The city owes tens of millions of dollars to the legal nonprofits it relies on to fulfill its promise of free counsel to low-income and elderly New Yorkers facing eviction, landlord harassment and immigration issues. <\/p>\n
And, if the city doesn\u2019t pay them by next month, some of those nonprofits say their operations will be thrown into crisis and they\u2019ll have to stop providing services to thousands who are counting on them.<\/p>\n
\u201cIf we aren\u2019t paid, it would create existential problems for our organization,\u201d said Greg Klemm, the chief financial officer of Legal Services NYC<\/a>, which provides tens of thousands of New Yorkers with counsel.\u00a0<\/p>\n Klemm said the city owes his organization roughly $20 million for work attorneys have done over the past year and a half for city programs that provide the most vulnerable New Yorkers with free counsel as they fight to stay in their homes, through the citizenship or green card process or against landlord harassment and deportations.\u00a0<\/p>\n The lag in payment has gone on for so long that it\u2019s pushed Legal Services NYC to a breaking point, Klemm said, forcing it to max out its line of credit at $15 million to maintain its operations and pay staff, a practice that\u2019s now racked up $370,000 in interest just this year \u2014 enough to fund the salaries of two and half full-time employees.<\/p>\n Klemm said the city hasn\u2019t provided a timeline to releasing payments, forcing the group, which gets 45% of its income from city contracts, to drain its reserves.\u00a0<\/p>\n \u201cIt\u2019s putting us in a bind,\u201d he continued. \u201cIf they do not pay us at all for December or January, we wouldn\u2019t be able to meet payroll at the end of January.\u201d<\/p>\n If bank accounts of multiple legal service providers dry up at once, Klemm said it would have a catastrophic ripple effect across the city\u2019s courts.\n<\/p>\n \u201cThat is a substantial number of people that would not get services,\u201d Klemm said. \u201cI couldn\u2019t imagine the devastating impact it would have on low-income New Yorkers taking legal action against landlords who are not making sufficient repairs. There would likely be an increased threat of deportation and family separation. It would be devastating.\u201d<\/p>\n Legal Services NYC isn\u2019t the only legal nonprofit the city\u2019s left hanging. Legal Aid Society<\/a> and New York Legal Assistance Group<\/a> also reported late payments on city contracts, with Legal Aid saying it\u2019s owed $16 million for work completed during FY 2025, which ended six months ago, and NYLAG reporting over $5.5 million in outstanding dues stretching as far back as Financial Year 2023.\u00a0<\/p>\n Though the city provided Legal Aid with a 50% advance on its FY 2026 contract, the midway point has now passed, and the city hasn\u2019t approved its FY26 budget or allowed it to submit invoices for payment for work on FY26 contracts, which began on July 1.<\/p>\n \u201cThe delay in payments severely impacts the Legal Aid Society\u2019s cash flow and threatens our ability to make payroll for our staff and to pay vendors and subcontractors who are critical to service delivery,\u201d a Legal Aid spokesperson told amNewYork Law. \u201cLAS spends a significant amount of time just trying to get paid. [The city] has created unnecessarily complex processes and procedures that delay contract budget approval and invoice submission, this complexity not only delays a crucial payment process but also diverts limited staff time to attending to this rather than other crucial priorities.\u201d\u00a0\u00a0<\/p>\n The New York Legal Assistance Group said that while it was \u201cgrateful\u201d to the city for providing significant advances for its work, it was still experiencing delays and unapproved budgets that affect its financial stability and prevent it from providing vital services.<\/p>\n \u201cAs we move into the second half of this fiscal year, budgets remain unapproved, we remain unable to invoice, and no additional advances have been provided,\u201d the group\u2019s\u00a0CEO, Lisa Rivera, wrote in an email. \u201cThe costs of doing this work exist in real time, addressing contract registration and payment delays is crucial, and expanding the use of advances when those delays cannot be mitigated is essential.\u201d\u00a0<\/p>\n The city\u2019s Department of Social Services, which handles the nonprofits\u2019 contract payments, told amNewYork Law that payment delays \u201ccan be caused by numerous factors,\u201d and that it was \u201ccontinuing to work through all outstanding budget items with our legal services providers.\u201d<\/p>\n \u201cEnsuring all appropriate payments are made in a timely manner is a top priority and both the city and agency have made significant strides to address payment delays,\u201d a DSS spokesperson wrote in an emailed statement. \u201cThis includes appointing a chief nonprofit officer to improve coordination with our nonprofit partners, streamline operations, and resolve payment issues; working with providers to identify and address pain points in the contracting process; and reforming procedures to minimize delays in registering contracts to ensure providers are receiving payment for the work they do.\u201d<\/p>\n The office did not respond to a direct question on when it planned to pay the money it owes the organizations.\u00a0\n<\/p>\n Legal Services NYC said it has been in touch with the city\u2019s contract managers, but hasn\u2019t been able to establish any contact with upper leadership at DSS, despite trying for weeks.\u00a0<\/p>\n \u201cIt is hard to tell whether it is stonewalling or incompetence, but there seems to be a general lack of willingness by them to move quicker,\u201d Legal Services NYC communication director Seth Hoy told amNewYork Law in an email. He added that the organization was trying to get the city to release at least $2 million for one of their outstanding invoices this week, though it wasn\u2019t clear if that would be successful.<\/p>\n The organization says it has grown to meet the city\u2019s demands, hiring staff and ramping up its caseload, only to be left destabilized by quick growth it can\u2019t sustain without the money it was promised to fund that growth from the city that asked for it.<\/p>\n \u201cWe have grown our organization to meet the city\u2019s desperate need for eviction defense attorneys, and that means relying on the city\u2019s promise to fulfill its end of our contracting bargain,\u201d Hoy said. \u201cYet, year after year we find ourselves on the brink of collapse due to the city\u2019s inability to pay legal service providers on time.\u201d\u00a0<\/p>\n If attorneys aren\u2019t paid in January, Klemm fears staff quitting. He imagines it would take a significant period of time for the organization to bounce back, and would make it difficult to hire new staff if the group can\u2019t pay its existing team.<\/p>\n