Dear Clients, Colleagues, and Friends:
As the second quarter of 2022 ends, we want to share our insights on the New York City economy based on data and information from legal filings and legal business.
The hangover of real estate closings in the first quarter 2022 has kept real estate attorneys and real estate professionals busy in the second quarter. Real estate attorneys’ businesses have thrived post-COVID-19. As real estate professionals have become accustomed to virtual closings that save time compared with in-person closings, real estate professionals are able to squeeze in more transactional work. Before the recent surge in mortgage rates that caused the monthly average on a 30-year fixed-rate mortgage to break five percent threshold for the first time since January 2010, Manhattan real estate sales had continued its momentum of record sales in 2021. The spike in mortgage rates and the pullback of the stock market have caused residential home sales in New York City to slow down its record- setting pace. The pullback in Manhattan residential real estate has been sudden and startling.
The number of corporate and personal bankruptcies are still below historic norms compared with bankruptcy filings pre-COVID-19. According to statistics released by the Administrative Office of the U.S. Courts, the March 2022 annual bankruptcy filings totaled 395,373, compared with 473,349 cases in the previous year. The filings for businesses and non-business filings are still below pre-COVID-19 levels. In the second quarter of 2022, bankruptcy filings have started to increase; however, the overall numbers of filings are still down compared to last year. The statistics and numbers of bankruptcy filings are not indicative of the widely reported concerns of an impending recession amidst rising interest rates, inflation, supply chain challenges, and worker shortages. Our office has experienced an increase in counseling services for businesses dealing with non-payment issues and breach of contract issues. Businesses are well advised to closely monitor accounts receivable.
The business sector most affected by the slowdown in the economy is the crypto currency sector. The plunge in the crypto market’s valuation has caused business partnerships to rupture as our office has handled two business divorces in the crypto sector in the second quarter. Our office has also seen an uptick in crypto investors seeking advice on recovering investments in questionable crypto products.
Perhaps the most interesting data point gleaned from legal filings, however, is the increase in wage related claims against e-commerce companies. During the COVID-19 pandemic, New Yorkers that stayed in the City undoubtedly experienced unmarked vans, manned by non-uniformed delivery workers, obstructing bicycles lanes and sidewalks to deliver packages. According to lawsuits, some of which our firm are involvement in, these e-commerce companies outsource deliveries to third-party companies that are fly-by-night operations that violate wage laws. The practice of utilizing third party companies with questionable business practices has artificially kept prices down for e-commerce companies.
Despite the economic and health challenges, New York City’s economic recovery is gaining momentum as the city repopulates. The sheer increase in the amount of the population is driving New York City’s economic recovery. Tourists are back on the streets; subway ridership is at approximately 55% of pre-pandemic levels; and about 40% of office workers have returned to the office.
The continued economic and health challenges have kept our law firm remarkably busy during the second quarter of 2022.
We want to thank you for contributing to our continued success. You know us, you know our experience, and you know the quality of our work. We would be most grateful to be retained in these areas, among others:
- Litigation before trial or appellate courts or administrative bodies, especially matters involving real estate, partnership disputes, and creditors' rights;
- Litigation avoidance - the crucial effort to negotiate agreements to resolve disputes before they cross the threshold of the courthouse;
- Domestic and international arbitration and mediations;
- Bankruptcy litigation and creditors' rights work, including avoidance actions, preference actions, discharge and dischargeability actions;
- Employment litigation in all aspects of employment law, including issues involving restrictive covenants and trade secrets, wage-and-hour issues, Fair Labor Standards Act issues, and breach of contract issues;
- Business divorce litigation, including contested stock valuations, derivative actions and other disputes between owners of closely held business corporations;
- Counseling and strategic planning that defy easy categorization, requiring a deep understanding of the pertinent legal issues and also of the business (and sometimes personal) considerations that must be taken into account to reach a favorable outcome; and
- Representing investors, restauranteurs, restaurant management companies, and chefs in New York City's hospitality sector.
With heartfelt good wishes for a healthy, happy and productive year, we remain,