Hurricane Sandy’s aftereffects continue to bedevil the daily routines of small firms and solo practitioners who have had to scramble to find alternate office space.
Some lawyers admit to meeting clients in homes or coffee shops, and several firms say they are still grappling with insurers over business interruption coverage.
110 Wall St.
A number of small firms were tenants at 110 Wall St., a 27-story lower Manhattan building across the street from the harbor where Rudin Management terminated leases due to flooding damage.
It’s "a big drain, emotionally a big drain, professionally a big drain and economically a big drain," said Thomas Campbell, a partner at business litigation firm Smith Campbell.
"All the leases [at 110 Wall St.] were canceled, leaving us to pretty much scramble to temporary space and then [to look] for a permanent new location," Campbell said.
He said his firm took space from friends, then had to seek out new quarters.
"These are all very disruptive and expensive tasks," Campbell said, estimating that the firm has spent between $60,000 and $90,000 during its relocation, in addition to the salaries it continued to pay its employees.
Smith Campbell eventually found an office at 100 Wall St.
The firm’s insurance company, CNA, has rejected its business interruption claim and has offered mediation, Campbell said.
Andrew Fallek, counsel at three-attorney Joseph Fallek PC, worked on the 19th floor of 110 Wall St.
"You’re not prepared to do anything because you expect your lease to last," said Fallek, who is also president of the Brooklyn Bar Association. "So suddenly you have to stop everything you’re doing to try to find new space, to try to find temporary space" and make sure phone service is up and running.
Finding alternate office space has not been easy and moving is expensive, Fallek said, adding that his firm is in temporary quarters downtown and is looking for a permanent location.
Meanwhile, small things, like trying to retrieve mail sent to 110 Wall St. can take weeks, Fallek said.
"It’s been a major disruption, and it still is," he noted.
While his firm has business interruption insurance, "our carrier and others have taken the position that because it was caused by flood," it’s not covered.
"You probably don’t think you need flood insurance" on the 19th floor, he said.
Joshua Cohen, of 25-attorney DeCorato Cohen Sheehan & Federico, said his firm occupied the entire 10th floor and some space on the 16th floor of 110 Wall St., with three years left on a lease.
After Sandy hit on Oct. 29, five feet of water collected in the lobby, on top of the basement flooding, he said.
"It was almost like a skating rink. The marble floors had a slick coat of oil on them," Cohen said, which made moving office equipment difficult. The firm had to hire movers to carry computer servers down 10 flights of stairs in the dark.
After working in temporary space, Cohen said his firm found a sublet for two years at 810 Seventh Ave.
The law firm submitted a business interruption claim worth "well into six figures," including lost revenue and relocation costs, but it was denied. The firm has since retained a lawyer to pursue its claim.
"It’s been an interesting process where we’ve been denied insurance coverage, and the building offered nothing in terms of helping us," Cohen said, adding that the firm has continued to pay its employees.
In a statement to the Law Journal, William Rudin, CEO of Rudin Management, said, "We are still in the process of analyzing different redevelopment alternatives and have not made a decision yet" as to the building’s future use.
"Superstorm Sandy caused severe damage and destruction to 110 Wall Street. We are currently working with a team of architects and engineers to create a redevelopment plan that will make the building less susceptible to future storms and which is in line with the recommendations announced by Mayor Bloomberg," Rudin added.
Many lawyers made use of virtual space at 110 Wall St. through the company Your Wall Street Office, which allowed them to lease space by the hour and purchase phone and mail service.
More than 400 attorneys have used the Your Wall Street space at 110 Wall, said company representative Donna Cano. She said no customers were left without space after Sandy because the company uses other facilities.
But one solo practitioner who used virtual space at 110 Wall and at a second location said her caseload dropped after the storm because her phone lines were knocked out for two months.
The attorney, who asked not to be identified, said she lost about $30,000 in new business. To cover the drop in income, she took up unemployment assistance through FEMA.
"This year my income will go down a lot because I didn’t pick up any new clients for almost four months," she said.
Another solo who used the virtual office space and also did not want to be identified said she has been working at facilities at the New York City Bar and meeting some clients in their homes.
Carl Spector, a criminal law solo attorney using the Wall Street Office arrangement at 110 Wall, said that in the more than seven months since Sandy, he has been meeting clients in their offices, in his New Jersey office or even at Starbucks.
Spector, who plans to continue using the company’s facilities, said Sandy was tougher for smaller firms that only need a small office.
"I’ve just been trying to get not too frustrated," he said
It is not easy for firms pursuing a business interruption claim to prove and quantify loss of business revenue, said Joshua Mallin, a partner at insurance firm Weg & Myers, which represents policyholders.
Contingency fee attorneys must predict how many prospective client calls they would receive and historically how many would retain the firm and the probability of succeeding in each case, he said. Each step in the process has a certain number of assumptions, Mallin said, making it more difficult to prove.
For those working by the hour, lawyers have to identify work they couldn’t do at any other time, even after their office was fully operable, he said. It may be difficult to prove they can’t recapture that lost time, he added.
Sullivan Papain Block McGrath & Cannavo is representing 65 clients in Sandy-related matters, including six law firms suing for business interruption claims, said partner Andrew Carboy, who declined to identify the firms.
Most of the clients are not in litigation at this point, and he expects some to be settled.
"Discussions are ongoing," he said. "We’re in unchartered waters. New York hasn’t seen this type of thing before…with these really substantial property damages and business loss claims."