As the coronavirus pandemic drove an increasingly larger wedge between the U.S. and China, Adams Lee, an international trade lawyer who represents companies in both countries, came to a disconcerting realization.

"My sense is there's a growing disenchantment in the government structures. I talk to my clients in China and they're used to that. They're used to being lied to by the government. They expect it and deal with it, which is kind of shocking to me," says Lee, who practices at Harris Bricken in Seattle.

"Now, we're starting to see that on our end," he adds. "We're becoming more and more like China in some ways."

Of course, the novel coronavirus outbreak has further strained already frayed U.S.-China relations, so more U.S. companies that do business with China or have operations there are searching for an exit and trying to reconfigure their supply chains. Many were already looking to leave China amid an escalating trade war and tit-for-tat tariffs. But the urge to get out has intensified.

"With the coronavirus hitting China first, stuff wasn't coming out of China. Everyone was waiting to see what happens there," Lee says. "Then, as it spread, importers here in the U.S. started shutting down and that was the third wave of the supply chain freaking out."

However, moving supply chains outside of China, a world leader in contract manufacturing, was difficult during the ­earlier stages of the trade war and remains difficult today.

Pedestrians wearing protective masks walk past the People's Bank of China (PBOC) building in Beijing, China, on Tuesday, March 17, 2020. China suffered an even deeper slump than analysts feared at the start of the year as the coronavirus shuttered factories, shops and restaurants across the nation, underscoring the fallout now facing the global economy as the virus spreads around the world. Photographer: Qilai Shen/Bloomberg

"A lot of our clients are looking to find alternative supply options in Taiwan, Southeast Asia, wherever. But it's hard trying to find a reliable new supplier," Lee says. "Everyone is hoping, planning on this going away, eventually. But I think the reality for many is that being entirely dependent on China probably wasn't the best strategy."

Ashley Adams, legal operations manager for Asurion, a Nashville, Tennessee-based company that insures and repairs cellphones and operates in 14 countries, including China, said she was bracing for supply chain disruption related to Apple Inc. halting operations in China over the coronavirus. But her firm remains dependent on China production.

"Being able to get parts and those types of things will have an impact on us," she says. "I just don't know the gravity of it yet."

'Biggest risk is defining … a pandemic'

The exponential spread of COVID-19 has spurred many companies to establish coronavirus task forces or crisis teams composed of members of various departments within the firm, including legal, compliance, information technology, marketing and human resources.

These teams have been responding to the ever-expanding list of challenges and disruptions within and outside the company, nationally and internationally.

Some firms began requiring employees to have their temperature tested as they arrived at the office. Others were scrambling to set up systems to allow employees to work from home. Some were battling the spread of misinformation within their own firms. One corporate counsel reported hearing erroneous rumors that company policy prohibited all employees from wearing face masks at work. And others have been considering the potential liability for employee exposure to COVID-19.

But for virtually all companies and their legal departments, the most pressing ­concern has centered on figuring out how the viral outbreak applies to their existing contracts and, more specifically, "force majeure"—the contractual term du jour during these strange and uncertain times.

Force majeure provisions relieve parties of their legal obligations to fulfill the terms of a contract if they are unable to do so because of an uncontrollable event or "act of God," such as an earthquake or hurricane. So the question of the moment for corporate counsel—and pretty much anyone else in the business and legal realms—is whether the various force majeure provisions in their contracts, every one of which is written a little bit differently, might apply to COVID-19 disruptions.

Adams Lee, with Harris Bricken.

"This type of major, international pandemic changes the economics of everything," says Tim Parilla, general counsel for DraftKings Inc., a fantasy sports contest and sports betting provider that was gearing up for an initial public offering this year. He agreed to speak generally but declined to answer questions about how the coronavirus was affecting DraftKings.

"A lot of people will look at this and say it's a force majeure," Parilla says. "Well, yeah, it is. But is it actually impacting your ability to perform under the contract or does it just make it less economically beneficial to do so?"

Courts and arbitrators will be grappling with that question for years to come. And it's obvious now that COVID-19 will forever alter the way in which future contracts are written. But it won't be as simple as stuffing broad language about viral pandemics into force majeure provisions.

"I would think force majeure provisions are going to start to include infectious diseases, pandemics and possibly broaden it to include local, state or federal orders restricting certain types of non-essential business," says Michael Blankenship, a Houston-based partner at Winston & Strawn who practices corporate finance and securities law.

"Now, the question is whether or not either counterparty is going to accept that as a reason to get out of the contract," Blankenship adds.

Ideally, contracts should contain specific geographic and temporal triggers that would bring force majeure into play in the event of a viral pandemic, according to Parilla.

"The biggest risk is defining what a pandemic is," he says. "When you look at how you're going to define the next coronavirus, you have to be extremely careful. I think you define it in terms of some actual pandemic existing accompanied by some other thing. Is it governmental action around it? Is it mass closures or mandated closures of greater than X percent of people operating in your industry?"

Blankenship agreed, adding, "The Ebola virus in Africa may not affect my commercial dealings with you in China or Europe. So I'd advise my clients to be specific in that language and reject anything that would have broad language."

Some bright spots amid the chaos

The coronavirus outbreak brought an abrupt end to the in-person meetings and negotiations that form the foundation of mergers and acquisitions, which is especially bad for cross-border dealmaking, says Leif King, head of M&A for Baker McKenzie's offices in California.