It is official. Nigeria is now in recession. Recession is a technical term used in describing a period of temporary economic decline during which trade, economic and industrial activities are reduced, generally identified by a fall in GDP in two successive quarters. According to the Nigeria Bureau of Statistics (NBS) gross domestic product (GDP) report for the second quarter of 2016, Nigeria’s economy contracted by 2.06 percent to record its lowest growth rate in three decades. In the first quarter of 2016, the NBS said the economy shrank by 0.36 percent to hit its lowest point in 25 years, hence the official confirmation of recession.

It has always been obvious that Nigeria has been in recession before official confirmation. Even when Nigeria rebased the economy and celebrated being the leading African economy, overtaking South Africa in the process, the impact could not be seen on the average man on the street. Our years of economic mismanagement and directionless governance have finally caught up with us.

The present recession situation is a culmination of persistent and consistent misrule by our former leaders. The unbridled looting of treasury, inconsistent policies, unfocused governance all combined together to get us to where we are today. All these have been exacerbated by the falling oil prices and oil production disruption by the Niger Delta militants, which a mono product economy like Nigeria can ill-afford.

Faced with this dire situation, businesses and individuals have to devise new strategies for survival. For businesses, there are key legal issues that are related to a period of recession that they will have to deal with. In recession, broad areas of focus are cost reduction and possible increase in revenue. In doing this, business relationships and stakeholder interests are invariably impacted. Many of these impact and relationships disruption have legal implications for the business. We will examine some of these and how they can be managed.

One main issue during recession period is non-willingness of parties to abide to the terms of a contract they freely entered into when the going was good. Breaches of contract terms go northward. It is important that actions businesses take in response to such breaches do not lead to further throwing away scarce resources in chasing hopeless situation. Such breaches can involve any contractual relationship, including contracts with suppliers, customers and other service providers. To get optimal solution in such situations, businesses will need to work closely with their professional advisers, particularly lawyers and accountants. A stitch in time saves nine. Early involvement of your lawyer would help in managing scarce business resources in the most prudent way.

One key option during recession is re-negotiating contracts terms, in the face of new reality confronting contract parties. Contract entered into in the period of boom may not be suitable in a period of recession. Parties therefore need to engage each other to renegotiate contract terms in a way that is mutually beneficial. During such renegotiation, you need the support of your lawyer to ensure that you do not sell yourself short.

Recession often comes with the forced need to embark on cost cutting. Typically, some areas targeted for cost reduction impact on staff take-home and welfare. Discussion around this often lead to conflicts and disputes because of interests differences. This need not be, if well managed. Involving your legal team can help smoothen the process. Proper legal advise can help in preventing dispute or where dispute arises, can go a long way in resolving it amicably.

During recession, purchasing power generally goes down due to accompanying inflation. Generally, people are desperate to make ends meet. Crime and other social vices go on the increase. Communities in business operational areas become more restive. In such situations, lawyers who are savvy in dispute resolution can help with appropriate legal support and advice to enable businesses navigate through the rough times without suffering further depletion of resources.

Other areas that a good legal support can provide succour include management of receivables, regulators relationship management, corporate governance practice and ethics.

The main key to effective management of legal issues arising during recession is early involvement of your lawyer. Prevention is better than cure. That saying is more relevant during the challenging times of recession. Therefore, early involvement of your lawyer is essential. Resources are scarce and therefore need to be optimally managed. A good legal support and advice will surely help in doing this. When you involve your lawyer early, you spend less and can prevent huge and higher cost that may arise when the damage has been done, when you may now have to endure expensive dispute, which may include litigation.