YOUNGSTOWN, Ohio – As businesses navigate a difficult economy in an unprecedented time, the legal specialists who advise these companies have to remain one step ahead of their clients.
This has proven especially challenging since these attorneys must also adapt at lighting speed to new rules and regulations that are still shifting even today, now seven months into a worldwide pandemic.
“These were constantly changing,” Tim Jacob, partner at Manchester, Newman and Bennett, Youngstown, says of the new regulations passed during the first several months of the pandemic. Jacob, whose area of focus is labor law, says he was bombarded with questions from clients during the early phase of the health crisis – questions that were difficult to answer as the rules changed.
“The advice you gave today that was very sound changed tomorrow,” he says.
Attorneys Jacob, John Petrony, Shawna L’Italien and Ed Smith all say their business has changed since the onslaught of the pandemic. Indeed the crisis has produced a menu of new legal issues for those engaged in contract negotiations, employment law, real estate, and acquisition transactions, they say.
For Jacob, this meant working through new employment law that dealt with emergency sick leave or an extension of family medical leave for parents, for example, who now were confronted with child care issues because of remote education or the closing of day care centers.
“Probably for the first two months of the pandemic, all of my practice was dealing with the Cares Act,” he says. Congress passed the Coronavirus Aid, Relief, and Economic Security, or Cares, Act in March as a $2 trillion relief package that provided direct help to businesses and workers. Part of that package provided $600 per week in addition to unemployment benefits to those displaced as a result of the economic shutdown.
“Overall, I’d say the employees were viewed with quite a bit of sympathy by their employers,” Jacob says.
Meantime, labor negotiations between employers and unions were placed on hold, because several of Jacob’s clients agreed to contract extensions rather than enter into new contracts during the pandemic. “It was chaos at one point,” he recalls.
Once the economy started to reopen, Jacob noted that some of his clients found it difficult to bring workers back since the additional unemployment benefits were still in place. “In Ohio, the average person could be making $1,000 a week on unemployment,” he says.
Jacob’s challenge was to help his clients interpret the new regulations to get their businesses operating again. Among his clients are manufacturers, hospitals, nursing homes and assisted living centers and service businesses.
Safety issues, for example, were of great concern since many of these workers were on the front lines of the pandemic. Jacob initially thought that the pandemic would unleash a wave of complaints directed at companies or institutions that they claim failed to sufficiently protect employees.
“That just didn’t happen that much,” he says. “I expected a lot more anonymous complaints. Our clients have been cautious.”
Moreover, Ohio recently passed legislation that grants health care providers, businesses, schools, individuals and other entities immunity from civil suits arising from Covid-19 issues, he says.
John Petrony, a business and real estate attorney with a sole practice in Poland, says although some of the legal issues are somewhat clearer today than six months ago, there remain unknowns about the course of COVID-19 and the impact it could still have on the local economy.
“Personally, I sense a lot of unease,” he says. “People are still uncertain between the pandemic and the political climate – especially in the retail sector.”
Petrony says the early orders from Gov. Mike DeWine and Pennsylvania Gov. Tom Wolf weren’t very clear. Therefore he spent most of his time dealing with clients unsure of their responsibilities as employers.
“Can we operate? How can we operate? What do I do with my employees? If they request a leave, what are my obligations?” Petrony says. “Some of these clauses in contracts that aren’t often thought about suddenly were relevant,” he says.
Petrony represents mostly small and medium-size businesses in northeastern Ohio and western Pennsylvania. If there’s one bright spot in the downturn, it’s that acquisition activity has surged over the last several months in this region, he says.
Low interest rates, plus increased pressure on business owners to sell in a down economy, has produced a climate that some view as an opportunity. “I’ve experienced quite a bit of it,” he says.
Petrony notes that net income is down for many businesses, which may lower their market value. Plus, those business owners uncertain about the future might feel the need to sell rather than wait out the pandemic, he says. “All of these dynamics have been in effect.”
Incorporations of new businesses have also remained steady over the last several months, despite uncertainty in the economy, says Shawna L’Italien, a partner at Harrington, Hoppe & Mitchell.
“It’s been kind of surprising. People have been coming in over the last four to six weeks to start new businesses or to diversify their existing businesses,” L’Italien says. Some of these startups, she adds, are nonprofits that see an opportunity to fill critical service voids in the community.
She attributes this to a growing confidence that the governor will keep the economy open even in the face of a virus surge, albeit with safety guidelines in place. “People aren’t afraid to start. They felt that it’s an OK time to move forward.”
At one point, some of her clients had to shut down completely because of the virus. Just about all of them are back in business. “People are starting to feel comfortable that businesses aren’t going to be forced to shut down.”
Among the biggest concerns of her business clients is keeping workers safe and healthy while at the same time keeping an eye on production, L’Italien says. “They want to keep qualified employees in the workplace while keeping them safe,” she says. “The balance is a big challenge for business owners.”
Edward Smith, a partner at Brouse-McDowell, Canfield, says that merger and acquisition activity is evident in the manufacturing, transportation, commercial real estate, and warehousing and distribution sectors.
“The clients I’m representing are still buying,” he says. “But, they’re still being very careful and conservative.”
The pandemic has also realigned how banks are lending money. Lenders, for example, are shying away from developments such as retail plazas at the moment, Smith says. On the other hand, bicycle shops are experiencing record sales. The shutdowns have encouraged people to pursue more outdoor activities. “Depending on what business you’re in, you could be having a tremendous year,” he says. Investors – faced with an uneven stock market – are cautious and putting money into ventures where they foresee a solid return, he says.
“Mergers and acquisition activity is still pretty active,” Smith says. “There are a lot of opportunities.”
Pictured: Tim Jacob, partner at Manchester, Newman and Bennett in Youngstown.