PR Council on what to do if a client suspends contract due to coronavirus

The council offered some practical advice to its member agencies on Monday.

PR Council president Kim Sample wants to provide "up-to-the-minute guidance" to members.
PR Council president Kim Sample wants to provide "up-to-the-minute guidance" to members.

NEW YORK: The PR Council is advising its member agencies on how to handle “pauses” in their contracts as the coronavirus epidemic disrupts business operations, according to a memo obtained by PRWeek.

In consultation with attorneys Michael Lasky and Samantha Rothaus from the law firm Davis & Gilbert, the trade association recommends that all agencies have “suspension language in new client contracts.”

“This makes [it] critical that the scope of the legitimate grounds for a suspension be carefully defined in the client contract,” the memo states. Clients may request contract pauses due to “a number of external factors, or force majeure events,” including natural disasters, war, slowdowns and pandemics.

“We’re just trying to provide up-to-the-minute guidance to members on how to run business successfully,” said PR Council president Kim Sample.

Agencies should “set a time limit for the pause before the termination clause goes into effect,” which will guide what a “reasonable length” looks like, according to the memo. They and their clients should also “agree on some level of payment during the pause to cover some of the costs and disincentivize the client from stretching out the suspension.”

Agencies should also “discuss when non-competes or category exclusivity clauses can be lifted.”

Additionally, the memo provides a template contract that members can customize for their own uses.

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