Washington Lawyer

Small Business, Big Impact

From Washington Lawyer, June 2011

By Thai Phi Le

berkowitz Walk into the D.C. Bar Pro Bono Program’s Small Business Brief Advice Legal Clinic, and it may seem like a typical pro bono resource center run by the Bar. Long–time attorney volunteer Ed Berkowitz
describes it as a “legal mosh pit.” Lawyers are positioned throughout the room, talking to clients in need of legal advice. Some are clicking away at a computer. Papers are scattered across desks.

But the clinic is unlike other pro bono projects. The problems it addresses and the clients it serves are unique. “You are dealing with entrepreneurs, people who are really trying to do business, people who are trying to get their commercial lives in place,” said Berkowitz, a retired attorney who was formerly in-house counsel for Kastle Systems. “They are not people in trouble. They are people who are trying to really make it.”

While legal assistance for those on the brink of losing their homes or their benefits to continue medical treatments is critical to the District’s underserved community, the small business clinic aims to help the economically disadvantaged in a different way—by spurring the local economy and offering entrepreneurs a chance to make it on their own and generate more jobs.

Creating More Opportunities
The D.C. Bar Pro Bono Program’s Community Economic Development (CED) Project was created in 1999 to make pro bono business law services available to the District’s community–based nonprofit organizations. In the fall of 2006, the CED Project launched its Small Business Initiative in response to a lack of access to legal services to help low-income entrepreneurs interested in bringing small businesses into the District’s poorer neighborhoods.

“In the late 1990s, when the District government was bankrupt, the burden of providing services and job creation in the District’s low-income neighborhoods often fell on the local nonprofits,” said Maureen Thornton Syracuse, executive director of the Pro Bono Program. “We started this project to provide legal help to the nonprofits and startup small businesses that were really trying to make a difference to help accomplish their goals.”

The Pro Bono Program began partnering with community development organizations, including Howard University’s Center for Urban Progress, the Washington Area Community Investment Fund, and the D.C. Department of Small and Local Business Development, that were also invested in supporting and creating small businesses in the District. All were united under the same mission: to create vibrant commercial corridors to build healthy communities throughout the city.

Another top priority of the CED Project was to produce more jobs in areas of the city where unemployment remains well above the national average. According to the D.C. Department of Employment Services, Ward 8 in the District had the highest jobless rate in the United States at 25.2 percent in January 2011, followed closely behind by Ward 7 with 17.1 percent. By bringing in new businesses, residents will have greater opportunities to find work nearby—a critical component for many who depend on public transportation to get to and from work.

“When there’s as much unemployment as there is now, a lot of people say now is the time to just go for it and start up,” said Cyril Crocker, vice president of development for the Menkiti Group. During the past year, Crocker has used resources from the CED Project for his company, a small residential and commercial real estate office in the Brookland neighborhood. “They’re ready to be entrepreneurial, sometimes out of necessity,” he said.

To help potential entrepreneurs navigate the process of starting a new business or patenting an invention, the CED Project offers walk-in legal clinics and business law training programs, in addition to matching small businesses, community–based nonprofits, and low-income tenant associations with pro bono legal counsel.

Business Training
Back in the fall of 2010, Renee Ingram, president and chief executive officer of Diversified Enterprises Group, a startup information technology consulting company, took advantage of the CED Project’s eight-week business law training program.

Despite having both an undergraduate degree in business management and a master’s in finance, Ingram still found the classes extremely useful. “It was great to have a refresher course in terms of understanding some of the nuances in the District of Columbia, in terms of some of the laws here,” she said. “I enjoyed it and recommended it to other individuals who are thinking about starting a new business, or a business that just has been formulated, to get a good grounding on some of the basic concepts of going into business for [themselves].”

The small business classes provide newer, emerging businesses an overview of the basics, including entity choice, employment, real estate, and contracts. Interested particularly in teaming agreements, Ingram was able to have a draft of one reviewed by an attorney at a small business clinic held after the training series she attended to ensure that she had written the contract correctly.

“As a new business, you want to be able to partner with other firms or companies that may have more experience than you do,” said Ingram. “[The attorney] reviewed my teaming agreement and did a thorough job of it. That was a tremendous benefit to me.”

