Will The Treasury Department and the Small Business Administration Cause You to Increase Your Legal Spend?

When the Coronavirus stimulus package became law in March of this year, it was a godsend to many small businesses. The CARES Act was a $2.2 trillion package meant to stabilize the economy and included $454 billion in loans to businesses, states and municipalities. On July 6th, the Treasury Department and the Small Business Administration released data related to those Paycheck Protection Program (PPP) loans. What that data showed was stunning.

Over 14,000 law firms across the country received PPP loans ranging in value from $150,000 to $10 million. Thousands more received loans between zero and $150,000.

Specifically to Ohio, 3,166 law firms received $327,840,697.08 in PPP loans. The largest was $9.86 million and the smallest was $600. For those keeping score at home, this is an average of $103,550 per Ohio law firm and a median of $24,989.66. The disparity between that high average and low median shows that a lot of money was given to only a handful of firms — 50 firms were given loans of more than $1,000,000.

What does all of this mean to a business owner? Simple. You’re gonna be paying your lawyers more.

With a significant amount of debt hanging over their heads — which needs to be paid back in 5 years — law firms will need to be generating revenues … more revenues than they were generating before the Coronavirus. Those revenues will come from two strategies: (1) increasing rates and (2) increasing billable hours. That means the firms’ clients likely will be paying more per hour AND will be paying for more hours of legal services than they used to.

Is your law firm one of the ones who took on debt through a PPP loan? For the list of the Ohio firms who took loans of $150,000 or more, click here (sorted by amount) or click here (sorted by name). For the list for the firms who took loans under $150,000, click here.

If you’d like to see the full list of firms from across the country, click here.

Disclosure: The Entrepreneurial General Counsel neither applied for nor accepted any loans and remains unencumbered by any PPP debt.