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August 05, 2015 Dialogue

Spotlight on Business Law Pro Bono: How Business Law Lawyers Contribute to Economic Justice

By Kimberly Lowe
“Pro bono service has to become as much a part of our substantive efforts as corporate law, tax law, real estate law and all of the other aspects of law that form part of our business law practice.—Joseph Mullaney, General Counsel of Gillette Company

Business law lawyers often feel challenged to provide pro bono legal services within their legal practice area. In an effort to increase the number of pro bono volunteers, many pro bono organizations and professionals claim (and in some instances proclaim) how much business law lawyers grow when they “step out of their comfort zone” and tackle litigation-based pro bono cases. Most business law lawyers (myself included) take offense to the suggestion that we somehow need to grow. Instead of encouraging a business law lawyer to grow experientially through litigation based pro bono, we should encourage each business law lawyer to use his or her legal skills to meet the ethical obligations of ABA Model Rule 6.1, which encourages every lawyer to provide pro bono legal services to “persons of limited means or . . . charitable, religious, civic, community, governmental, and educational organizations in matters which are designed primarily to address the needs of persons of limited means.” A business law lawyer need not depart from his or her practice area in order to meet this obligation. Assisting a client of limited means in obtaining economic justice (or a nonprofit organization assisting their clients to do the same) is just as laudable as battling on behalf of a client of limited means in a court of law.

Put most simply, economic justice involves the laws and institutions that determine how each person earns a living, enters into contracts, exchanges goods and services with others, and otherwise produces an independent material foundation for his or her economic sustenance. While the economic justice system includes multiple interfaces with the law, very few of these encounters involve the court system. Who is better equipped than a highly-trained business law lawyer to assist persons of limited means in navigating and succeeding in the economic justice system? The business law section created its own pro bono committee in 1993.

While business law lawyers are well equipped to help pro bono clients navigate the economic justice system, finding eligible pro bono clients poses a challenge. There are no courthouse steps where people of limited means line up pro se to battle the economic justice system. Connecting business law lawyers who want to provide pro bono legal services within the business law context with potential pro bono clients is less direct than a self-help desk at the court house.

In keeping with Model Rule 6.1, in his 2002 law review article entitled “Fulfilling the Promise of Business Law Pro Bono,” James Baillie, a one-time chair of the ABA Standing Committee on Lawyers’ Public Service Responsibility and the Business Law Section’s Pro Bono Committee, outlined a path for business law lawyers to provide business law pro bono. Mr. Baillie generally defined business law pro bono to include any legal services in the broad category of business law (as contrasted with litigation) provided to any person or entities that need legal services on a pro bono basis. Mr. Baillie stated that “the recipients of these services can, for the most part, be divided into two broad categories: nonprofits and microenterprises.”

Since business law pro bono is by definition provided to persons or entities that are participating in the stream of commerce, one critical component of business law pro bono is making sure the clients being served actually cannot afford to pay for the legal services provided. Given the diversity of the lawyers in the legal profession and the clients served, one lawyer’s pro bono client could be another lawyer’s paying client. Means testing business law pro bono clients is just as important as means testing any other pro bono client.

Determining the personal economic means of an individual who desires to start a microenterprise, or who needs assistance with a business law issue related to an existing microenterprise, is fairly straight forward. The same can actually be said for nonprofit organizations. According to Marcia Levy, the Executive Director of Pro Bono Partnership: “in evaluating whether we can represent a nonprofit that otherwise meets our mission-based criteria, we look at whether the organization can afford legal representation without significantly impacting their resources for services. It is a means test, but one with flexibility based on the totality of the circumstances, including whether they have a paid relationship with a lawyer or law firm.”

While the theoretical and professionalism aspects of business law pro bono are critical, what really matters is the impact of business law pro bono legal services and how a business lawyer can make a difference in the lives of people of limited means. Gary Connelley, Pro Bono Counsel for Crowley Fleck PLLP, a regional firm with offices in Montana, North Dakota and Wyoming, said it best: “As far as the impact, we often get feedback from the organizations on the value of our services to their clients, but not much from the clients of those organizations directly. I just spoke with one of our senior partners who has done considerable work with Tumbleweed, especially negotiating a lease from the county for an overnight shelter for homeless teens. When I asked him about the impact of that work on him, he just mentioned that knowing there were now beds (where there were none before) for teens who would otherwise be under the bridges, vulnerable to sexual predators, was a source of pride and great satisfaction to him.”

Below are three pro bono client stories that show how business law lawyers have helped people struggling to participate in the market economy obtain economic justice—or at least access to economic justice—through direct legal services to people and/or or nonprofit organizations of limited means that provide services to individuals of limited means.

