As a beautiful but unusual Canadian summer gives way to fall, we want to share how we've fared over the past few months, both as a country and at Stikeman Elliott as a firm.
We recognize that Canada has been relatively fortunate so far. In the spring, our New York and London colleagues kept us informed about the serious outbreaks in the U.S. Northeast and parts of the United Kingdom and continental Europe. Knowing that those regions are home to many of the people that we work with every day, our thoughts were with them during that difficult period, just as they now are with our clients and friends in other hard-hit areas.Canada has faced the same COVID-19 challenges as the rest of the world, although the crisis has not been quite as severe here as in some other countries. To date, its most striking aspect has likely been a series of tragic outbreaks in long term care facilities in the spring. Since those early days, other infection clusters have appeared in a number of settings, but community transmission has generally been relatively well contained. As in the U.S., the pandemic in Canada spread to regions that had previously been affected less severely, such as in British Columbia and the Prairie Provinces. Most recently, public health authorities have been reinforcing their guidance as case numbers have increased and a certain "COVID complacency" has settled into some parts of the population. Concerns about a second wave are heightened as the fall brings cooler weather and increased time indoors, something of a seasonal fact of life in Canada. And already, Canadians have been cautioned about family gatherings during the holidays.
Canadian governmental responses
Canadian governments – federal and provincial – have responded to COVID-19 with three types of initiatives most of which will be familiar in kind to our friends around the world:
- Restrictions and lockdown measures introduced in March to "flatten the curve" of the pandemic by restricting the operations of non-essential businesses and settings and imposing distancing and other safety requirements on those that stay open. These measures have been gradually lifted to allow reopening as discussed below, but re-implementation is a continuing possibility as circumstances evolve.
- Support programs designed to mitigate the financial consequences of health measures on businesses and individuals such as by offering wage and commercial rent support. These efforts will push our federal debt beyond $1 trillion, as compared to the previously projected $716.8 billion.1 The Bank of Canada also acted to support our economy and financial system, including through lowered interest rates, liquidity facilities and asset purchases of long-term debt.
- Reopening plans that follow a phased approach, with most provinces having proceeded to the most advanced levels of reopening permitted in the absence of a vaccine, though still short of business as usual.
Restrictions on travel continue to have an impact on business. Inbound discretionary travel – including all types of tourist travel – is broadly prohibited. Business travel may be permitted if it is non-discretionary, related to essential services, or by certain classes of persons. A 14-day quarantine is required of most persons who are permitted to enter or return to the country. Calls by Canadian business leaders to government authorities to loosen some of these restrictions have yet to be acted upon.
As in other countries, government restrictions on businesses and otherwise had an immediate effect on the Canadian economy. Our GDP fell 11.5% in Q2, although there was an encouraging 6.5% rebound in June over May.2 The gradual reopening of the economy has led to good news in some economic indicators, such as better, though uneven employment numbers and increased household spending and exports. There remains uncertainty about the course of the pandemic and the recovery, each of which has had and may yet have in future uneven effects on Canadians and our business sectors.3 In a widely-anticipated announcement in Parliament on September 23rd, the federal government signalled its intention to remain focused on public health and economic support initiatives in the months ahead.
Our firm's activity
From a business perspective, we have been fortunate to be among those firms able to serve our clients by working remotely throughout the pandemic. Some key practice areas have been particularly busy because of COVID-19, including our capital markets, employment and labour, real estate, litigation, life sciences/healthcare and restructuring groups.
As a transaction-focused firm, we witnessed first hand the pandemic's impact on deal flow. While many pre-pandemic transactions did grind to a halt initially, the market adjusted relatively quickly. Many "old" deals were eventually completed, while new activity emerged in sectors such as healthcare, logistics and technology. Recently, we have even seen renewed acquiror interest in other areas, including the energy and mining sectors. Transaction funding continues to be available, as major investors and lenders are generally taking a long-term approach.
As in the U.S., a robust IPO market has emerged, especially in technology and other sectors that are likely to do well in the pandemic and post-pandemic economy. At the opposite end of the uneven economic impact of the pandemic, the most severely affected businesses are adjusting to the likelihood of continued challenges through the remainder of 2020, including by looking at restructuring options. The energy sector has been particularly hard hit, and we have added a senior practitioner to lead our restructuring team in western Canada.
When it comes to working remotely during COVID, our situation is not unusual. From the outset, it has been an experience in agility and quick learning, and new organizational priorities or trends have emerged or been accelerated. We have found that working with our clients throughout this period has not only been possible but also productive and efficient. Indeed, remote working and e-meetings have been successful (give or take a few uninvited pets and mistimed grocery deliveries), but we still miss the camaraderie and spontaneity of being together with colleagues and clients and are ready for a change of scenery.
Some of us are returning – subject to public health guidelines of course – to our Stikeman Elliott offices such that the premises are beginning to feel more active again. However, we are not yet able to invite people back in significant numbers, let alone to encourage that. Indeed, it is likely that remote working will continue to be the norm for the foreseeable future. The long term implications of the pandemic on how we work and interact will be sorted out in time. For the time being, we are focused on the near future and on ensuring that we continue to work effectively in meeting our clients' needs. We are also working to adapt firmwide initiatives, such as in the advancement of women, diversity and inclusion and wellness, to take the different and uneven burdens and conditions of remote working into account.
Most of all, in these times of physical distancing and restricted travel, we are mindful of the importance for all of us to stay connected with each other. In that spirit, each one of us will be glad to speak with you about what's happening in Canada, and to hear in turn about developments in your part of the world as well.
Be well, stay in touch!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.