Legal groups struggle as NYC owes millions in contract payments

December 2, 2024 Robert Abruzzese, Courthouse Editor

Mayor Eric Adams faces scrutiny over delayed payments to nonprofit legal service providers, raising concerns about access to housing, immigration, and tenant protections for vulnerable New Yorkers. Photo: Seth Wenig/AP

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At a recent press conference, Mayor Eric Adams addressed the city’s ongoing payment delays to nonprofits, stating, “The problem is not the worst it’s ever been.”

He added, “Cities are not always good at paying on time,” and assured New Yorkers that his administration is “on top of this issue.”

The remarks drew sharp criticism from Legal Services NYC, which highlighted the dire financial strain caused by delayed payments.

“While we acknowledge and appreciate the mayor’s initial efforts to address long-standing payment backlog issues, including the $4.2 billion expedited during the 12-week sprint that took place in early 2022, the current fiscal reality for Legal Services NYC and other legal service providers remains dire,” said Shervon Small, executive director of Legal Services NYC.

“The City still owes Legal Services NYC nearly $30 million, forcing us to make difficult financial decisions that jeopardize the services we provide to New Yorkers in need, including those facing eviction, landlord harassment, immigration orders, domestic violence and other critical issues,” Small continued.

Nonprofits providing legal services for eviction defense, tenant harassment and immigration support are particularly affected. Payment delays from the Human Resources Administration (HRA) have left organizations unable to invoice for Fiscal Year 2025 contracts related to critical programs like the Right to Counsel, Anti-Harassment Tenant Protection, and the Immigrant Opportunities Initiative.

Despite contracts being registered on time for FY25, HRA has not approved provider budgets, leaving many nonprofits unpaid for five months. Smaller organizations are struggling to maintain operations, with some facing difficulty meeting payroll demands.

Nonprofits have also raised concerns about a new policy that would withhold 10 percent of payments on Right to Counsel contracts regardless of whether providers meet performance targets. They argue this approach, typically used with for-profit contractors, would exacerbate cash flow challenges for nonprofits that only receive reimbursement for actual costs incurred.

Earlier this month, Legal Services NYC joined 13 other organizations, including the Legal Aid Society, Brooklyn Defender Services, Brooklyn Legal Services Corporation A and BronxWorks, in a letter urging Mayor Adams to address payment delays and reconsider the proposed policy.

“We understand that systemic change takes time, but the current payment pace is unsustainable,” Small said.

“Despite assurances from the city, the delays we face are not merely administrative inconveniences — they threaten the stability of our operations and, by extension, the well-being of our clients,” Small added.

“But we remain hopeful that the city will take decisive and immediate action to clear the backlog and prevent future delays so that vulnerable New Yorkers can access the services they so desperately need.”