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“Just Enough”: The Case for Low-Profit Legal Services

April 22, 2011

A Scandinavian friend once told me that in Sweden, there is a word that encompasses a core Swedish ideal: lagom, “just enough.”  The concept of lagom represents the Swedish attitude toward social strata and the balance of rich and poor.  It is reflected in the country’s progressive tax brackets and relative lack of status symbols.  It means that one’s life should be lived in moderation, and that people should strive to have not too much, not too little – just enough.

The concept is quite un-American, actually.  But in the shadow of overindulgent consumerism that led to America’s current economic hangover, perhaps it’s about time for a dose of lagom.

I posit that the growth of the social enterprise movement, and the increasing need for legal representation among social entrepreneurs, represents an opportunity to put lagom into practice.  This is in the provision of legal services for mission-driven organizations.  Until now, legal services in the United States have generally been delivered under one of two cost structures: full price or pro bono (free).  This makes sense for for-profit businesses and individuals who can pay for legal services.  It also makes sense for nonprofit organizations and poor individuals who simply cannot.  But the existing model for pro bono legal services is inadequate to meet the needs of social enterprises.

The problem is particularly acute for startup for-profit social enterprises that may not have sufficient capital to afford the services of a traditional law firm, but which – due to their for-profit status – do not qualify to receive pro bono services from the various public interest legal services organizations that provide them.  In other words, if a social enterprise has formed as an LLC, or even an L3C, it will likely be foregoing some amount of financial profit in favor of a social benefit.  Which means that the extra financial padding that could have been used to purchase professional services in the open market is not available.  At the same time, however, the social enterprise is ineligible to receive pro bono services because it does not have a 501(c)(3) tax exemption.

One solution to this problem could be the establishment of low-profit law firms that would cater to social enterprises regardless of their choice of entity.  I would be interested to hear comments from anyone who has seen this work – or not work – as the case may be.  Can a lawyer or a law firm survive if its hourly rates were $100, rather than $400?  What would be different about a firm like this?  And, could professional services firms such as law firms actually embrace the idea of covering expenses with just enough profit on top to make it worth pursuing this work?

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