With the help of several firms working pro bono, the North Carolina Pro Bono Resource Center is doing its best to help small businesses and nonprofits keep their workers employed and their doors open.
Soon after COVID-19 began wreaking economic havoc, the PBRC launched its Small Business and Nonprofit Initiative, intended to help organizations most affected by the pandemic. To date, it’s fielded more than 180 calls from business owners and nonprofit leaders seeking guidance on issues including federal funding, commercial leases, bankruptcy and dissolution, and employment law.
Attorneys from several North Carolina firms are offering free 45-minute consultations to businesses with 25 or fewer employees. The legal advice is limited in its scope, but organizers hope that the advice of attorneys—generally working within their practice areas—and recommended resources can help organizations determine the best path forward.
Sylvia Novinsky, the PBRC’s director, noted that no other state agency is providing this service.
“We identified two very important populations,” Novinsky said. “Small businesses are the backbone to the economy in many areas, and nonprofits who provide services to people and groups are safety nets in many places.”
Stuart Russell, a business litigator in Nelson Mullins’ Winston-Salem office, recently counseled a business owner who, like many others, has seen a dramatic reduction in revenue. The client was having problems making commercial lease payments, but Russell provided a crash course on legal principles like the frustration-of-purpose doctrine, impossibility, and good faith and fair dealing. Ultimately, the business owner and landlord reached a satisfactory agreement.
Though Russell’s work was in his wheelhouse, it wasn’t without challenges.
“Attorneys are having to apply well-known principles to new problems like this pandemic presents,” Russell said. “We’re trying to find a beaten path that’s been tread before with a given problem, but of course there’s not a whole lot out there about how to address a COVID-specific problem.”
Martin Warf of Nelson Mullins’ Raleigh office made a similar observation after seeing myriad issues from a wide array of businesses: There was an arts center seeking ways to make its gallery event safer, a newly opened restaurant that was doing fine in March but is on the verge of closing now, clients looking to apply for Paycheck Protection Program loans and other relief funding, and businesses finding themselves short-staffed because employees were afraid to come to work.
Warf also saw many leasing issues. While tenants are finding themselves in a financial pickle, so are landlords. Warf was able to point clients toward resources that could spell out their options, empowering them to have more informed conversations with landlords.
“You’ve had other crises in the past that can give some guidance, but it’s developing as we go along,” Warf said. “Hopefully, everyone is working together. I did see some instances where landlords were willing to negotiate with the tenants. At the end of the day, some money is better than no money.”
Kayla Frederickson, an employment lawyer with Kilpatrick Townsend & Stockton in Raleigh, got extra practice honing her craft. Her time was spent providing guidance on matters such as the shelter-in-place order and, later, how to transition into reopening phases while maintaining a safe workplace.
But despite the efforts of a team of experienced, competent lawyers, not every story had a happy ending, unfortunately.
“It was really quite heart-breaking,” said Barbara Christy of Schell Bray in Greensboro, who is also the North Carolina State Bar president. “I talked to one woman who had been in business for 20 years and after talking to me, she just came to the realization that she just could not continue, even with the rental break.”
“It’s hard when a small business comes to you … there are so many issues coming out of COVID,” Novinsky said. “It’s a legal issue that has life implications.
“Good advice was critical, and this was an example of how [lawyers’] special skills can be put to use in a very needed way. We could not do it without them.”