Changemaker Legal
Putting ongoing legal counsel & management guidance within reach of changemakers who combat inequity & transform society
Legal Services Needed
But at What Cost?
By Lia Totty, Communications Intern
October 30, 2024
The nonprofit sector has grown by about 28,000 nonprofit organizations each year over the past ten years. Meanwhile, more than five million new businesses are forming annually. It is important for the founders of these new entities to seek legal counsel to excel and stay out of trouble. However, for these founders, navigating the legal and administrative demands of their new projects is expensive. Socioeconomic status plays a huge role in who gets a solid legal foundation and who doesn’t.
According to a Utah Law Review study, almost 90% of the legal matters startups face are “within the categories of general corporate formation, contracts, and non-patent intellectual property.” This study also found that “startups generally had difficulty identifying their most pressing legal needs.” For grassroots nonprofits and small businesses to survive these legal complications, they need an appropriate and compliant governance structure guided by reliable experts as well as instruction on identifying their legal needs.
The importance of access to legal services for these types of entities cannot be overemphasized. But, how much will this legal guidance cost? Many associate attorneys bill over $1,000 an hour, and many law firm partners bill close to $3,000 an hour. While there are big corporations that can pay these fees, grassroots nonprofits and small businesses usually cannot pay that much for help, only to risk getting lost in the shuffle of the many other clients that associates manage. That means, in addition to experiencing severe levels of burnout and rapid employee turnover, grassroots nonprofits and small businesses can’t financially access law firms to support their efforts. While many pro bono legal service providers assist with individuals’ legal matters—benefit claims, housing matters, and civil rights matters, for example—few other legal services providers assist such individuals to grow wealth and resources for themselves and other low-income people through the creation of grassroots nonprofits and small businesses. There’s a real need for legal support, but up until now, few organizations have helped grassroots nonprofits and small businesses in this way.
As a new designer of sustainable fashion myself, I had to bootstrap my business, starting in 2022 when I asked family members for $100 each person to help fund my $500 business registration. I thought I then needed to pay another $300 worth of registered agent fees each year. I had paid for my college tuition myself and did not have the funds for even these initial expenses, not to mention the legal support I also needed. Furthermore, I realized through this experience, that registering a business is a complicated process wherein one needs significant familiarity with legal concepts such as the concept of a registered agent. It is easy for people without a legal background to fall into cost traps causing expenditures at a steep cost. If I had had an attorney to assist me in navigating the registration process, I would have been able to avoid the loss of funds that could have been used elsewhere.
For me as a black female without access to family wealth, starting a business had long been a goal and tool for creating income for myself and my family in the long term. There are many others like me. According to the Harvard Business Review, “In the U.S., 17% of Black women are in the process of starting or running a new business, compared with 10% of white women and 15% of white men.” However, black female founders only receive about 0.34% of the total venture capital funds distributed in the U.S.
That’s why Changemaker Legal exists today. Our goal is to bridge gaps by giving grassroots nonprofits and small businesses a fair chance with access to reliable, ongoing, and specialized legal guidance. While some law firms may believe dissolving is nearly inevitable for fledgling nonprofits and small businesses created by minority and low-income individuals, we believe that, with our expertise, any changemaker can overcome the many legal challenges that could arise. To inquire about the legal services offered by Changemaker Legal and learn how you can be a part of our movement to put ongoing legal counsel and management guidance within reach of changemakers who combat inequity and transform society, please contact us at info@changemakerlegal.org and follow us on Instagram.com @changemakerlegal.
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Internal Revenue Service, SOI Tax Stats - Tax-exempt organizations and nonexempt charitable trusts - IRS Data Book Table 14 (Aug. 19, 2024), https://www.irs.gov/statistics/soi-tax-stats-tax-exempt-organizations-and-nonexempt-charitable-trusts-irs-data-book-table-14.
U.S. Chamber of Commerce, Map: New Business Applications Surge Across the Country (Feb. 2, 2024),
https://www.uschamber.com/small-business/new-business-applications-a-state-by-state-view?state=.
Utah Law Review, Startups and Unmet Legal Needs (Jul. 11, 2015), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2628900.
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The American Lawyer, Senior Partners Approach $3,000 an Hour, As More Billing Rate Hikes Expected in 2025 (Sep. 24, 2024), https://www.law.com/americanlawyer/2024/09/24/senior-partners-approach-3000-an-hour-as-more-billing-rate-hikes-expected-in-2025/?slreturn=20241029153052.
Harvard Business Review, Black Women Are More Likely to Start a Business than White Men (May 11, 2021),
https://hbr.org/2021/05/black-women-are-more-likely-to-start-a-business-than-white-men.
Cruchbase News, Black Women Still Receive Just a Tiny Fraction of VC Funding Despite 5-Year High (Jul. 16, 2021), https://news.crunchbase.com/diversity/something-ventured-black-women-founders/.