For Crocker, the training sessions helped clarify important business law issues that were critical to his company. “One issue that came up repeatedly was … defining when someone is an employee and when someone is an independent contractor,” said Crocker. The designation is significant when determining whether an organization needs to provide certain benefits.

“That was fascinating to me to really delve into that issue,” said Crocker. “Since we do development, pretty much every contractor we hire is considered an independent contractor. [Afterwards] I felt it was that much more important to make sure that the format and the way we use people was consistent with that [definition].”

By attending the workshops, both Crocker and Ingram discovered another benefit: ample networking opportunities. “You’re there with other people who you know are just as motivated as you are to take that additional training and to learn something. There’s an initial kinship around that,” said Crocker.

Ingram agrees and has developed relationships with other IT firms for potential future partnerships.

Walk–in Clinics
Unlike the structured training program, clients come into the clinic with an array of issues. Should I form a limited liability company or partnership? Which licenses do I need to start a barbershop or nail salon? Can I patent or copyright my idea?

“Very often, they don’t know what their problem is. It’s like going to a doctor and saying, ‘I don’t feel good.’ Somebody has to probe out and come out with a general idea. This is a real estate problem. This is an intellectual property problem. This is a corporate problem,” said Berkowitz.

While the typical questions revolve around basic business needs, occasionally lawyers are confronted with people who have real legal problems. Berkowitz remembers one man who came in with questions about buying a fast food franchise. The person “selling” the franchise told the client to try running the business for a while to make sure he liked doing it.

“It seemed like a perfectly reasonable thing, except this trial period kept going on for literally a matter of months,” said Berkowitz. “This fellow was getting absolutely nothing out of it except running this man’s business for him for free. The whole thing was a nightmare. He had signed all kinds of pieces of paper that he didn’t really know what he signed, and the seller kept waving all these documents at him.” In the end, Berkowitz was able to point him in the right direction and find someone to come in and provide legal assistance to get the client out of the situation.

With an expertise in intellectual property, Brian Bannon, a partner at Blank Rome LLP and regular volunteer at the clinic, often hears cases about possible inventions. “Some have very good ideas, but you have to explain to them that it’s a long and complicated process,” he said. “You have to try to work through the issues with the people to get an understanding if their inventions do rise to a level of novelty and [non-obviousness] that can result in a patent.”

Bannon also walk clients through the process of creating their own business or marketing their products, from obtaining startup capital, to forming the business, to hiring employees. He tries to be realistic with many possible inventors, warning them of the daunting patent application and registration process. “It’s unlikely that an individual without a legal education—for that matter, most lawyers—can undertake it on their own,” he noted.

That is not to say their chances are impossible. The possibility of having that one great idea or building a hugely successful company from the ground up is what the American Dream is made of.

Berkowitz remembers meeting entrepreneur Gene Samburg back in the 1970s at an alumni association meeting for Cornell University. “We just met casually and he said, ‘I want to start a business, but can’t afford a lawyer. Do you know any lawyers who might be able to assist me?’” Berkowitz had just formed his own firm and had zero clients at the time. “We got him started. It was a very unique business,” he recalled. “At the time, electronic office security stuff was unknown in Washington.”

For a year, Samburg worked day in and day out. “I was getting beat up by my partners wondering where the money was. Obviously, [Samburg] didn’t have any,” said Berkowitz. “At the end of the year, he called me up and said, ‘We had a very good year. I know you worked very hard. Send me a bill.’”

Samburg continued paying Berkowitz for the next 30 years. His company was Kastle Systems, a security system that now protects more than 2,000 buildings across the world, or nearly 400 million square feet of office space. Added Berkowitz, “We’re talking about one man.”

As Ingram noted, “Small businesses are the backbone of the economy here in this country.” From a home-based bakery that later opened a small storefront in Mount Pleasant to a flower shop in Anacostia, the CED Project has helped more than 430 businesses attain some of the skills and information they need to venture out on their own.

“Some of them [who walk in the clinic], you know. You can look at them and say, ‘This guy is going to make it. He’s really going to make it,’” said Berkowitz. “He many not become General Motors, but you know he’ll do just fine.”

Reach D.C. Bar staff writer Thai Phi Le at tle@dcbar.org.