Your nonprofit organization may have attempted to obtain legal services on a pro bono (volunteer, unpaid) basis. After all, as a nonprofit, funds are limited and your nonprofit would rather spend those funds on its cause, rather than legal advice.
However, your nonprofit may have found that many lawyers won’t agree to this type of arrangement, at least not for every legal issue that your nonprofit encounters. While a lawyer may not agree to represent your nonprofit for free, other options are available that will allow your nonprofit to gain valuable legal services without breaking the bank.
Many lawyers offer some type of pro bono services for nonprofits, but nevertheless refuse to represent your nonprofit for free on all legal issues. There are several possible reasons for this.
Work involved. Depending on the work that needs to be done, lawyers may wind up spending several hours each week working on a nonprofit’s legal issues, and it’s often difficult to determine at the outset exactly how much work will need to be completed. For example, a lawyer may agree to help your nonprofit with its 501(c)(3) application on a pro bono basis, initially thinking it will take five hours to complete. In actuality, many issues can come up, causing the lawyer to work well over the five hours initially promised. Because it’s difficult to estimate how much time it will take to solve a legal issue, a lawyer may not be willing to invest that time on each issue that your nonprofit encounters.
Type of legal issue. If your nonprofit has engaged a lawyer, that lawyer may be willing to write off phone calls or emails about simple legal issues. The lawyer may even draft a short contract for no charge. However, other legal issues can arise that are more complex and more difficult for a lawyer to provide representation for free of charge. For example, if your nonprofit becomes embroiled in a trademark dispute, the lawyer may be willing to send a pro bono email to the opposing attorney to try to resolve the dispute quickly and easily. But if the quick email doesn’t resolve matters, your lawyer may charge a fee as the dispute becomes more complex, especially if it involves litigation.
Difficulty in choosing pro bono clients. If a lawyer works exclusively with nonprofits, that lawyer can’t work for free for all of its clients; and it wouldn’t be fair to pick and choose among clients as to who gets free services. Rather than picking one or more clients to represent pro bono, the lawyer may instead choose to offer different payment options so that all of the clients can benefit.
It’s a business. A law firm is a business, just as your nonprofit organization is a business, and lawyers need to charge fees in order to be able to provide services to their clients. While most lawyers are willing to do some form of pro bono for nonprofit or other clients in need, they have to limit that type of work so their business can be profitable. Lawyers are much more willing to combine limited pro bono services with alternative fee arrangements so that they can provide low-cost legal services to their clients.
While a lawyer may not be in a position to represent your nonprofit for free in every circumstance, a lawyer may offer to represent your nonprofit in another way.
Reduced fees. Lawyers may be willing to work for reduced fees, especially if it’s for a cause they are close to. If a lawyer’s normal hourly rate is $200, try to negotiate a lower hourly rate of $150 or $100. Many lawyers are willing to reduce their fees when they know their services are going towards a good cause.
Alternative fee arrangements. Lawyers don’t charge solely by the hour anymore, instead sometimes using either a flat-fee model or a hybrid model, which allows them to charge part hourly and part flat-fee. Having a flat fee is beneficial because your nonprofit will know exactly how much it owes up front and won’t be surprised by the bill at the end of the representation. Not all lawyers offer this option, and the ones who do might not offer it for every type of service. The types of services that are usually covered under these arrangements include contract drafting or review, business formation, and trademark registrations.
Limited scope representation. When nonprofits think of engaging a lawyer, they may think of traditional legal representation, which means the lawyer handles every aspect of the case or matter. In limited scope representation, the lawyer will handle only a certain part of the matter. For example, if your nonprofit is filing for 501(c)(3) exemption, its board members could prepare the paperwork and then hire a lawyer for the sole purpose of reviewing the paperwork before filing. This option allows your nonprofit to save on legal fees, while still obtaining the benefit of using a lawyer.
Payment plans. Regardless of the type of fees or representation your nonprofit chooses, it may be possible to negotiate a payment plan. For example, if your lawyer charges a flat fee of $2,000 to form your nonprofit and file for 501(c)(3) exemption, your nonprofit may be able to pay that amount over a few months, rather than all of it up front. The flexibility of a payment plan is beneficial to any nonprofit, but especially to ones that are in their start-up phase.
It may be frustrating that a lawyer won’t represent your nonprofit for free, but it’s important to keep in mind the amount of time a lawyer will be spending on your legal issue, and that a lawyer is also running a business. While a lawyer might not be able to represent your nonprofit for free, it may be possible to work out another arrangement that will allow your nonprofit to gain much needed legal advice at a reasonable price.