What Personal Injury Lawyers Can Do Now to Prepare for the COVID-19 Case Settlement Delays

In a rare move, the U.S. Supreme Court announced it was postponing upcoming oral arguments on March 16. Additionally, most state supreme courts and appeal courts have entered into their own emergency status, and they have modified or suspended certain provisions related to court proceedings.

As the effects of the coronavirus continue to spread, as an attorney, you have likely already been in touch with your clients about what to expect next – which is, a potentially very long delay in their case settlement. When you did, you probably heard about how they were relying on their case settling sooner so they can pay back various debts they have incurred as well as pay their living expenses, like rent or their mortgage, their car payment, utilities and food. In addition, the job market may be soft for a long time, making their settlement even more important. As you know all too well, the plaintiffs in these cases are usually already on borrowed time when it comes to their finances, especially if they have been injured and were left unable to work.

But these settlements are a major element of your firm’s cash flow too. You take risks to serve your clients and are paid on contingency, not hourly. So, not only are your clients being left in a precarious financial situation, so are you. The resulting delay of cases and settlements being caused by the coronavirus is, and will continue to be, a pandemic in and of itself. What happens next is anyone’s guess, but one thing is for sure, more so than ever before, businesses, plaintiffs – everyone – is in need of cash, now.

For plaintiffs we have lowered pricing during this time to provide Pre-Settlement Cash Advances and Post-Settlement Cash Advances. As you know, we only do this with your approval as we strive to not advance more than 10-15% of an anticipated case value to make sure there are plenty of funds available for the plaintiff at settlement.

Fortunately, there are resources to brace for the unknown we all are facing.

Government Assistance for Your Law Firm

The relief package passed by the U.S. Senate last week has some important and highly relevant information for you and your business. Below I have outlined some of the key takeaways of the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act,” which you can read in full here.

I thought it would be helpful to simplify each application and outline them below. You can also access a calculator here (this is an Excel file that you may download) that you or your finance team can use for convenience. If you would like any additional help or have any questions, please reach out, I am happy to help. I hope you are able to take advantage of the programs available. Please feel free to share with others.

How to apply for either the Payroll Protections Program (please use the attached calculator to assist)
How to apply for the Retention Credit For Businesses Subject to Closure (please use the attached calculator to assist)
Payroll Protection Program – For those companies still in business;

Allowable use for the Payroll Protection Program for companies still in business, the loan looks back at the monthly averages of the following from last year. You will need;
Payroll
Rent
Utilities
Interest on any other obligations incurred before the covered period
Borrower Requirements
Good Faith Certification
The uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations
Acknowledging the funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments.
No pending application for a paycheck protection loan, and no amounts have been received
Credit against applicable employment taxes (social security 6.2%) for each calendar quarter an amount equal to 50 percent of the qualified wages
If the amount of the credit exceeds the payroll taxes, the excess will be refunded to the employer.
Eligible employer
Business suspended during the calendar quarter due to government order
Significant decline in gross receipts 50% less than the same calendar quarter in the prior year
Other Terms
Delay of payment of employer payroll taxes
2% Social security tax is deferred
Deferred period begins on the date of the enactment of this Act and ending before 1/1/2021
50% of the deferred tax is due 12/31/2021
another 50% due 12/31/2022
Retention Credit For Businesses Subject to Closure