Appetite For Change: Business Law Pro Bono from the Client’s Perspective

By Michelle Horovitz and Matthew Stortz. Ms. Horovitz is a recovering public defender and Co-founder and Executive Director of Appetite For Change. Mr. Stortz is an attorney at Fredrikson & Byron where he practices as a corporate and tax associate and is a proud member of the Appetite for Change legal team.

Appetite For Change (AFC) just celebrated the beginning of its fifth year of service to the North Minneapolis community. It’s been one wild ride, but without business law pro bono legal help, the road we’ve travelled would have been a lot bumpier.

AFC is a 501(c)(3) food justice social enterprise headquartered in North Minneapolis (Northside). Our neighborhood is one of the most culturally rich, yet challenged parts of the Twin Cities. AFC’s mission is to use food as a tool for building health, wealth and social change. AFC uses food as a vehicle to organize the Northside community and to create the change that Northsiders want to see in their food environment and policies. Healthy, nutritious food options are generally lacking in the Northside food environment, perpetuating longstanding inequities that disproportionately burden the Northside’s predominantly African-American community. AFC is working to change that. We offer traditional programming like cooking, nutrition and gardening workshops, urban agriculture, and leadership development activities in the realm of food policy and advocacy. Our vision is that every Northside child will have the opportunity to grow up healthy and happy in their own community.

I started AFC in 2011, motivated by my passion for food, social justice, and the inspiration I gained from becoming a mother. I hoped to teach other young mothers how to prepare nutritious and delicious foods using urban-farmed produce while building community with one another. When I started AFC I was a “recovering public defender” and I had little professional experience in non-profit and business management. Fortunately, I surrounded myself with talented people whose passion for AFC’s mission matched my own. In 2012, I met Princess Titus and Latasha Powell, women with strong ties to the Northside community. We partnered to expand AFC’s reach and to grow the organization.

In late 2014, AFC’s growth required us to find new space. Up to that point, our staff of six had been sharing a single 250 square foot office in a local church. Moreover, by expanding into the new space we had identified, AFC could bring a long-time Northside goal to fruition: starting a soul-food fusion restaurant in an area with very few “real food” options. There were a number of very complex legal issues standing between us and the space we wanted. As part of the lease AFC would be required to take over an existing commercial kitchen incubator business—Kindred Kitchen—that had been operated by the building owner. We also planned to build a new café in an empty space next to the kitchen. Moreover, we encountered legal issues relating to prior grant funding and program-related investments connected to the property. While our lease negotiations were ongoing, we realized that we also needed to refine our governing documents. We needed to amend our Articles of Incorporation to expand our charitable purpose and we needed to restate our bylaws to adopt a governance structure befitting AFC’s growth.

I knew that AFC needed to do these projects right. Needless to say, my experience as a public defender did not quite prepare me to solve legal puzzles involving commercial real estate and complex corporate governance. We needed help.

Enter our business law pro bono legal team. I reached out to Fredrikson & Byron, a full service law firm, for AFC’s pro bono legal needs. I was connected with a shareholder in the firm’s real estate group who negotiated AFC’s new lease. Although the deal involved only 5,000 square feet of commercial real estate, the lease took over nine months to finalize because of the complications involved. This real estate legal expertise was crucial to resolving those challenges. I was also introduced to a business lawyer who had extensive experience in both for-profit and nonprofit governance and structuring, as well as social enterprise. An entire legal team helped us to restate AFC’s articles and bylaws, structure the relationship between AFC, the café, and Kindred Kitchen, as well as draft a lease for use with our tenants at Kindred Kitchen.

Our business law pro bono team helped AFC lay the groundwork for expansion, and AFC has grown by leaps and bounds. In four short years we have expanded from a tiny nonprofit into a burgeoning social venture that is leading the Northside food justice movement and bringing major economic development to a marginalized commercial corridor in the city of Minneapolis. We moved into our new office space. We doubled our budget from $500,000 in 2014 to over $1,000,000 this year. Our pro bono partnership with our business law lawyers has also facilitated opportunities to collaborate with other Northside organizations, like the Northside Economic Opportunity Network (NEON).

On April 29th, 2015, AFC opened Breaking Bread Café and Catering and since that time has already hosted a pop-up restaurant with one of NEON’s start-up business clients. Minneapolis Mayor Betsy Hodges spoke at the Café’s grand opening, as did celebrity chef and television personality Andrew Zimmern. As part of his remarks, Zimmern applauded the AFC-Breaking Bread endeavor as an entrepreneurial catalyst and a space for community to join together sharing a meal. Mayor Hodges said of AFC and Breaking Bread, “This is the future of Minneapolis.”

