Bradley attorney Robert Maddox was quoted in the Birmingham Business Journal on the effect of COVID-19 in the legal and banking industries. Firms have spent much of the last year advising their bank and other financial institution clients on the ever-changing requirements of the Paycheck Protection Program (PPP) and other CARES Act and Economic Aid Act measures while also dealing with PPP litigation.
Maddox said the quickly evolving landscape surrounding coronavirus legislation as well as the changes happening in the government right now have affected both the legal and banking industries.
He added that PPP litigation revolved around agent fees early on. This category of PPP bank litigation generally involves agents that claim banks have unlawfully withheld fees owed to agents for assisting in the PPP application process.
Maddox said he is now preparing his clients for what is anticipated in the future related to Covid legislation. He said the legislation was hastily drafted, but financial institutions are expected to still understand and follow the rules.
“Banks were vilified in the last financial crisis. These banks stepped in again through their SBA programs for PPP and worked with their accounts on forbearance and things of that nature,” he said. “But if history is any indication as to what will happen next, all of those institutions – both banks and nonbanks – will likely face heavy scrutiny. We’re spending a significant amount of time right now on reviewing what our clients have done over the past 12 months in great deal detail because they know they’ll be scrutinized for it.
“Even if they did everything perfect, they’re still having to make that extra layer of investment (in compliance) … because we’re trying to make industry standards, while the industry is trying to still learn what the standards are – you know, the old analogy of trying to change your tire while driving.”
On another note, Maddox said he has been dealing with increased M&A among banks because of the low-rate environment and deposit growth that has flowed into banks because of stimulus payments and PPP payments.
The original article, "What Birmingham Law Firms are Seeing with COVID-19 Litigation," appeared in the Birmingham Business Journal on March 11, 2021.