NEW YORK – There are an estimated some two million "unbanked" residents in New York City, and millions who are low-income wage earners. For the credit unions in the Big Apple that strive to serve these struggling populations, legal assistance and advice is sometime required, but the prohibitive cost of high-priced New York attorneys, however, can make these altruistic credit unions feel like second-class citizens. The Lawyers Alliance for New York (LANY) is changing all of that. The leading provider of business legal services to New York's non-profit organizations, LANY is coming to the rescue of low-income credit unions by providing pro bono work through its network of 150 law firms and corporate legal departments, equating into more than 700 lawyers. Assistance to credit unions comes in many forms, but according to Laura Schwartz, senior staff attorney at LANY, it has included help in ATM licensing, the development of personnel policies, branch acquisitions, reviewing construction contracts and commercial leases, immigration issues, asset purchase agreements, and setting up loan participation programs. "We provide legal services to non-profit groups that work to improve the quality of life in the city's low-income neighborhoods. This has normally included non-profit affordable housing developers, social service organizations and many economic development groups. Credit unions are becoming a priority because they are bringing capital and credit into these communities," says Sean Delany, LANY executive director. For the four participating credit unions of the New York financial Network Action Consortium (NYCfNAC – pronounced knickknack), the pro bono assistance from the law firm of Debevoyse and Plimpton has been estimated at $75,000 to $80,000 over a 12 month period. According to Peter Bray, NYCfNAC's executive director, the help from the law firm, which volunteers its services through LANY, is invaluable. "We normally would have nowhere else to turn," says Bray, explaining that the costs of legal assistance would have been unaffordable. Debevoyse and Plimpton have assisted the credit union consortium with the legalities in developing loan agreements in which, for example, the four NYCfNAC credit unions – Bethex FCU, Union Settlement CU, Homesteaders CU and Lower East Side Peoples CU – that all serve low-income areas, could purchase existing loans from more mainstream credit unions. The firm also did the legal work in developing loan participation agreements between the NYCfNAC credit unions themselves, where they can buy and sell loans from one another. For NYCfNAC member Bethex FCU, the alliance was able to call upon the services of Kramer, Levin, Naftalis and Frankel, LLP for handling the negotiations for the creation of a branch in the Mott Haven section of the South Bronx, the lowest income neighborhood in New York City. According to Bray, "That neighborhood didn't have a functioning bank probably since World War II. A commercial storefront was located on East 38th Street. The deal was complicated because HUD (the Department of Housing and Urban Development) owned the site." Kramer Levin helped negotiate the lease with HUD. "It was a complicated lease with the law firm putting in an extensive amount of time," he says. Bethex, however, was able to receive a $30,000 rent credit, meaning it wouldn't have to pay rent for the first four to five years. This was HUD's contribution to the renovation of the storefront. The firm also helped negotiate the $400,000 construction contract for the branch in which Bethex received a $200,000 grant from New York Empowerment Zone money. All of NYCfNAC's credit unions are being assisted by the alliance with asset purchase agreements issues in which, for example, they can restructure the way they do business and share in the purchase of new information technologies. For Bushwick Cooperative FCU in Brooklyn, a lawyer from LANY is currently helping with the immigration status of a desired employee by dealing with H1-B VISA issues. The importance of hiring an immigrant is that "there are different pockets of immigrants within the city. It is therefore important for credit unions to hire the right person with the necessary language and cultural affinities," says Schwartz. In Harlem, Neighborhood Trust FCU is receiving legal assistance in the area of personnel policy issues. "One of the problems that low income credit unions and non-profit clients have is that they don't have a personnel policy, and they frankly need to know the legality of what they are allowed to do in terms of employment leave, termination, hiring, family leave etc," says Schwartz. A LANY participating lawyer also assisted Neighborhood Trust with the acquisition, title search and property transfer of a building owned by Chase Bank which the credit union wanted to use as a new branch location. Going forward, Delany says that credit unions will be more of a focus for LANY. "We are going through another priority setting process and it seems crystal clear that economic development and our work with credit unions are going to stay at the top of our agenda," he says. "Credit unions are becoming more sophisticated," adds Schwartz. "They are doing more participation loans, they are talking about offering new financial products, they're talking about things that 10 years ago they wouldn't talk about doing. The more they do that, the more they will need the assistance of lawyers." -


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