$1.4 Billion Forgiven PPP Loans Paid To Wealthiest Law And Accounting Firms
The big firms got bigger and you paid for it during the Covid pandemic.
Congress bailed out large, white shoe, professional firms with billions of taxpayer dollars during the pandemic. Yet, the vast majority of these firms had no demonstrated financial hardship.
Our auditors at OpenTheBooks.com found an astonishing $1.4 billion in forgiven PPP loans that flowed to big law and accounting firms across America. In fact, 126 law firms in the Top 300 took $809 million in forgiven PPP loans and 236 accounting firms in the Top 300 received $635 million in forgiven PPP loans.
Today, it is an open question whether many of the firms needed a taxpayer subsidy to “save” any jobs during the Covid-pandemic. Many racked up record revenues while their equity partners made millions of dollars.
For example, in the years 2020 and 2021, Boies Schiller Flexner, a law firm that billed clients $480 million during the pandemic years 2020-2021, received the largest forgiven PPP loan, $10.14 million. The Guam office of Ernest & Young, a Big Three accounting firm with 365,000 employees, took a $750,000 forgiven loan.
In 2020, millions of mom and pop businesses on Main Street had to shut down during the forced economic lockdown. So, Congress created the Paycheck Protection Plan (PPP) to compensate those businesses for their economic losses– firms with 500 employees or fewer met eligibility requirements.
However, Congress didn’t anticipate that BigLaw and the largest accounting firms would cash in so profitably.
BigLaw: 126 firms received $809 million
Congress made the PPP loans available and BigLaw cashed the Covid-aid checks. In fact, 126 of the top 300 largest law firms in the country received $808.9 million in forgiven PPP loans – $6.5 million per firm on average.
We found 10 BigLaw firms with the largest forgiven PPP loans reaped $100 million – despite estimated revenues of $3.5 billion in the two year period (2020-2021).
Are taxpayers going to be happy to learn they subsidized lawyers and wealthy law firm partners?
Boies Schiller Flexner (Boca Raton, FL) received a $10.14 million PPP loan in April 2020 that was forgiven in October 2021. During the period 2020 and 2021, firm’s equity partners earned $4.5 million each in profit compensation – receiving $2.219 million (2021) and $2.283 million (2020). The firm billed clients $480 million during this two-year period. Furthermore, the partners and employees of the firm donated nearly $1 million in federal campaign cash during the 2020 and 2022 election cycles.
Kasowitz Benson Torres (New York, NY) successfully navigated the pandemic. Its revenues grew from $216.8 million (2019), to $219.4 million (2020) and then $238.4 million (2021). In April 2020, the firm received a $10.13 million PPP loan that was forgiven in July 2021 – while profit per equity partner averaged $2.418 million (2021). Furthermore, the partners and employees of the firm donated $300,000 in federal campaign cash during the 2020 and 2022 election cycles.
Maynard, Cooper & Gale (Birmingham, AL), ranked 154, received a $10.13 million forgiven loan. However, the firm grew substantially during the pandemic. Employee headcount increased from 247 (2019), 260 (2020), 283 (2021), and 286 (2022).
GrayRobinson PA (Orlando, Florida), ranked 171, received a $10.12 million loan with forgiveness granted in July 2021. However, the firm had revenues of $156.8 million in 2021 up 3.2-percent from $151.9 million in 2020. GrayRobinson spent $2 million of its PPP funds on utilities and $8 million on payroll.
Day Pitney LLP (Hartford, CT), ranked 165, received a $10.11 million loan with forgiveness in June 2021. The firm posted revenues of $184.3 million up 10.5% from $164.9 million in 2020. Furthermore, the partners and employees of the firm donated $173,000 in federal campaign cash during the 2020 and 2022 election cycles.
Cole Scott & Kissane (Miami, FL) ranked 89, had $3.8 million in profits per equity partner in 2021. Their $10.11 million PPP loan was forgiven in August 2021 and $2.5 million in PPP funds wasn’t used for payroll, but utilities. The firm billed clients $171.2 million in 2021 up from $170.3 million in 2020.
Robins Kaplan (Minneapolis, MN), ranked 204, made $1.474 million in profits per equity partner in 2021 and $1.578 million in 2020. In June 2021, the firm received forgiveness on their $9.9 million PPP loan. The firm spent $1.8 million on office rent; 611,000 on healthcare; and the balance on payroll. Revenues in 2021 were $172 million down from $189.2 in 2020.
Strook & Strook & Lavan (New York, NY), ranked 182, notched $2.327 million in profits per equity partner in 2021. In September 2021, they received forgiveness of their $8.8 million PPP loan after using $1.7 million for office rent and the balance for payroll. Revenues in 2021 were $274 million up 5.1-percent from $260 million in 2020.
Spencer Fane (Kansas City, MO), ranked 139, received a $8.3 million PPP loan in April 2020 that was forgiven in September 2021. Their 2021 revenue exploded by 23.4-percent. In 2021, the firm billed clients for $188.6 million versus $144.5 million in 2020.
