A law office and other closed businesses on Metropolitan Ave. in the Queens borough of New York early this month. Photo: Christopher Occhicone/Bloomberg

The Small Business Administration's Paycheck Protection Program, which many small law firms had hoped to use as a lifeline to avoid furloughs and other cuts, burned through its initial budget of $350 billion in loan guarantees in barely two weeks.

While the Senate voted on Tuesday to add at least $310 billion to the program, some lawyers at small and midsize firms are already frustrated with the process, expressing concern with how the government or the banks handled their application.

Several lawyers said they applied for a PPP loan and didn't receive the money. That meant more anxiety for their small and midsize law firms—many with small profit margins—as they are forced to adapt to an essentials-only economy.

Eric Turkewitz, a solo personal injury lawyer with a paralegal, said he couldn't even figure out whether Citi, his longtime bank, has received his complete application for a PPP loan. "Most people I know are supremely discouraged and exasperated trying to find out what's going on," he said about the loan program. Meanwhile, he said his practice has slowed to a crawl.

Ken Falcon, the managing partner of 23-attorney Falcon Rappaport & Berkman on Long Island, also hadn't received any money yet after applying for a PPP loan. He said his firm hasn't had to lay anyone off yet, but said he anticipated that the quarterly profit distributions that make up a big chunk of partner compensation would take a hit.

"If I were looking at average daily collections on any given day, they're off 30 to 50% from what we'd hope," he said.

A broad sweep of small firms has been impacted by the lack of the program's funding. June Castellano, a family law practitioner in Rochester who jointly leads a task force that is trying to help solos and small firms through the crisis, said in an email Thursday she's one of many lawyers who had applied for a PPP loan but hadn't gotten it.

"Today on our task force Zoom call of over 20 people, we did a quick poll, and I heard only one person say they actually got funded," she wrote.

There are some signs that clients have had better luck with the loan program than the lawyers who service them, Castellano said. Jason Rimland, a corporate lawyer at Tannenbaum Helpern Syracuse & Hirschtritt, said about 30% to 40% of clients who sought them have gotten approved for a PPP loan. He said those who worked with smaller, regional banks tended to have more success.

The PPP program, in its first round, approved $20 billion in loans to small businesses in New York and $43 billion to the professional services industry nationwide, according to SBA data. Some businesses have been approved but still have not received money.

Other programs are also available to help small law firms and other small businesses weather the pandemic. The SBA's Economic Injury and Disaster Loan program has also been swamped with applications and is set to receive more funding, though it's smaller than the PPP program.

The New York State Bar Association has asked Congress to allocate more funds for small businesses, including small legal practices.

Small Firm Demands

For plaintiffs-side litigators, who do more cases on contingency and have lumpier cash flows than Big Law firms, courthouse closures have imposed a special burden. Michelle Simpson Tuegel, a Texas solo practitioner with a national practice who usually represents plaintiffs in sexual abuse cases, said she has taken on some hourly consulting matters she wouldn't normally take on. She applied for a PPP loan and hasn't heard back yet.

"[The threat of a jury trial] holds defendants' feet to the fire," she said. "When that pressure valve is not as tight or completely turned off, it has an impact on everything down the line."

Many small firms say their services are still in demand, even if actually rendering them—filing a new complaint or motion, say, or closing a transaction—is made more difficult by delays in civil litigation, jury trial cancellations and social-distancing requirements.

And some small firms—those whose cash flow is less dependent on lawsuits, and those where clients' retainers tend to cover a great deal of necessary work—have been less immediately impacted.

Carrie Goldberg, whose firm represents clients in sexual misconduct and revenge porn cases, said April 15 that March was "fine" in terms of cash flow, and April probably would be, too, as the firm's six lawyers and six staff had time to focus on longer-term work. But she said slowdowns today could mean problems down the road.

"Making sure that there's a healthy reservoir of incoming cases is what's important," she said.

She said her firm was only approved for a PPP loan after funds were exhausted. And now she's happy that more funding will reportedly be made available, she said, given the fierce competition for funds from larger businesses that still qualify for PPP loans.