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Remember PPP loans? That’s the Paycheck Protection Program, not to be confused with the legal industry acronym “per partner profits.” Although in this case there may be some overlap!
PPP provided taxpayer funds to businesses impacted by COVID-related business slowdowns in an effort to prevent mass layoffs and to otherwise, you know, “protect” employee “paychecks.”
Last week, the state supreme court agreed that law firm Larson Latham Huettl could seize back salary from its former associates for not billing enough hours during the COVID-induced legal industry slowdown. The firm had sued a pair of former associates to repay distributed salary for not meeting the firm’s minimum billables requirement.
So with the firm effectively slashing paychecks because the partnership couldn’t bring in enough business, a few clever tipsters read this story and took it upon themselves to look up whether or not the firm collected tax dollars for the intended purpose of not cutting employee salaries.
Friends, you already know where this is going:
Typo in the second one aside, that’s nearly $800K in federal help according to Pro Publica’s PPP tracker. And it’s all been forgiven, so the firm took federal money to pay these paychecks and then turned around and asked the employees for the paycheck money back too! One of the associates left in the summer of 2020 and the other in summer 2021, so the firm had PPP funds in its pockets at all relevant times (it turns out this was mentioned in some of the supreme court briefing, but got buried under a lot of the other troubling facts).
PPP loans never intended to prevent firms from firing employees or to force employees not to resign. Had both of these lawyers stayed through the end of their respective years, maybe the firm wouldn’t have sought back pay and the PPP funds would have paid those salaries in full regardless of billable totals.
But those aren’t the facts. Instead, we have an employer taking federal funds for the purpose of paying salaries in the face of a slowdown, while knowing that it could — and eventually did — seek to get back the salary that it paid under the program.
That’s… quite the business model!
Earlier: Law Firm Wins Suit Against Associates For Not Billing Enough And All It Cost Them Was Any Semblance Of Professional Dignity
Law Firm Sues Associates For Not Billing Enough
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
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