Tuesday, July 10, 2012

Startups and nonprofits have legal teams at the ready

Two days after she opened her hair salon, Sahara Lannon took steps to ensure the new business would be around for years to come.
Lannon and her attorney, Laurie Hauber, went through the salon’s operating agreement and discussed financial issues, such as the tax ramifications of adding a partner.
“So much about this document is minimizing misunderstandings,” Hauber said to her client over stacks of legal papers last month at the Images of Change salon at 5942 Delmar Boulevard.
Hiring a lawyer can be expensive, but the meter wasn’t running on this visit. Lannon is one of more than 35 clients who have received free legal advice through an initiative launched last fall by Legal Services of Eastern Missouri. The program aims to help low-income entrepreneurs starting or expanding businesses and for nonprofits that serve low-income individuals.
The initiative, called the Community Economic Development program, is one of a few similar programs available through Legal Services Corp., a Washington-based nonprofit that distributes federal funding to 135 independent Legal Services programs nationwide.
Ken Harrington, managing director of the Skandalaris Center for Entrepreneurial Studies at Washington University in St. Louis, said nothing like Legal Services’ new program exists locally.
“This is a major, major gap that they’re going to fill,” he said.
Legal Services of Eastern Missouri has worked for decades to provide “survival services,” said Daniel Glazier, the agency’s executive director and general counsel.
From its office in St. Louis, the staff attorneys and volunteers provide free legal help in civil cases to those who meet income and other eligibility guidelines. Its recipients include tenants fighting illegal evictions, battered spouses seeking orders of protection and consumers who have been defrauded.
The new program is a way to go beyond basic needs and offer people a way to break out of poverty, Glazier said.
“These folks are going to hire other people in the community, in addition to bettering themselves,” he said.
In the case of Vitendo 4 Africa, a nonprofit based in Hazelwood that helps immigrants from Africa, lawyers are helping the nonprofit establish a micro-loan program.
Vitendo 4 Africa’s founder, Geoffrey Soyiantet, said micro-lending will help immigrants who don’t have credit histories to buy a car or other equipment to start a business.
The new initiative came to fruition despite the funding challenges facing Legal Services. Legal Services Corp.’s federal funding fell 14 percent to $348 million in fiscal 2012. As a result, Legal Services of Eastern Missouri’s funding from Legal Services dropped 15 percent to $1.9 million in fiscal 2012.
Legal Services of Eastern Missouri had been looking for a way to fund law advice for entrepreneurs and nonprofits for several years, but the money couldn’t come at the expense of reducing basic legal needs, Glazier said.
In 2010, Hauber began working as a volunteer with Legal Services of Eastern Missouri after moving from Nashville, where she taught at Vanderbilt Law School for five years.
After talking to local nonprofits about the inaccessibility of legal services, she decided to create a program similar to a one she started in Boston in 2001.
Hauber worked on securing funding sources, and by last fall, the local Legal Services secured grants totaling more than $130,000 from PNC Bank, U.S. Bank, Bank of America, the St. Louis County Port Authority Community Reinvestment Fund, St. Louis Development Corp., the Trio foundation and the Incarnate Word Foundation.
In October, she was hired to lead the new Community Economic Development program.
Hauber practiced corporate law in San Francisco early in her career, but she says she felt pulled to using legal services as a means to furthering economic development.
“These are people who don’t have access to capital or professional networks,” Hauber said. “This is about leveling the playing field.”
Several local law firms and in-house counsel at Sigma-Aldrich and Emerson have stepped forward to volunteer with the new effort. The law firms that have participated include Husch Blackwell; Bryan Cave; Lewis, Rice & Fingersh; Ogletree, Deakins, Nash, Smoak & Stewart; Greensfelder; Armstrong Teasdale; Gallop, Johnson & Neuman, Thompson Coburn; and Steinberg & Steinberg.
The new service fills a crucial void in the region, according to the Skandalaris Center’s Harrington.
Washington University and St. Louis University’s law schools have clinics for students to provide free legal help for nonprofits and entrepreneurs under the direction of attorneys, but they’re limited by what they can do, Harrington said.
For example, they can’t file incorporation documents for businesses, which is overlooked by some entrepreneurs getting started.
“It’s a relatively inexpensive thing, but if you don’t do it ... it can be devastating.”
Harrington said many small startups don’t anticipate disputes between family members or business partners and overlook completing legal documents that can avoid problems when disputes arise.
“Without that legal foundation established, the probability of failure goes way up,” he said.
For Lannon, the salon owner, opening Images of Change was a lifetime dream for the 34-year-old, who cut and colored her friends’ and family members hair since she was a teenager. After working in customer service, collections and as a stylist at a hair salon for more than a decade, Lannon always wanted to open her own shop.
“I have three girls, and I wanted to show them you don’t have to work for someone else,” she said.
Last fall, Lannon saw an advertisement by a nonprofit, the Grace Hill Settlement House, for a 10-week class on starting or expanding a business through its women’s business center. The classes are held at Washington University’s west campus in Clayton. During the class, she found out about Legal Services’ new program.
Lannon, who opened the salon to customers in late February, is hiring. Images of Salon currently has a staff of two, and she is seeking to hire several stylists and a nail technician.
Without the legal help, Lannon said she’s doubtful Images of Change would exist.
“I have so many ideas,” she said. “But I have to have the right team. Without the right team, my dreams wouldn’t come true.”

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