to landlords during the lock-down period.  The statement reads as follows:

In the wake of the COVID-19 pandemic, Zimbabwe responded with measures to reduce its spread and impact on all citizens.  These include the declaration of a national lockdown which commenced on 30th March 2020 and was effective for an initial 21 days before it was extended by a further 14 days to May 3rd 2020.

In order to mitigate the impact of the national lockdown, on April 29th, 2020, the President promulgated Presidential Powers (Temporary Measures) (Deferral of Rent and Mortgage Payments During National Lockdown) Regulations Statutory Instrument 96 of 2020.  The statutory instrument was gazetted in terms of Section 2 of the Presidential Powers (Temporary Measures) Act.  SI 96 of 2020 defers payment of rentals in respect of residential premises and all mortgage repayments.

This in the view of the Law Society of Zimbabwe, brings about an unjustifiable scenario where a commercial landlord who benefits from a deferment of mortgage repayments can still legitimately demand rental payments from his tenants of the same commercial premises.

In the preamble to the Statutory Instrument it is stated that the instrument was made in the interest of health and public safety, as provided in Section 2 of the Act.  The preamble then goes on to elaborate the situation forming the basis for the Statutory Instrument in the following terms, “on account of the lockdown many people are on forced leave from employment and therefore unable to earn the income necessary to pay for among other things, rentals for residential accommodation and mortgage repayments.”

It is the Law Society of Zimbabwe’s considered view that the above basis as stated in the preamble to the regulations does not meet the criteria set out in Section 2 of the Presidential Powers (Temporary Measures) Act.  The situation as given above does not address the interest of defence, public safety, public order, public morality, public health, the economic interest of Zimbabwe or the general public interest.  The situation describes an economic difficulty in respect of a section of the population and only in respect of a section of the national economy.  In this regard therefore the Law Society believes the regulations are ultra vires the enabling Act.

Given the foregoing the Society also believes that SI 96 of 2020 would, therefore, be irrational when measured against the principal law from which it draws its authority.  It also fails to take into account the effect of loss of income that would result from the implementation of the SI for individuals who solely rely on rental income.  At the same time, the individuals whose property rights are being interfered with are still liable to pay rates, insurance premiums and other expenses for the same properties.  They are also suffering the negative effects of the lockdown.  Instead of holistically solving the burden brought about by the lockdown, the SI seeks to take the burden from one citizen and thrust it upon another who may also be suffering the consequences of the lockdown.

It is the expectation of the Law Society of Zimbabwe, its membership and the general populace that government will cause public service providers like Zinwa, Local Authorities and ZESA to suspend or defer charging for their services which are basic needs if the inspiration behind S1 96 of 2020 was to cushion the public against the negative effects of the COVID19 pandemic.

The Law Society is deeply concerned that SI 96 of 2020 only interferes with contracts between parties in relation to residential properties and leaves out the contracts in respect of commercial properties for no apparent reason.  The LSZ believes Government could have approached this issue in a more holistic manner if indeed the rationale was to reduce the burden of COVID-19 effects on the populace.

It is important that during these difficult times and at all times, that every State action must be lawful, transparent, compassionate and conform to domestic and international human rights standards.

Law Society of Zimbabwe

“Committed to Justice and the Rule of Law”

Veritas endorses the views of the Law Society and would like to add some further points:

• Veritas has always contended that the Presidential Powers (Temporary Measures) Act is unconstitutional, in that it gives the President primary or plenary law-making power in violation of section 134 of the Constitution.  If the Act is unconstitutional then SI 96 of 2020 is void.
• Even if the Act is constitutional, section 3(1) of the Act says that the President must invite the public to make representations before he publishes regulations, “unless he considers it inexpedient to do so because of the urgency of the situation”.  The lock-down has been in force for over a month so the situation cannot be so urgent as to justify the President in publishing regulations without calling for representations.  His failure to comply with section 3(1) does not invalidate the regulations (see section 3(3)), but it suggests an arrogant disregard for the views of interested parties
• If the President had solicited representations from the public, he might not have created the anomaly pointed out by the Law Society, that landlords of commercial premises can take advantage of the regulations and withhold payments on their mortgages while at the same time squeezing their commercial tenants for rent.
• SI 96 of 2020 contains at least one other anomaly in addition to the one pointed out by the Law Society:  it does not prevent a landlord from terminating a lease for non-payment of rent.  If a landlord does so, he or she will be able to have the tenant evicted as soon as the lock-down ends.