As much as AFC has grown in the past year, we expect to grow even more in the near future. Just three weeks after we opened Breaking Bread, AFC secured a small business loan from The Nonprofits Assistance Fund and City Planning and Economic Development. We have hired thirteen new full time staff for the kitchen and Café, almost all of whom are members of the Northside community. In June 2015, AFC will launch a Kickstarter campaign to raise funds for a new youth training and employment program, which will allow us to expand the Café and catering operation even further. Fourteen of the top chefs in the Twin Cities have donated culinary experiences as rewards for this campaign. AFC has been featured in the Minneapolis Star Tribune and on various local television news programs. The business law pro bono legal assistance we received helped make this transformation possible.

From Gang Member to Executive Director of a Nonprofit: Business Law Pro Bono at Work

By Pamela J. Wandzel. Ms. Wandzel is Pro Bono Manager at the law firm Fredrikson & Byron, P.A.

Pro bono clients come in with all manners of needs. While many clients need assistance for themselves or their families, some clients, including those who want to start a nonprofit, want to help others. One such client, Latriste Graham, is one of those rare individuals who has been able to overcome adversity, learn from it, and make a direct, positive impact on others. Her story began when she was born into a gang family on the west side of Chicago. Her family life was rough, and she started drinking and doing drugs early. She became a prostitute by age 15, a gang leader at age 16, a mom at age 18, and a felon by age 23. Drug and alcohol treatments failed until Latriste decided to turn it around. In 2007 Latriste got clean, moved to Minnesota, and started a program assisting other women to escape prostitution, a form of human trafficking.

Latriste began her journey with a business law pro bono lawyer at a MicroGrants awards celebration event in 2012. MicroGrants provides micro-grants to low-income individuals to spur economic self-sufficiency. Prior to connecting with a pro bono business lawyer, Latriste had started her enterprise as an individual without any sort of entity or nonprofit organization. Latriste just wanted to help others escape the horrors that she herself had endured. That evening she was being honored for taking her $1,000 micro-grant and using it to make a positive impact in the community.

Up until the time of the award, Latriste’s work to rescue women from prostitution had been a one-woman job. She would drive to Chicago four times a year in her van, where she would pay gang members $20 each to protect her as she used a bullhorn to yell at the johns and tell the women she encountered on the street that she could offer a way to escape the violence that surrounded them. Often, she would bring the women she had rescued from prostitution back to Minnesota. Once back in Minnesota, Latriste and the women she had convinced to leave a life of prostitution were dependent on local ministries and others for funds to pay for gas and clothing that these women needed to make a fresh start.

While accepting her award at the MicroGrants celebration, Latriste mentioned that the next step in her journey was to start a nonprofit so she could help more women. Of course, she had no funds to pay a lawyer to do the work, and navigating the complexities of forming a nonprofit corporation, putting a board together, and filing for tax-exempt status were beyond her capacity. Imagine her surprise when she was offered pro bono legal services to do just that!

Latriste’s project was staffed by two pro bono service providers: Jessica Manivasager, a lawyer whose practice focused on business and tax planning as well as nonprofit organizations, and Erik Beitzel, a volunteer law student from the University of St. Thomas School of Law who was serving as a pro bono intern through a pro bono volunteer program. Initially, Jessica was hesitant to take on Latriste’s project because she was trying to focus her pro bono work on low-income entrepreneurs instead of start-up nonprofit organizations. Like many long-term business law pro bono volunteers, Jessica had formed more than her share of tax-exempt nonprofit organizations. But Latriste’s story was different. Here was a disadvantaged person looking to use all that she had to help others escape poverty, gang violence, and prostitution.

Together Jessica and Erik guided Latriste through the legal formation and tax exempt application process, and Latriste’s nonprofit organization, Coming Out of Bondage, was formed. Working as pro bono mentor-mentee team, Jessica was able to provide Erik with the practical instruction and guidance he needed as a law student to provide assistance to Latriste. This mentored pro bono approach to client service results in a multiplying pro bono impact whereby one “generation” of business law pro bono practitioner provides the practical training a law student who wants to practice in the area of business law desperately needs to become practice ready, while also providing a client with additional pro bono client resources.

Even after formation, Latriste and Coming Out of Bondage have continued to need business law pro bono legal assistance relating to the business and governance needs of the organization. Latriste has been able to raise funds to continue and expand her work. Besides taking women off the streets and giving them the tools they need to recover and succeed, she is a local resource for women and others who are victims of sex trafficking.

Jessica’s own words best express the impact of this client’s story: “After meeting with Latriste and hearing her story, I was committed to helping her form a nonprofit entity that would allow her to continue her work and expand her program. It did not take a great amount of time on my part to guide her through this process. I enjoyed the work; Erik had the opportunity to work with a wonderful client, and Latriste was extremely grateful for the assistance. Knowing I played a small part in this dynamic woman’s mission to help others is tremendously satisfying as a lawyer.”

