Economic downturns and political disruptions often present complex challenges for businesses, investors, and individuals. These conditions can disrupt contracts, strain business relationships, increase litigation risk, and force difficult operational decisions. Focal’s attorneys offer strategic legal counsel across a wide range of practice areas to help clients safeguard their interests, minimize risk, and remain strategically positioned. Below, we highlight some of the key legal issues that may arise during uncertain times and how the Focal team can assist.

Contract Considerations by Ashley McDonald

Economic instability and political shifts, such as recent executive orders, can affect both new contracts and those already in place. Depending on the contract terms, these changes may lead to delayed payments, suspended obligations, or disputes over performance. Some parties may argue that economic or political developments excuse nonperformance under doctrines like frustration of purpose or force majeure, similar to what occurred during the COVID-19 pandemic. If you are entering into a new contract and want to protect your interests, please contact Sean McChesney, Lachlan Huck, Vickie Kuang, or Ian Grant or for more information. If you have an existing contract and would like help understanding your rights or navigating a contract dispute, please contact Ashley McDonald, Stacia N. Lay, Barb Rhoads-Weaver, or Randall Moeller.

Shareholder and Partnership Disputes by Randall Moeller

Economic downturns often strain relationships among business owners, causing shareholder or partnership disputes over management decisions, profit distributions, buyouts, or exit strategies. These conflicts — whether in startups, family businesses, or closely held companies — can threaten operations, derail growth, erode trust, or jeopardize valuable assets. Left unresolved, they may escalate into costly legal battles. Focal’s litigation team helps clients navigate these disputes, from negotiating settlements to pursuing or defending claims in court and arbitration, working to achieve favorable outcomes that protect your interests. If you’re facing a shareholder or partnership conflict, please contact Randall Moeller, Stacia N. Lay, Ashley McDonald, or Barb Rhoads-Weaver.

Intellectual Property Enforcement by Stacia N. Lay

Uncertain economic times can cause intellectual property (IP) owners to deprioritize protection and enforcement of their IP rights. Reduced enforcement of such rights in turn can encourage bad actors to escalate their infringement of the IP of others. But resource constraints and an unpredictable economic landscape need not force IP owners to risk the devaluation of their IP portfolio. Focal’s IP protection and enforcement team can:

• Assist clients in auditing their IP portfolios to identify the trademarks and copyrights for focused protection and enforcement efforts;
• Identify and implement cost-effective and streamlined online takedown programs;
• Advise on strategic litigation opportunities most likely to have a cost-effective ROI; and
• Much more.

Through cost-effective and creative solutions, Focal helps clients protect their valuable IP, preserving long-term brand value and competitive advantage, even as the economic landscape shifts.

To talk about how Focal may be able to assist you with protecting and enforcing your IP rights, please contact Stacia N. Lay, Jen Davis, Ashley McDonald, or Randall Moeller.

Employment Issues by Sean McChesney

Changing economic winds often require cost reduction measures, including changes to your teams. When contemplating layoffs or downsizing, employers must be cognizant of legal considerations and employee rights to minimize the risk of disputes (including legal action) and damage to your company’s reputation. It’s important to comply with local, state, and federal employment laws, such as the WARN Act, the Age Discrimination in Employment Act (ADEA), and the Older Worker Benefit Protection Act (OWBPA). It’s also important to ensure that decisions regarding layoffs are made without discrimination or bias. Among other things, Focal attorneys can assist you by:

• Identifying local, state, and federal laws that are applicable to your company and your particular terminations or reduction in force plans;
• Preparing severance agreements that comply with applicable local, state, and federal laws and provide protection for your company through an enforceable release of claims;
• Ensuring that you comply with applicable wage and hour laws, including laws governing the payment of final paychecks, payment of commissions and bonuses, and payout of unused PTO;
• Ensuring that you comply with applicable local and state laws requiring employers to provide information related to the reason for terminations and access to certain information contained in employee personnel files; and
• Identifying the risk of potential claims for discrimination, disparate treatment, retaliation, or similar claims, and ensuring that you properly document legitimate and non-discriminatory business justifications for your termination decisions.

If you would like assistance navigating the complex web of laws and considerations relating to terminations and layoffs, please contact Sean McChesney or Barb Rhoads-Weaver.

Distressed Companies by Lachan Huck

A company operating during an economic downturn oftentimes faces tough corporate issues. For example, companies must ensure they have sufficient capital to weather a liquidity crisis; must maintain harmony among debt and equity holders; must discharge fiduciary duties owed to various stakeholders; and must prepare for the worst case—dissolution or a distressed sale.

The corporate team at Focal has experience advising clients in various distressed scenarios, and can assist with the following:

• Negotiating downround and bridge financings;
• Navigating recapitalizations and pull-through and pull-up financings;
• Advising on all aspects of distressed sales;
• Assisting with the orderly dissolution and distribution of corporate assets;
• Advising management on fiduciary duties in the zone of insolvency and related duties; and
• Negotiating with lenders and investors to preserve operating capital and runway.

If you would like assistance navigating corporate and startup issues during an economic downtown, please contact Lachlan Huck or Zoë Maddox.

Bankruptcy Preference Claims by Ashley McDonald

During economic downturns, an increase in companies filing for bankruptcy often leads to a rise in preference claims. Preference claims are demands by bankruptcy trustees for the return of payments made to creditors within 90 days before the bankruptcy filing. Receiving a demand from a bankruptcy trustee or having an adversary proceeding filed against you because of a preference claim can be alarming, especially when the payments were made under valid contracts for legitimate goods or services. Fortunately, statutory defenses may allow for the reduction or elimination of liability, either through negotiation or litigation. If you have received a preference claim demand or have been named in an adversary proceeding, an attorney can help you assess your options. Please contact Ashley McDonald for more information.

Cost-Sensitive Dispute and Litigation Resolution by Venkat Balasubramani

Tough economic times call for evaluation of the resources you expend in litigation. Focal can assist with assessing whether it makes sense to litigate or to take the alternate dispute resolution (ADR) route:

• Pre-Litigation Counseling: Advise on legal risks and potential business impacts of pursuing or avoiding litigation.
• Early Case Assessment: Evaluate strengths, weaknesses, and strategic options to determine if ADR is a viable, cost-effective path to achieving business objectives.
• Negotiation Strategy & Support: Craft demand letters, assist with direct negotiations, and represent clients in early settlement talks.
• Mediation Preparation & Representation: Identify appropriate mediators, prepare briefs, and advocate for clients in mediation.
• Preserving Business Relationships: Use collaborative dispute resolution methods to minimize disruption and preserve valuable commercial relationships.
• Review of Ongoing Litigation: You may already be involved with ongoing litigation. Focal can help you assess whether the costs still justify the benefits and whether it makes more sense to pursue ADR.
• Customized ADR Clauses: We can also review or draft ADR clauses in contracts to maximize enforceability and alignment with business goals.

To discuss any of the above, please contact Stacia N. Lay, Ashley McDonald, Barb Rhoads-Weaver, or Randall Moeller.

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If you’d like information about other matters Focal may be able to assist you with, please visit Focal’s website, www.focallaw.com, or email info@focallaw.com.