Veritas is also concerned that SI 96 of 2020 will imperil the livelihoods of many people in poor urban areas who rely for part of their incomes on rentals from letting out rooms.  Veritas therefore joins the Law Society in suggesting that it would have been better for the Government to give people with low incomes, and also small businesses, at least relief from the burden of paying for water and electricity.  The Government should also act to reduce the high cost of fuel, which in turn leads to higher prices for basic necessities.  The cost of this relief would be borne by the State or its parastatals, rather than falling on ordinary citizens who are already suffering from food shortages and the inability to earn their livings because of the lock-down.

Veritas makes every effort to ensure reliable information, but cannot take legal responsibility for information supplied.

Post published in: Featured

On April 2, Zimbabwean Finance Minister Mthuli Ncube wrote to the International Monetary Fund and other leading multilateral lenders pleading for help.

More than half of the population needs food aid, the economy collapsed even before the impact of the global coronavirus pandemic and the country’s health service is in tatters, he said. To date, he’s had no response.

Zimbabwe’s plight highlights the dilemma that global lenders face. At a time when the coronavirus and its associated economic impact threaten illness, unemployment and starvation across much of the developing world, the IMF has barred from its relief program countries that haven’t kept up with their payments.

“If you look at all the countries, they are arguably the most ill-equipped to deal with the Covid outbreak,” said Jee-A van der Linde, an analyst at NKC African Economics in Paarl, South Africa. “My heart goes out to them. The people shouldn’t be held accountable.”

As early as March, the IMF said it would make $50 billion available to low-income and emerging economies to help mitigate the impact of the outbreak. While Zimbabwe has cleared its arrears to the IMF, it still owes $8 billion to foreign creditors including the World Bank and African Development Bank.

Ncube addressed his letter to the heads of the IMF, the World Bank, the European Investment Bank, the Paris Club of creditors and the AfDB. While his country has just 34 confirmed coronavirus cases, it has only managed to carry out 920 tests and a lockdown has brought its economy to a standstill.

He admitted policy errors and promised measures ranging from electoral reforms to a market-related exchange rate if the organizations would agree to reschedule the payment of arrears and allow it to access fresh finance.

Still, these promises have been made before and haven’t been honored. In a staff report earlier this year, the IMF criticized everything from Zimbabwe’s reluctance to crack down on corruption to a failed currency policy. Still, it said the country would need hundreds of millions of dollars in donor money to avoid “a deep humanitarian crisis.”

The Paris Club declined to comment. The other organizations didn’t respond to requests for comment.

Corruption, Migration

A senior official at one multilateral organization said the groups are reluctant to help Zimbabwe because they aren’t confident that aid won’t end up in the hands of the country’s elite, rather than the people who need it. He asked not to be identified as public comments haven’t been made about Ncube’s request.

Officials in Zimbabwe’s Finance Ministry and presidency didn’t respond to requests for comment. George Guvamatanga, the director-general in the finance ministry, said earlier that it was unfair to expect Zimbabwe to deal with the consequences of a pandemic it didn’t cause.

Zimbabwe’s relations with its creditors have soured over the past two decades. It narrowly escaped being expelled from the IMF in 2006 for non-payment of arrears and a series of irregular and violent elections, along with erratic economic policy, have frustrated attempts at finding a solution.

The country’s agricultural and manufacturing industries collapsed, the government has at times been unable to pay doctors and teachers and millions of its citizens have migrated.

For those who are left, there is little hope of help from abroad or from their own government.

“The blockage on funding is wholly the fault of the Zimbabwean government,” said Derek Matyszak, an independent governance consultant in Harare, the capital. “There is no back up for the people who cannot work during the Covid crisis. The government is unable to absorb any shocks like Covid or natural disasters.”