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Best Practice: Volunteer Transactional Lawyers Providing Assistance to Microentrepreneurs

Pro Bono Best Practices
Wednesday, February 19, 2014

Microenterprises, typically defined as a small business with five or fewer employees, provide a valuable opportunity for low-income people to earn a living. However, the success of these businesses is dependent on their legal foundation – without the appropriate written agreements and an understanding of relevant laws and regulations, a microenterprise might struggle to receive funding or to defend itself in court.

It is difficult to devote scarce legal services staff time to business law cases for microentrepreneurs. However, volunteer attorneys can be uniquely suited to this type of legal work.

Benefits of Volunteer Transactional Lawyers Providing Assistance to Microentrepreneurs

  • Services can lead to self-sufficiency. Microenterprises can bring economic vitality into traditionally poor communities. Having a volunteer attorney assist with a new business’s legal needs increases the likelihood that the business will be viable, and that the microentrepreneur will be able to support him/herself, and eventually hire additional employees from the community.

  • Services are more likely to match volunteers’ expertise. Microentrepreneurs’ legal needs, like entity formation, contacts, real estate, zoning, and intellectual property, are areas of the law that are likely to be familiar to many volunteer attorneys. In addition, volunteers can usually provide transactional services without going to court, which may be appealing to lawyers who are not typically litigators.

  • Open new avenues for fundraising. Community economic development can open a number of new fundraising opportunities for legal aid organizations, from foundations, banks, and local or state government agencies.  

Case Study: Legal Services of Eastern Missouri’s Community and Economic Development Program

Legal Services of Eastern Missouri (LSEM) established the Community and Economic Development Program (CED Program) to provide legal assistance and education to low-income entrepreneurs who are starting or expanding small businesses in the greater St. Louis area.

The CED Program uses volunteer transactional attorneys to provide business legal assistance and education to entrepreneurs and eligible nonprofits. The program is managed by one attorney and one paralegal at LSEM, with support from 100 volunteer attorneys from LSEM’s Volunteer Lawyers’ Project. Most of the volunteers provide direct, one-on-one legal assistance to microentrepreneurs. They also have the opportunity to teach legal workshops and business law clinics.

Clients are typically referred to the CED Program by community organizations and then matched with a volunteer attorney by program staff. Depending on individual needs, the CED Program may connect the client with additional resources like funders, government agencies, and accountants. 

Volunteers have helped microentrepreneurs achieve a wide range of business goals. Through the program, a local landscaper incorporated his business as a limited liability corporation, an after school program for at-risk teens applied for nonprofit status, and a local baker gained access to a certified kitchen so that she can sell baked goods to the public.

Since the CED Program was founded in 2011, volunteers in the program have served 99 clients and closed 143 matters. This assistance has allowed 100 microentrepreneurs to sustain their businesses, and to create nearly 100 new jobs in the community. 

How to Plan a Pro Bono Transactional Project for Microentrepreneurs  

Steps to planning a transactional project for microentrepreneurs

Conduct community outreach

Community organizations and local chapters of SCORE will have a strong sense of the services that microentrepreneurs need. Asking these organizations for their advice has a dual purpose: it will help transactional pro bono programs focus their services, and it will build relationships between the program and organizations that could provide referrals.  

Determine range of services

There are a number of ways to meet business legal needs, including one-on-one representation, clinics, seminars, and education materials. When choosing the most appropriate services for clients, consider your available volunteers. Since Legal Services of Eastern Missouri has a dedicated pool of volunteer attorneys that focus on transactional law, it made sense to provide one-on-one representation. 

Establish client screening process

Unlike most of the services that legal aid organizations provide, transactional services for microentrepreneurs are largely proactive and preventative – this requires clients to see the value of working with a lawyer before they have a legal problem. To make sure clients are committed to getting legal assistance for their business, it may be helpful to require a written application for business assistance. 

Build network of volunteers – attorneys and otherwise

To be successful, microentrepreneurs will need more support than legal aid organizations can provide alone. Microentrepreneurs with access to a collaborative network of volunteers that include lenders and business organizations are much more likely to succeed.  

Resources for Transactional Legal Aid Programs

LSC regulation for self-employed individuals – 1611.3(d): In addition to screening for LSC’s income eligibility requirements, programs serving microentrepreneurs will need to pay careful attention to their organization’s asset restrictions, as established in section 1611.3(d) of LSC’s Regulations. 

LSC Resource Information – Community Economic Development: LSC Resource Information's Community Economic Development section provides examples of several LSC-funded legal aid organizations that serve microentrepreneurs, along with contact information for the attorneys that manage each project.

University of San Diego School of Law Entrepreneurship Clinic: The University of San Diego School of Law’s legal clinics include business law advice for nonprofits and low-income entrepreneurs. Volunteer law students provide clinic services.