It has become clear that the Deepwater Horizon incident has and for a long time to come will dramatically impact the way that many companies do business, both in and outside of the oil and gas exploration industry.
While it is obvious that oil and gas exploration companies will be required to adhere to more stringent drilling and safety regulations, we note that the ways BP and others have done business have also come under intense scrutiny, and that a perception that a company has poor practices can have a very adverse financial impact. We therefore believe that there will be less obvious, but no less important, impacts that make it imperative that all companies review, update and improve their own business practices, such as decision making procedures, risk tolerance standards, business interruption stamina, documentation of operations, insurance coverage, and contractual indemnity and damages exclusion rights and obligations.
Has your company developed clear policies and guidelines for the types and levels of risk that your company can assume? Have you kept key employees who make decisions that could jeopardize the well-being your company informed on those policies?
If your company provides products or services that were involved in a similar catastrophe, would it be contractually protected with binding indemnity provisions that are truly appropriate for the products and services that you deliver? Or are those provisions antiquated boilerplate that may have limited benefit in today’s environment?
Does your company clearly document its operations and decisions and maintain adequate information about its important activities? Would it be able to readily defend itself against anyone who might seek to include it in a dragnet of possible target defendants in a lawsuit? Do you maintain sufficient records to support coverage of an insurance claim?
The business and litigation attorneys at Baker Hostetler have extensive experience in helping our clients develop, review, improve and update their business practices with the view to effectively reducing their exposure to losses that could occur from the actions of their own employees but also from the actions of those with which they do business.
We hope you find this information helpful. If you would like to discuss any matters or have questions on how the issues raised here may affect you or your business, please contact any of our Energy Team members or your regular Baker Hostetler contact.
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