Open 8 am - 8 pm
info@Cherokeefunding.com
855-394-2274

Single Blog Title

This is a single blog caption
Personal injury cases being put on hold due to the coronavirus

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

//
Posted By
/
Comment0
/
Categories

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.

  1. How to apply for either the Payroll Protections Program (please use the attached calculator to assist)
  2. 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;

  1. 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;
    1. Payroll
    2. Rent
    3. Utilities
    4. Interest on any other obligations incurred before the covered period
  2. Borrower Requirements
    1. Good Faith Certification
      1. The uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations
      2. 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
  1. Credit against applicable employment taxes (social security 6.2%) for each calendar quarter an amount equal to 50 percent of the qualified wages
    1. If the amount of the credit exceeds the payroll taxes, the excess will be refunded to the employer.
  2. Eligible employer
    1. Business suspended during the calendar quarter due to government order
    2. Significant decline in gross receipts 50% less than the same calendar quarter in the prior year
  3. Other Terms
    1. Delay of payment of employer payroll taxes
    2. 2% Social security tax is deferred
      1. Deferred period begins on the date of the enactment of this Act and ending before 1/1/2021
    3. 50% of the deferred tax is due 12/31/2021
      1. another 50% due 12/31/2022

Retention Credit For Businesses Subject to Closure

  1. This is a credit against social security tax (6.2%) at an amount equal to 50% of the qualified wages.  If the amount of the credit exceeds 6.2% payroll tax per calendar quarter, the extra will be refunded to the employer
  2. But if the employer participates in the Paycheck Protection Loan, it is not eligible for the credit. So an employer needs to compare 8 weeks payroll, rent, utility (forgivable amount) with 50% of the eligible wages from 3/12/2020 to 1/1/2021 (given gross receipts never exceed 80% of prior quarter).

Below is the summary for businesses subject to closure;

  1. Eligible Employer
    1. Business fully or partially suspended during the quarter due to government order
    2. Significant decline in gross receipts. The period is calculated as
      1. Beginning with the first calendar quarter after 12/31/2019, gross receipt is 50% or less than the same calendar quarter in the prior year
      2. Ending with the calendar quarter for which gross receipts are greater than 80% for the same calendar quarter in the prior year.
  • Qualified Wages
    1. Qualified wages shall not exceed $10,000 by individual by calendar quarter
    2. Paid after 3/12/2020 and before 1/1/2021
    3. Include “qualified health plan expenses”. The health expense has to be excluded from the gross income of employees.

If you can use any one of these resources as you, your firm, and your clients, brace for the ongoing effects of the coronavirus, please reach out to us.  We are operating safely from our homes and can field any questions you may have. Visit www.cherokeefunding.com for more information, or get in touch with us by emailing info@cherokeefunding.com or by calling 855-394-2274 or you can message me directly.

Leave a Reply

Call Now