Background on Small Business Legal Clinic
Introduction: Lewis & Clark Law School has launched a new and unique Small Business Legal Clinic that will provide significant contributions to the growth and development of the Portland business community. The Small Business Legal Clinic will provide minority and women-owned small and emerging businesses with the immediate legal assistance they need to respond to current challenges and by building a pro bono network of business attorneys to ensure that these business owners have access to long-term support. By supporting small businesses, the clinic will encourage the creation of new jobs and new opportunities for low-income families. In addition to strengthening the city’s economic infrastructure by assisting individual small businesses, the clinic will benefit agencies and organizations serving these clients by providing them with access to a coordinated legal network. Taken together, these activities will facilitate community development. The clinic will also promote volunteerism by familiarizing law students with the needs of low-income small businesses, by introducing them to the tradition of pro bono legal work, and by expanding the opportunities for interested business transactions lawyers to engage in socially meaningful pro bono activities.
Benefit to the Community - Population at Risk: The Small Business Legal Clinic will make an immediate difference to small and emerging businesses, which will gain the legal support they need to create strong and profitable enterprises. This clinic responds to an immediate and pressing demand. The U.S. Census Bureau reports that over half of the Portland metropolitan area’s 57,626 businesses employed fewer than five people in the year 2002. In the same year, another 10,000 businesses employed between five and nine workers. Portland’s small business community reflects an entrepreneurial pulse that is visible throughout the State of Oregon. Census data indicate that Oregonians are 35% more likely to be self-employed than are American workers as a group. Further, Oregonian businesses tend to be smaller than the national average. In Oregon, the average firm with paid employees grosses $2.9 million in sales and receipts and has 16 employees, compared to 20 employees and $4.0 million for the nation as a whole. Oregon’s women- and minority-owned businesses tend to be smaller still. Oregon businesses owned by African-Americans or Hispanics grossed approximately $1 million with an average of six employees. On average, Asian-owned businesses employed eight workers and grossed $650,000. Native American-owned firms brought in approximately $488,000, with five employees. Firms owned by women of all ethnic backgrounds employed an average of six workers and had sales and receipts totaling $660,000. In other words, Oregon’s women- and minority-owned businesses are smaller, less capitalized, and bring in less money per employee than the statewide average.
Small businesses are the backbone of Portland’s economy, and, taken together, they constitute a major local employer. Indeed, 95% of Portland’s firms employ fewer than 50 workers. These small and mid-sized businesses currently employ 254,000 people, with an annual payroll of nearly $2.1 billion. Despite this enormous contribution to the local economy, there are no coordinated legal services in Oregon focused on serving the needs of small, low-income, and minority entrepreneurs. The lack of affordable legal representation leads to the systemic disenfranchisement of many small and emerging business owners, and leaves them less stable than larger, more established firms. For example, in 2004, 13,481 new employer businesses opened shop in Oregon, while 14,407 closed. Each of these failed businesses represents a financial catastrophe for the owner, their employees, their families, and their community. Notwithstanding the high cost of failure, business owners with limited capital, especially women and minorities, seek out crucial legal advice only sporadically, often in response to crises. A recent Oregon State Bar Legal Needs Study concluded, “a full range of legal assistance should be available to low- and moderate-income Oregonians, including community education, outreach, advice, and transactional assistance.”
The Small Business Legal Clinic will address these needs by producing the following outcomes:
About Lewis & Clark Law School: Lewis & Clark Law School, a private, ABA-accredited school of law located in Portland, Oregon, is part of Lewis & Clark College, a highly selective, independent liberal arts college. Founded in 1884, the Lewis & Clark Law School (a member of the Association of American Law Schools) offers a well-rounded legal curriculum that prepares lawyers for practice in all fields of law. Several of the Law School’s programs are nationally recognized as innovative in the field of legal education, including its strong business and intellectual property program, its National Crime Victim Law Institute, its fine Indian law program, and its leading environmental and natural resources law program. Lewis & Clark is dedicated to exploring the lessons of the liberal arts and the related fields of education and law.
The Law School provides students with rigorous training in the substance and practice of law, thus preparing them for civic leadership in our diverse, interdependent world. Integral to the Law School’s mission of training professionals is its commitment to engage students in clinical experiences that will benefit diverse communities and inspire its students to greater leadership.