Sonora Grill: How Microentrepreneurs Create a Thriving Small Business with Business Law Pro Bono Help

By Levi Smith. Mr. Smith is a corporate attorney at Fredrikson & Byron, P.A. and a 2014 graduate from the University of Michigan Law School.

Over the past four years, a team of business law lawyers from Minneapolis, Minnesota have helped two friends, Alejandro Castillon and Conrado Paredes, start and grow their successful restaurant concept. Today, Sonora Grill operates in two locations and employs more than 40 people. When the friends originally teamed up with their business law pro bono legal team, however, the friends had no money and little more than a business plan and a dream of opening a fast-casual food stall located in the Midtown Global Market in Minneapolis, serving a fusion of Spanish and South American cuisine with influences from Alejandro’s and Conrado’s native Sonora, Mexico. Located in a repurposed former Sears store, Minneapolis Midtown Global Market is an internationally-themed market with groceries, food, and gifts. According to its own literature the Midtown Global Market gives new and emerging entrepreneurs, many of whom are low income and recent immigrants, a prime location and support to build a business and future— for themselves, their families, and their employees, at the same time making the surrounding neighborhood safer and healthier.

Much like any other start-up business enterprise, these micro-entrepreneurial friends needed to consider and understand the tax and legal implications of their business enterprise. During the business formation process, pro bono business lawyers worked closely with Alejandro and Conrado on entity selection and formation issues along with joint ownership and tax issues. Recognizing the importance of educating the new entrepreneurs on the legal risks and obligations of business ownership, the pro bono lawyers counseled the pair on the details of limited liability, maintaining corporate formalities, and keeping accurate records. In addition, the pro bono lawyers counseled the pair on all the legal and tax implications of operating a for-profit business that employed people and sold goods and services into the stream of commerce. These issues included sales and use tax; local, state and federal employment law and tax law issues; as well as legal issues related to equipment acquisition and financing. Once the new business enterprise was incorporated, Alejandro and Conradro hit the ground running, with their highly successful Sonora Grill food stall receiving much acclaim for its food as well as its contributions back to the community.

With one successful location operating, Alejandro and Conrado turned their sights to an even more ambitious dream: owning a full-service sit-down restaurant serving upscale food and beverages. They turned back to their one-time pro bono business law lawyers for assistance with the new concept and location. Although opening a second location was a great opportunity, the pro bono business law lawyers counseled the pair on the need to protect themselves and the first location from any liability that could arise out of the operation of the second location. After much discussion and weighing different options, a second entity was formed for the second location.

Because the second location, unlike the first, was to be a full-service sit-down restaurant with a full-service bar, Alejandro and Conrado needed to lease a new space for the restaurant and hire many more employees. Several pro bono real estate lawyers worked closely with Alejandro, Conrado and the landlord to reach agreement on building out the new space, an agreeable rental price, and protecting the new restaurant from any issues with the space. The real estate attorneys, relying on their experience representing a national restaurant chain in complex lease issues, were able to negotiate favorable lease terms with specific provisions for operating a restaurant at the location. After many months of planning and renovations, a second Sonora Grill location opened in 2013. What was once a long-vacant building is now home to a vibrant business that employs more than 40 people and has contributed to the revitalization of the Midtown neighborhood in Minneapolis.

Alejandro and Conrado have enjoyed much success as both business owners and entrepreneurs. Sonora Grill recently won the 2014 Employment Impact Award from the Neighborhood Development Center, a community and economic development organization based in Minneapolis, recognizing the job-creation efforts of the business and its owners. Both Sonora Grill locations have received high praise from customers, critics, and the local media. Fredrikson attorneys continue to work with Alejandro and Conrado on Sonora Grill’s day-to-day legal issues and hope to be part of their next endeavor on a billable basis.

Tom Archbold, a corporate and commercial law lawyer, worked closely with Alejandro and Conrado. “It has been very rewarding for me as a business lawyer to work with Alejandro and Conrado as they initially started their Sonora Grill restaurant and then again when they expanded to a second, larger location,” Archbold said. “Alejandro and Conrado have a great concept, an entrepreneurial spirit, and they have worked very hard to develop their business. I’m very proud to have been a part of the process.”

Business law attorneys work on complex transactional matters every day, but for many none are more rewarding than helping their pro bono clients achieve their dreams, build businesses, and achieve sustaining economic and personal success.

Kimberly Lowe

Business Law Lawyer, Fredrikson & Byron

Ms. Lowe is a business law lawyer with the law firm of Fredrikson & Byron in Minneapolis, where she focuses her practice on both for-profit and nonprofit organizations as well as public and private cooperatives and social enterprises.