Pryor Cashman (New York, NY), ranked 227, racked-up $1.582 million in profits per equity partner in 2021. In 2021, revenues exploded by 29-percent to $175.8 million. In September 2021, they received forgiveness on their $6.7 million PPP loan after using $850,000 for their mortgage interest and the balance on payroll.
Lane Powell PC (Seattle, WA) had a $8.4 million loan forgiven. Lane Powell is one of the oldest and largest Pacific Northwest law firms, founded in 1875. The firm is ranked 266 and its annual revenues are estimated at $94 million.
The firm responded to a KOMO News Seattle request for comment:
"It enabled us to maintain our workforce through a time when it was difficult or impossible for many of our employees to perform their duties as they had before the pandemic."
However, data provided by the SBA showed that the firm spent nearly $2.1 million paying utilities and used only $6.2 million for payroll.
Other top 300 law firms used the PPP proceeds for more than just payroll:
Office Rent: 27 firms paid $26.6 million
Utilities: 23 firms paid $14.2 million
Healthcare: 17 firms paid $4.1 million
Mortgages: 11 firms paid $2.3 million
We reached out to every law firm mentioned in this piece for comment or context.
Largest Accounting Firms: 237 firms received $635 million
We reviewed the top 300 accounting firms across America and found that 237 firms received $635 million in forgiven PPP loans. The average large firm received $2.6 million.
The Guam office of Ernst and Young located in Tamuning received a $750,000 forgiven loan. Ernest and Young (E&Y) is a Big Three accounting firm with 365,000 employees and $45 billion in gross revenues. Really?
E&Y has more than 700 office locations in over 150 countries and its net revenue has steadily increased during the pandemic, reporting $17.6 billion in net revenue in 2021, up from $16.2 billion in 2020, $15.8 billion in 2019.
Did any of these firms really need a taxpayer subsidy?
Prager Metis CPAs, ranked 45 among top law firms by Inside Public Accounting, had its $10.2 million loan forgiven in June 2022. The firm had $139 million in net revenue in 2021, up from $123.9 million in 2020. In 2019, the firm billed net revenue of $133.9 million.
Marcum LLP, ranked #16 among top firms, absorbed Friedman LLP in September 2022. Friedman LLP received a $9.4 million loan, which was forgiven in August 2021. Friedman’s revenue in the two years before selling to Marcum reflected increases during the pandemic $145 million in 2020 and $135 million in 2019. Marcum is an $800 million firm.
WithumSmith + Brown, P.C., ranked #22, received a $10 million loan, forgiven in June 2021, while the company saw consistent growth throughout the pandemic. Its 2021 net revenue was $425.3 million, way up from $257 million in 2020 and $223 million in 2019.
Schneider Downs & Co. Inc, ranked #54, with $103.4 million in net revenue in 2021, had its $8.9 million loan forgiven in June 2021. Its revenues also continued to rise throughout the pandemic, with $92.4 million in 2020 and $88.1 million in 2019.
Sean Smith, chief marketing offer at Schneider Downs responded to our comment request:
“Our people are our greatest asset and necessary for us to support our clients and communities throughout any crisis. As a privately owned company with fewer than 500 employees, we were eligible to apply for a Paycheck Protection Program loan to allow us to operate with our workforce fully intact during a period of economic uncertainty in which all of our clients were impacted and reliant on our services. The loan allowed us to focus our energy and efforts on helping them manage through their rapidly changing needs. Our decision to accept a PPP loan included our acknowledgement of all requirements associated with the program. The specific use of the funds fell into those required guidelines and helped our company weather the early challenges of the pandemic so we could focus on meeting the needs of our clients.”
RKL LLP, ranked #59, received a $8.9 million loan, forgiven in June 2021. RKL revenues steadily increased: $95.7 million in 2021, up from $88.6 million in 2020 and $88.3 million in 2019. The firm used PPP proceeds for $1.1 million on utilities, $1.1 million on healthcare, and $6.6 million on employee payroll.
Elizabeth Foose a spokesperson for RKL responded to our comment request:
“We can confirm that RKL received a PPP loan in accordance with all of the eligibility requirements and guidelines set forth by the Small Business Administration. The money was spent on eligible costs as approved by our bank and verified by the SBA.”
Aprio LLP, ranked #35 among top firms, received a $8.4 million loan that was forgiven in October 2021. The Atlanta-based firm had $170.8 million in net revenue in 2021, up from $122.9 million in 2020 and $110 million in 2019.
Cohen & Company, ranked #51, received a $8.4 million loan, forgiven in June 2021. The Cleveland-based firm had $111.8 million in net revenue in 2021, up from $98.8 million in 2020, which was down from its $115 million in 2019.
Whitley Penn LLP, ranked #37, had its $8.3 million loan forgiven in June 2021. The Fort Worth-based firm collected $165.6 million in net revenue in 2021, up from $145.7 million in 2020 and $128.5 million in 2019. The firm spent PPP proceeds on $1 million on utilities, $1 million on mortgage interest, and $6.3 million on payroll.