Small Business Legal Clinic Goals: The Small Business Legal Clinic will provide long-term benefits to the Portland community by bringing free and sliding scale legal services to small and emerging businesses, especially those owned by low-income women, minorities, and recent immigrants. The clinic’s services will fulfill an unmet, pressing community need. The clinic’s objectives are: 1) to provide crucial legal assistance to small business owners; 2) to coordinate with small business assistance centers to provide basic legal information and outreach; 3) to create an organized framework for the provision of pro bono legal services to small businesses; 4) to provide practical training to law students in all areas of business law and economic development; and 5) to promote legal scholarship on issues that affect the entrepreneurial community and nurture the careers of young legal scholars committed to these issues.
To achieve its goals, the clinic will undertake service and community-building efforts, as well as academic activities. The clinic will assist sole proprietorships and small businesses with all types of business law transactions and provide the legal advice that business owners need to make informed and productive decisions. The clinic will also conduct open sessions at small business assistance centers, providing basic legal information to support the creation, survival, and growth of small and emerging businesses. The clinic will coordinate with federally funded and nonprofit small business assistance centers and community organizations to increase the effectiveness of these organizations. In addition to those small businesses served directly, the clinic will provide a referral system for attorneys wishing to do transactional business work with business clients who meet the criteria for pro bono legal assistance. The clinic also will initiate collaborative efforts with the Oregon State Bar and other institutions to ensure that small businesses have greater access to legal services and legal information. Law students participating in the clinic will attend a weekly classroom seminar taught by a clinical professor and will receive practical training on a wide variety of substantive legal issues facing small businesses. In addition, in an 8-hour per week supervised practicum, students will represent small businesses in a wide variety of transactional matters.
Client base: The potential client base for the Small Business Legal Clinic is conservatively estimated to be at least 1,000 low-income small businesses annually in the Portland metropolitan area, estimated to impact approximately 3,000 people. This client base includes small business owners served through the clinic’s collaborations with small business incubators, as well as those who seek help directly from the clinic.
Government agencies and private not-for-profit service providers in the Portland metropolitan area currently serve several thousand small businesses each year; however, none of these provide legal advice. Presently, the Bureau of Housing & Community Development for the City of Portland is funding 22 projects serving approximately 1,000 low-income people; its goal is to increase clients’ income by 25% within three years. Several small business incubators, including Portland State University’s Office of Small Business Advising, Oregon Native American Business Network, and Mercy Corps, actively provide technical assistance to small businesses.
The Portland Development Commission (PDC) has approximately 1,200 businesses in its database, approximately 75% of which are small businesses. The PDC Storefront Project and the Childcare Improvement Project each assist approximately 100 small businesses per year. The Hispanic Chamber of Commerce annually assists approximately 250 small businesses, and the Oregon Association of Minority Entrepreneurs assists approximately 500 businesses a year on a case-management basis. Each of these organizations has indicated that their clients would benefit from the Small Business Legal Clinic’s services and has expressed an interest in collaborating with the Law School.
Most of the agencies listed above are assisting, or funding, projects involved in micro-enterprise development in low-income populations focused on women and minorities. These organizations provide technical assistance to small businesses with the goal of growing these micro-enterprises by increasing their gross receipts, number of employees, and visibility in the community. The Small Business Legal Clinic will help these organizations achieve their goals by providing access to high-quality legal services that have traditionally been out of reach for economically disadvantaged small business owners.
The clinic is designed to be a catalyst that brings business and law together to build a solid infrastructure of support for small enterprises. By providing small businesses with sound legal advice, as well as tools to create and grow their businesses (such as obtaining and protecting intellectual property rights, drafting sound contracts, and advising on business capitalization and regulatory matters), the clinic will strengthen the economic fabric of the region to ensure a robust and diverse economy.
Community Collaboration: In building the framework for the Small Business Legal Clinic, Lewis & Clark Law School conducted informational interviews in 2005 with the following local nonprofit and public organizations: the City of Portland Mayor’s Office and Office of Housing and Economic Development; the Portland Development Commission; Portland Community College’s Small Business Development Center; Portland State University’s Small Business Outreach Program; the Oregon Association of Minority Entrepreneurs; the African American Chamber of Commerce; the Hispanic Chamber of Commerce; the Oregon Native American Business Network; Mercy Corps; the Portland Business Alliance; Trillium Artisans; the Childcare Improvement Project; the Small Business Administration and the Housing Development Center Support Program. These organizations provide a range of services to thousands of small and emerging business owners, and they have first-hand knowledge of the condition of Portland’s small business community. They all report that low- to moderate-income small business owners, especially women and members of minority groups, have a very difficult time finding affordable and reliable legal advice. These interviews provided the Law School with crucial information about the type of legal aid most needed by small businesses. They also laid the groundwork for future collaborations: all of the organizations providing direct service to small and emerging businesses reported that they would refer their eligible clients to the Small Business Legal Clinic.
