Has elite law firm David Boies secured a pandemic bailout? It’s a secret
(Reuters) – When the U.S. government announced a multibillion-dollar bailout of struggling small businesses amid the coronavirus pandemic, one of America’s leading law firms sensed an opportunity.
Executives at the prominent David Boies-founded company circulated an email asking partner shareholders to allow the company to seek up to $ 20 million in repayable public loans, two sources close to the government told Reuters. folder. Boies Schiller Flexner, where partners typically earn seven-figure compensation, is known to have represented Hollywood producer Harvey Weinstein against sexual assault charges and companies ranging from Oracle to Theranos.
The company declined to say whether it actually requested or received the money under the U.S. government’s paycheck protection program. And the government won’t say it – because of a policy that keeps all these nominations and awards secret.
The US Small Business Administration (SBA), which oversees the program, declined to say whether Boies Schiller had applied for a PPP loan. The agency previously told Reuters it would release data on individual loans when its current PPP funding cycle runs out. But he did not say whether that data would include the names or amounts of borrowers or detail what they plan to release. U.S. Treasury Secretary Steven Mnuchin told the U.S. Senate Small Business Committee on Wednesday that the names of borrowers and amounts received would not be made public, calling the information proprietary and confidential.
Critics say the government is violating public records laws and distributing billions of dollars in taxpayer dollars without any public accountability.
Several major news organizations, including the Washington Post and the New York Times, have sued the SBA in federal court in Washington DC, arguing that the names of the borrowers and the loan amounts are legally public. Reuters is not among the complainants. They point out that the SBA has for years published such information about borrowers receiving loans under other programs.
The SBA said in a court filing Friday that some or all of the documents and information requested by plaintiffs are exempt from disclosure under the Freedom of Information Act, without specifying which ones.
Confusion over the program’s disclosure rules escalated on Tuesday when Republican Senator Marco Rubio of Florida tweeted, “We will have #PPP loan disclosure” and there is “no dispute over the disclosure of larger loan recipients ”. Rubio is chairman of the Senate Small Business Committee.
A spokesperson for the senator, Nick Iacovella, did not comment on what information Rubio wanted to disclose or whether it would include the names of recipients and loan amounts. Iacovella said Rubio “plans to work closely with the SBA and the Treasury to ensure that enough data is released about the program to determine its effectiveness … without compromising the proprietary information of borrowers.”
The Treasury Department and the White House did not immediately respond to requests for comment.
In a statement to Reuters, Democratic Senator Elizabeth Warren of Massachusetts called it “absurd” that the administration “distributes more than $ 500 billion in public funds in secret.”
To apply for a loan, applicants must certify that they need the money to cover basic needs such as wages and rent and that “the current economic uncertainty makes this loan necessary to support” ongoing operations. With a few exceptions, businesses must have 500 or fewer employees to be eligible.
Businesses do not have to repay loans as long as they spend the money on qualifying expenses.
PPP loans are capped at $ 10 million. The two sources, who declined to be identified, said they were unsure why Boies Schiller asked his partners to ask for double that amount. Some applicants have applied for and obtained more than one loan by applying through more than one branch.
The April email from the managing partners requesting partner approval raised concern among some cabinet members, the two sources said.
Some partners believed the company’s management had not been transparent about its finances and may not need the money, the sources said. Boies Schiller does not disclose its financial information, but last year, its shareholder partners earned an average of more than $ 3 million, according to the American lawyer.
Managing partners Nicholas Gravante and Natasha Harrison followed lawyers who did not immediately respond to the April email, sources said.
Since the launch of the PPP, some companies, such as Shake Shack and Ruth Hospitality Group Inc, have reported receiving funds through regulatory filings. The two companies said they would repay the money, in response to public backlash against large companies taking out the loans even though they have other means of financing not available to small businesses. The SBA has said it will verify loans over $ 2 million.
Unlike public companies, which must periodically report on their finances, private law firms do not have such requirements.
The coronavirus pandemic has hit many American law firms hard. More than 25 of the 200 most profitable U.S. law firms, according to the American Lawyer, have laid off or laid off employees since March. The US legal sector lost 62,800 net jobs from March to May, according to data from the Bureau of Labor Statistics.
Boies Schiller declined to comment on whether and to what extent the pandemic has impacted his finances.
Founded in 1997, Boies Schiller has around 245 attorneys in the US and UK according to the firm’s website. In 2019, the firm grossed $ 405 million, according to the American lawyer. At least some of his partners charge more than $ 1,000 an hour, a source close to the firm said.
Boies, the chairman of the company, is well known for representing the US government in antitrust litigation against Microsoft Corp and former Vice President Al Gore in the US Supreme Court case during the 2000 presidential recount. He most recently advised blood testing startup Theranos and Weinstein, which was convicted of sexual assault and rape by a New York court in February.
The company’s reputation has recently suffered following media reports that Boies used aggressive tactics to defend his clients, including hiring private Israeli intelligence firm Black Cube to quash negative publicity about Theranos and Weinstein. . He declined to comment on the reports.
Since January, more than 25 partners have left the firm, Reuters reported, including two senior litigators who joined another firm last week. Company executives said many departures were linked to internal restructuring.
Reporting by Caroline Spiezio; Editing by Noeleen Walder, Amy Stevens and Brian Thevenot