‘New normal’ creates challenges in employment law, CBD industry faces a reset,
M&A stays strong while construction industry grapples with labor shortages
DENVER, Colo. (Nov. 16, 2021) — Change is the only constant in the legal industry, and 2021 was no exception. The world has struggled to adjust to the myriad ways the pandemic has transformed society. As 2021 comes to a close, partners at Fortis Law Partners highlight the biggest legal trends and issues they expect to rise to the forefront in 2022.
Employment Law Gets (Even More) Chaotic
In 2021, employers were blowing up their attorney’s phones, trying to get a handle on the countless impacts of COVID-19 on employment law. Unfortunately, in 2022, navigating vaccine mandates will continue to be akin to playing a game of whack-a-mole. Various appeals courts will continue to see challenges to President Joe Biden’s federal vaccine mandate, and smaller companies that do not fall under the mandate may find it difficult to assess their options.
Christine Lamb, co-founder of Fortis Law Partners and head of the firm’s employment practice, predicts new legal hurdles arising from the “work from anywhere” pandemic migration, which has scattered employees into various states and even countries, each with different employment laws. “I’ll be advising my clients about whether or not they have the necessary legal footing to mandate employee vaccination or, in a new wrinkle, to require booster shots,” Lamb says. “Employers need clarity on whether or not they can legally penalize or fire employees who opt-out of vaccination altogether.” She also advises her clients to develop review-and-response processes that address vaccine exemption requests impartially and equitably.
M&A Expected to Continue to Be Hot, and It’s a Sellers’ Market for Small Business Transactions
“2022 will continue to be a spectacular year for small business owners looking to sell,” says Julian Izbiky, partner at Fortis Law Partners. Izbiky has handled more than 1,000 transactions in the small and lower middle market space. “Interest rates are low, it’s relatively easy to get Small Business Association loans, and buyers are abundant for all types of small businesses, at any price point.”
Izbiky advises business owners hoping to sell in 2022 to get reinvigorated about growing their business and prepare, prepare, prepare. “Whether that means launching a new marketing or customer acquisition strategy, putting a strong management structure into place, or working with a CPA to ensure the financials are in order—do whatever you can now to make your company as attractive as possible to potential buyers. It will pay off in spades later,” he counsels.
“At Fortis, we counsel business owners about how important it is to proactively address the legal issues that can inhibit a sale,” says Andrew Comer, partner at the firm. “These can include outdated corporate or LLC documents, unprotected intellectual property, leases without renewal options and ensuring key employees have signed non-competes or financial incentives that encourage them to stay on board through the date of an exit event.”
Julie Herzog, co-founder and head of Fortis’ corporate practice, also expects large business M&A activity to be robust in 2022. “Not only will the companies that performed well during the pandemic continue to be in high demand for merger or acquisition in so-called ‘mega-deals,’ but those that struggled may also find buyers are plentiful,” she says. “I expect to see continued consolidation as large companies look to acquire smaller, synergistic businesses to scale up and tap into new markets.”
Bankruptcies Ahead in the CBD Industry
2021 was a particularly bad year for many CBD businesses. The tough times began in late 2019 when skyrocketing hemp supply depressed prices and have only gotten worse this year. And while the pandemic may have been a boon for cannabis usage, CBD products, in contrast, were viewed by many as a luxury rather than a necessity—never a good position to be in during an economic downturn when most people reduce their non-essential spending.
Henry Baskerville, a partner at Fortis Law Partners and head of the firm’s cannabis practice, expects to see more CBD businesses headed into bankruptcy or receivership in 2022. Still, he also projects the market will stabilize, with better days ahead. “Prices are starting to climb a bit, the CBD buyers are returning, and ultimately, the market reset on hemp pricing is good in the sense that it’s allowing CBD products to be much more financially accessible,” he says. “Whereas two to three years ago, a CBD soft gel could cost consumers 50 cents to a dollar a day, they can now buy them for pennies on the dollar, making it much easier for people to add CBD products to their daily regimen.”
Construction Boom Continues, but Labor Shortages Create Challenges
Expect the construction industry to continue experiencing steady to skyrocketing growth depending upon the sector, but with continued limitations due to the challenges of finding and retaining workers and subcontractors. The Association of General Contractors recently polled general contractors nationwide, and a full 80% reported that they were having difficulty finding qualified tradespeople and laborers to hire. And that’s just half the battle. Retention can be even more difficult, as some workers jump ship to more lucrative jobs before finishing the current job.
Given these issues, Baskerville advises his construction industry clients to protect themselves contractually. “Construction companies and general contractors should ensure that their contracts include a retainage clause that allows a general contractor or business to hold back a certain percentage of a subcontractor or worker’s payment until the project is complete. Performance bonds, which are usually provided by a bank or insurance company, also are a good idea. They guarantee that the contractor will meet the obligations specified in the contract and complete the project satisfactorily.”
Subscription Models Become Even More Popular
Subscription services are now ubiquitous for seemingly everything under the sun—entertainment, groceries, meals, pet food, cleaning supplies, baby essentials and more. They’re popular because they help people save time, money and make busy lives a little bit easier. In 2022, expect to see the subscription model move into new service sectors, like the law.
Firms like Fortis now offer clients the option to “subscribe” to general counsel services. Like Netflix or Amazon Prime, a subscription model allows businesses to pay a fixed monthly or yearly fee on a tiered basis and offers continuity of access to professional attorneys. Herzog was recently asked to speak at a national law conference about the firm’s innovative subscription offerings that can help meet clients’ changing needs. While companies like LegalShield or Rocket Lawyer have long offered subscription services to help with one-off items like contract templates, a general counsel subscription is particularly useful for entrepreneurs or small businesses who need assistance with day-to-day legal services involving compliance, commercial contracts, trademark filings and corporate governance.
Expect to see subscription service offerings extend into niche but complex industries such as cannabis as well. Fortis Law Partners’ Hemp & CBD Risk Assessment Service allows businesses to cherry-pick and subscribe to several regularly updated risk assessments that can help them stay up-to-date on the shifting legal sands and compliant with numerous federal and state requirements.
To schedule an interview with any of the partners at Fortis, please contact Shawna Seldon McGregor at 917-971-7852 or shawna@themaverickpr.com.
About Fortis Law Partners
Fortis Law Partners offers broad expertise to help clients achieve effective legal solutions, from the simplest matters to the most challenging business problems. Whether a successful outcome means winning at trial, dismissing a lawsuit, negotiating a settlement, closing a transaction, or just getting thoughtful legal advice, Fortis lawyers get results. Our business-minded problem-solving approach, coupled with a persistent dedication to client service, enables us to create unmatched value. Practices include Commercial Litigation, Corporate / Securities / M&A; Employment Law; Tax; Compliance Programs and Internal Investigations; and Real Estate & Development. For more information, visit FortisLawPartners.com. Continue the conversation on LinkedIn and Facebook.