Outreach plan: The Law School has implemented its outreach plan by:
- Producing a brochure that is distributed to all small business incubators and advisors marketing the clinic’s services;
- Making personal contacts with small business community leaders;
- Speaking about the clinic at educational programs presented by community groups and small business incubators;
- Advertising and distributing brochures in community centers frequented by potential clinic clientele; and advertising with various attorney groups.
The Law School also plans to publicize the clinic to larger audiences locally and nationally, including, but not limited to, the City of Portland, regional chambers of commerce, Oregon Entrepreneurs Forum, Associated Oregon Industries, state and local economic development bodies, the United States Small Business Administration, the United States Association of Small Business and Entrepreneurs, and national nonprofits working with small businesses.
Lewis & Clark Law School’s support for the Small Business Legal Clinic: The Business Law faculty at its October 2005 meeting unanimously approved the Small Business Legal Clinic. In addition, the Curriculum Committee voted to recommend the clinic to the full Law School faculty, which unanimously voted to approve the clinic at its November 2005 meeting. The Law School faculty sees the Small Business Legal Clinic as the capstone of the Law School’s efforts to offer a comprehensive range of services to economically disadvantaged members of the Portland community, while providing an invaluable hands-on training experience for its students. The Law School’s track record is proof of its leadership in initiating public and private partnerships with other institutions of higher learning and community groups:
- In partnership with the Community Development Law Center (CDLC), the Law School offers valuable services to nonprofit corporations. Law Students work with experienced attorneys representing tax-exempt corporations involved in community development.
- In an innovative joint venture with Portland State University’s Graduate School of Business, the Law School launched the Center for Technology, Entrepreneurship and Law (CTEL), in which law and MBA students work together to assist regional start-ups. CTEL focuses on the needs of “early stage” high-growth potential, knowledge-based technology companies.
- Lewis & Clark Law School also operates two teaching and direct service clinics focused on the needs of low-income persons: the downtown Portland Lewis & Clark Legal Clinic, and Low Income Taxpayer Clinic.
Funding: The Small Business Legal Clinic project budget is $1,288,070 over the first three years. In total, the Law School has secured $298,070 in cash and in-kind funding for the clinic.
To raise the remaining funds, the Law School is aggressively pursuing grants from a number of foundations and is including the needs of the Small Business Legal Clinic in its annual fundraising drive. As part of a multifaceted plan to secure stable and sufficient funding for the
Small Business Legal Clinic, Law School representatives have:
- Met with the Oregon Economic Community Development Department to discuss funding;
- Met with the Portland Development Commission and have secured clinic office space;
- Had a preliminary meeting with the City of Portland to discuss funding;
- Approached law firms, banks and other businesses regarding community sponsorships with a goal of securing five "Leadership Partners” at $10,000 per year and ten “Supporting Partners” at $5,000 per year;
- Actively sought and are seeking funding from foundations.
Lewis & Clark College is committed to sustaining the Small Business Legal Clinic as a permanent source of support for small business owners in the Portland area. The clinic will be sustained through the continued support from the Law School’s annual fund, Lewis & Clark College’s annual contribution, donations from individuals, law firms, and corporations, and by the support of the participating lawyers who are offering their expertise pro bono. Lewis & Clark Law School continues to explore funding partnerships with additional law firms, businesses, foundations and the Oregon Economic Community Development Department in addition to seeking endowment funding from alumni and private individuals associated with Lewis & Clark Law School.
Summary: The proposed Small Business Legal Clinic is the capstone of the Law School’s extensive efforts to offer a comprehensive range of services to economically disadvantaged members of the Portland community, while providing an invaluable hands-on training experience for its students. The clinic will dovetail with the Law School’s existing legal clinics and nonprofit partnerships to create a comprehensive network of legal aid for economically disadvantaged residents and the organizations that serve them. The Small Business Legal Clinic will provide long-term benefits to the Portland community by bringing free and sliding scale legal services to small and emerging businesses, especially those owned by low-income women, minorities, and recent immigrants.
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