Law firms are the Philadelphia region’s biggest recipients of cash from the Paycheck Protection Program, which is aimed at helping small businesses through the coronavirus pandemic.
More than 2,100 of the loans in the region went to law offices in Philadelphia and surrounding Pennsylvania and South Jersey counties, comprising at least $228 million, according to an Inquirer analysis of data released this week by the Trump administration. Of the total, 426 law firms borrowed more than $150,000 each.
Among business sectors, the legal profession was followed by about 2,600 restaurant firms that borrowed $220 million across the eight-county region .
The gap between the legal business and others was most pronounced in Philadelphia, where law firms took in $110 million, compared with $75 million for the restaurant sector.
Although there is some dispute about the accuracy of the job-retention figures, the numbers released by the Trump administration for the $660 billion national program suggest that taxpayer funding saved far more jobs in the Philadelphia area by helping restaurants than law firms.
In the region, the program kept about 46,400 workers on the job in restaurants, but only 16,500 in law firms. The story was similar in Philadelphia. The money subsidized about 14,800 restaurant jobs in the city, vs. 8,000 law firm positions.
Marcus Stanley, policy director for Americans for Financial Reform, a left-leaning nonprofit based in Washington, said he was not surprised to see restaurants as big recipients because of how badly they were affected by the pandemic.
Unlike cooks and waiters, however, many employees at law offices can work remotely, so those businesses wouldn’t seem to have needed as much public support to stay afloat, said Stanley, whose group advocates for tighter financial regulations.
“This money is intended for businesses to maintain the wages of their workers, so we need oversight and information from the people handing out that money,” he said.
Paycheck Protection Program loans can be forgiven if at least 60% of the money is used on payroll. Even if a firm chooses to spend the money on other than job retention, the loans remain a very good deal: Interest was set at only 1 percent.
Under the rules, only businesses with as many as 500 employees could apply. Moreover, the rules specified that a maximum of $100,000 of program money could be used to pay any one employee.
Two firms applied for the maximum amount, between $5 million and $10 million. (The Treasury Department provided only ranges, and not specific amounts for recipients it named). They were White and Williams, based in Philadelphia; and Archer, headquartered in Haddonfield.
The White and Williams firm said the loan money helped it retain more than 400 jobs, while Archer said it kept 330 jobs.
Andrea Malone, chief marketing officer at White and Williams, said in an e-mail that the money permitted the firm to “work seamlessly and without interruption in the service of our clients.”
“White and Williams, like many businesses across the country, has been negatively impacted by COVID-19. In the face of such economic uncertainty, the PPP loan enabled us to retain and pay employees as well as rent and utilities,” she said.
Community Legal Services, the nonprofit that helps those too poor to afford a lawyer, received a loan, borrowing an amount between $1 million and $2 million.
Another nonprofit recipient was the Law School Admission Council, which received a loan of between $5 million and $10 million. The company administers the Law School Admission Test, or LSAT, for admission to law school. The Newtown company left blank the number of jobs retained.
Stradley Ronon chairman William Sasso said the firm is using its loan money on “exactly what it’s meant for, to keep our employees employed. We used it mostly for payroll, and that’s all I can say right now. We’re pretty good about keeping all our people.”
The Center City law firm listed itself as retaining 268 jobs after applying for a loan of between $2 million and $5 million.
Among other law firms that received loans of between $2 million and $5 million were Bennett Bricklin & Saltzburg; Chartwell Law Offices; Cohen Seglias Pallas Greenhall; Dilworth Paxson; Flaster Greenberg; Klehr Harrison; and Kline & Specter.
Also, KML Law Group; Marks O’Neill; Margolis Edelstein; Mid-Atlantic Solutions; Mintzer Sarowitz; Obermayer Rebmann; Post and Schell; Rawle & Henderson; Schnader Harrison Segal & Lewis; and Weber Gallagher Simpson Stapleton Fires & Newby.
Philadelphia follows the national trend of law firms applying for PPP money. A Wall Street Journal analysis found that 45 top law firms in the United States got at least $210 million in PPP loans, including the firms of David Boies; Marc Kasowitz, a longtime Trump lawyer; class-action firm Lieff Cabraser Heimann & Bernstein; and securities law firm Labaton Sucharow.
The data weren’t perfect, and some lawyers disputed the figures.
At least one Philadelphia law firm, Zarwin Baum, said the government shared inaccurate data about its loan. Zarwin Baum was listed as receiving between $1 million to $2 million while retaining no jobs. In fact, the firm kept nearly all of its employees through the crisis, Zarwin Baum marketing director Valerie Burns said.
The data, released on Monday, provided the most detailed picture to date on the businesses and industries that received funding from the program, which lawmakers passed in haste this spring to help companies survive the pandemic.
Treasury Secretary Steven T. Mnuchin had for months resisted identifying recipients of the loans, but reversed course after weeks of negotiations with congressional leaders. Members of both parties pushed for some kind of disclosure.
In an interview, A. Michael Snyder, a retired judge and chancellor of the Philadelphia Bar Association, said the prominence of law firms in the data breakdown made sense, saying the legal field “is a key driver of the local economy.”
“We’re no longer a manufacturing center. Law, medicine, education are the professions that are the largest employers in the region,” he said. “It’s to all our benefit to make sure the entities that employ them stay healthy.”
For every lawyer at a firm, “there’s probably four or more support staff, so when we talk about large firms with hundreds of lawyers, those become even more significant.”
Across the eight-county region and in the city, law and the restaurant trade occupied the top two tiers in terms of sectors helped by the program.
For the region, the next three top sectors, in descending order by amount borrowed, were doctors (1,500 loans for at least $200 million); plumbing and HVAC contractors (about 1,100 loan for at least $145 million); and home health care (about 575 loans for $145 million).
The PPP data identified only the almost 660,000 grantees that received more than $150,000, accounting for fewer than 14% of all entities awarded money through the program.
However, that fraction of grantees borrowed three-quarters of the money lent.
A separate set of data released Monday disclosed specific loan amounts for awards that are less than $150,000, but did not identify recipients.
U.S. Rep. Dwight Evans (D., Philadelphia), said he had “advocated for this [PPP loan data] so we could see the distribution of loans and grants.”
Evans said he would like to see considerably more money provided to smaller businesses. “There’s more work to do,” he said.
In addition, he said he and U.S. Sen. Pat Toomey (R., Pa.) are proposing a new program to provide loans to small businesses destroyed or damaged in the protests and looting that took place in late May. As much as three-quarters of each loan would be forgivable.