Berry Dunn McNeil & Parker, ranked #49, collected a $8.3 million loan, forgiven in August 2021. The Portland, Maine-based firm took in $118 million in net revenue in 2021, $100.8 million in 2020 and $80 million in 2019.
KSM Business Services, the parent company of Katz, Sapper and Miller CPAs and Advisors, ranked #58, and received a $8.2 million loan forgiven in June 2021. The Indianapolis-based firm had $97.6 million in net revenue in 2021, up from $81.8 million in 2020 and $77.1 million in 2019.
Other top 300 accounting firms used the PPP proceeds for more than just payroll:
Utilities: 47 firms paid $9.3 million
Office Rent: 42 firms paid $7.3 million
Healthcare: 26 firms paid $4.8 million
Mortgage Interest: 18 firms paid $3.1 million
We reached out to every accounting firm mentioned in this piece for comment or context.
BACKGROUND
The Small Business Administration (SBA) doled out $787 billion in federal loans across all industries. The rules were lax and 95-percent of the “loans” turned into grants when the firms qualified for forgiveness.
Overall, 25,000 law firms and accounting firms received nearly $13 billion in Covid-aid PPP forgiven loans.
Find the all companies in your own ZIP Code who received forgiven PPP loans.
Our auditors at OpenTheBooks.com created an interactive map of all forgiven PPP loans at $150,000 or more. Just click a pin (ZIP Code) and scroll down to see the names of the companies in your neighborhood receiving forgiven PPP loans.
NOTE:
No firms mentioned in this investigation are accused of wrongdoing. We assume that all firms honestly represented their individual circumstances to their banks and, ultimately, the SBA, when qualifying for their PPP loans and arguing for forgiveness.
SOURCES:
2022 Am Law 200: By The Numbers (2021) | Published May 2022
https://www.law.com/americanlawyer/2022/05/24/the-2022-am-law-200-report/
Original Jurisdiction, David Lat, Say Hello To The 2022 AM Law 200 | Published July 2022
National Law Journal: The NLJ 500 | Published June 2022
https://www.law.com/nationallawjournal/2022/06/21/the-nlj-500-our-2022-survey-of-the-nations-largest-law-firms/
2022 IPA Top 500 Firms
https://insidepublicaccounting.com/top-firms/ipa-500/
2021 Accounting Today Top 100 Firms
https://www.accountingtoday.com/the-2021-top-100-firms-data
2020 Accounting Today Top 100 Firms
https://www.markspaneth.com/assets/images/articles/2020_Accounting_Today_Top_100_Firms.pdf
Small Business Administration (SBA) PPP loan data (current through 9/30/2022)
SNAPSHOT — CAMPAIGN DONATIONS:
Boies Schiller Flexner LLP
In the 2022 cycle, all federal candidates received $353,546. 99.69% went to Democrats, including Pelosi, former partner Gillibrand, Mandela Barnes, Masto, Demings, Kelly, etc.
In the 2020 cycle, all federal candidates received $629,896. 99.56% went to Democrats, including Biden, Harris, Warnock, Ossoff, Klobuchar, Beto O’Rourke, Gary Peters, etc.
Total for Federal Candidates (2020-2022): $983,442.
Summary Total (Federal and Non-Federal, Committees)(2020-2022): $1,794,289.
Kasowitz Benson Torres LLP
In the 2022 cycle, all federal candidates received $120, 408. 55.86% went to Democrats.
In the 2020 cycle, all federal candidates received $180,203. 81.1% went to Democrats including Biden, Harris, Buttigieg, Senate Majority PAC, Warren, Ossoff, Booker, etc.
Total for Federal Candidates (2020-2022): $300,611.
Summary Total (Federal and Non-Federal, Committees)(2020-2022): $345,972.
Lane Powell PC
In the 2022 cycle, all federal candidates received $10,116. 67.50% went to Democrats.
In the 2020 cycle, all federal candidates received $37,518. 94.51% went to Democrats.
Total for Federal Candidates (2020-2022): $47,634.
Summary Total (Federal and Non-Federal, Committees)(2020-2022): $59,248.
Day Pitney LLP
In the 2022 cycle, all federal candidates received $34,102. 96.04% went to Democrats.
In the 2020 cycle, all federal candidates received $139,435. 94.90% went to Democrats.
Total for Federal Candidates (2020-2022): $173,537.
Summary Total (Federal and Non-Federal, Committees)(2020-2022): $237,911
Kelley, Drye & Warren
In the 2022 cycle, all federal candidates received $250,303. 65.31% went to Democrats.
In the 2020 cycle, all federal candidates received $406,803. 63.79% went to Democrats.
Total for Federal Candidates (2020-2022): $657,106
Summary Total (Federal and Non-Federal, Committees)(2020-2022): $823,156
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Wow, I'm furious the huge amount of my income that's stolen by the government is given away to thieves.
I can't wait to do something about this.
Oh, wait.
Never mind.
"However, Congress didn’t anticipate that BigLaw and the largest accounting firms would cash in so profitably."
I'll bet they did.