With small law firms in Connecticut laying off staff amid fears of being unable to pay employees during the coronavirus pandemic, the Connecticut Bar Association has formed a Financial Impact Subcommittee within its COVID-19 Pandemic Task Force to help those anxious lawyers.
“The complaints continue to come into us of lawyers saying we can’t make payroll and we have to layoff staff, and how will we make ends meet,” said CBA President Ndidi Moses. “They are working on billable hours, and if they are not billing hours then they are not bringing in money. Obviously, their clients are saying they can’t pay this month and, so, that obviously has an impact on whether the firms can get their invoices paid.”
The committee will be co-chaired by Ralph Monaco of New London-based Conway, Londregan, Sheehan & Monaco, and Brad Gallant of Hartford-based Day Pitney. Monaco will work with solo practitioners and smaller law firms and Gallant will work with larger law firms. Forming the committee, Moses said, was essential to “alleviate that panic and offer some solutions and options.”
Monaco, a former CBA president who helped form the subcommittee on Sunday, said he’s been making phone calls nonstop with those in the banking industry who can help his colleagues.
While President Donald Trump and other elected officials have said the Small Business Administration is ready to help, Monaco said the feedback he is receiving shows that attorneys want another solution.
“There is funding through the SBA, but what we’ve heard from lawyers is that it’s a cumbersome process and very time-consuming. People just will not get money quickly through the SBA,” said Monaco, whose firm has seven lawyers and a staff of 10, and specializes in personal injury and medical malpractice litigation.
“What we’ve done with some lending institutions and smaller community banks and credit unions is to try to see their interest in lending money to lawyers and law firms during this crisis,” Monaco said. “There are many that are amenable.”
That, Monaco said, includes Charter Oak Federal Credit Union in Waterford. “I spoke to the head of the credit union and he said they’d be more than happy to receive applications by email from lawyers and law firms and will expedite the analysis of those applications.” The federal credit union, Monaco said, can only do business, though, with firms located in eastern Connecticut.
Monaco said he’s also reached out to Tom Mongello, president of the Connecticut Bankers Association, who said “Connecticut banks are well capitalized and would certainly be available to give financing to lawyers and law firms during this crisis.” He recommends that attorneys reach out to their own banks and request funding.
How much a lawyer from a firm can get from a loaning institution varies, Monaco said. And the amount will often depend on the size of the firm.
“It’s easier to get a loan for a lesser amount for like $50,000,” Monaco said. “I don’t see a problem with an established lawyer or firm getting that amount.”
Getting a larger loan could also depend on the firm’s relationship with the lender, and the type of law practiced. In his conversations with Charter Oak, for example, Monaco said, “they said they know the attorneys in eastern Connecticut and said there would not be a problem in getting many of those firms larger loans. He wouldn’t even blink.”
Moses said larger law firms will also feel the financial pinch, eventually.
“Larger firms have access to more capital and some firms have more liquidity than others, but the longer this goes on, the bigger a problem it will be for everyone,” Moses said.
Most of the bar association’s approximately 10,000 members are solo practitioners, or work for small law firms, Moses said.
The CBA, Monaco said, is in the process of putting together a video on financing for its members that will soon be available on the association’s website. In addition, Monaco said, the association will probably have a list of banks on its website that are rolling out programs specific to this crisis.