The Nonprofit FAQ

You need to be clear why you want a lawyer. Is it to ascertain your rights as part of the group? To seek legal solution to a problem? Or to start your own group?

There are probably no complete listings of pro bono lawyers in a particular state. There may be pro bono lawyers who have aligned themselves to do certain types of cases with local legal services programs for the low-income community. There may be pro bono lawyers that are affiliated with the local Bar Association, depending on a state's court rules.

Some State Bar Associations have attorney resources and other assistance at their web site.

If you do not know an attorney there are several other places to seek some out. The first preference is to find an attorney who has experience and interest in tax exempt law and nonprofits. The more the attorney shares the same dedication to your mission as you do, the greater the chance she/he may agree to pro bono or low-fee work. The second choice is to find either an experienced and interested corporate lawyer or a tax lawyer. Again the more shared thoughts about the mission may increase the probability for pro bono or low-fee work. The last choice is a lawyer with interest in your mission and endeavor who will put in the necessary time to learn the law and to advise you appropriately.

If you are looking to form a new nonprofit organization you want an attorney who will process the papers with all due haste and timeliness. Working with an attorney in the formation of a nonprofit organization requires careful thought. How much work do you expect? Do you want the attorney to prepare the incorporation papers for the state? Do you want the attorney to prepare the bylaws and work with the board on responsibilities and authority? Do you want the attorney to work with the board on other policies and procedures necessary to operate a nonprofit with accountability? Do you want the attorney to prepare with the board IRS Form 1023? Each of these acts take significant time. There needs to be a clear understanding who is doing what and when and to what extent.

If you do not know any attorney to help you there are several steps you can take to find one locally. You can use all of those listed here or any variations. Check the Yellow Pages of your telephone book under "Lawyers." Read the ads. Check the section where there is a listing or grouping by type of law. Select several possible candidates. Ask around in the community about them in the context of your needs. Call some nonprofits or the United Way for names of attorneys known to help nonprofits. Check the Internet. Contact the state university to see if there is a state coop branch near you. Under all these scenarios, be sure to seek all the information you can about the lawyer(s) including Googling them.

Call the local Lawyers Referral Service (LRS) listed by that name in the Yellow Pages. Generally the LRS has a listing of lawyers by type of law they practice. The lawyers usually select the listing themselves as areas of law they handle or are interested in. It does not set expertise. The LRS will give you one or more names of attorneys signed up for tax-exempt, nonprofit, and corporate or tax law. The normal process is that you can have a half-hour free consultation with an attorney about what you want. The LRS will charge a
referral fee that is either paid to the LRS directly or to the attorney who sends it to the LRS. Get a receipt. The fee is usually $15-25. Ask the LRS receptionist if the LRS requires the member attorneys to have malpractice insurance and if they must report any ethical or malpractice claims to the LRS. If the LRS requires these, it is helpful for you to know that. It is still advisable to ask around about the lawyer you will have referred to you. Check with the state bar to see if there are any public disciplinary decisions against the attorney.

The National Council of Nonprofits (NCN) may have an affiliate in your State. Offices are listed at http://www.councilofnonprofits.org/. Your State office may be able to assist you in locating an attorney. There are also lists of state-level resources in this Nonprofit FAQ; see 'State and Local Organizations' at http://www.idealist.org/en/faqcat/21-74

There is an outside possibility you can secure a pro bono attorney. "Pro bono" means for the public good, at no cost. Many attorneys provide pro bono work but not always for nonprofits. If your group will be providing service to a low-income community, call the local legal services program, sometimes also called legal aid. Many legal services programs and sometimes the LRS will have a pro bono program. If your group qualifies and there is an attorney familiar with tax exempt law on the panel, you may have a free attorney.

You can find the name of the legal services program near you through http://www.rin.lsc.gov/rinboard/rguide/pdir1.htm. If there is a law school in your community, it may have a community law clinic or a professor who is interested in the same issues you are and who may help.

Some attorneys have a low-fee plan that is between pro bono and the usual fee - ask if there is one.

When you set a meeting with an attorney plan your meeting with the attorney. Do your homework. Prepare questions. What is her/his experience, will there be a retainer agreement or letter of scope of service with deadlines? Verify the lawyer has malpractice insurance. Assess the lawyer. I recommend two people from your group go so that after the meeting you can talk about whether this is the lawyer for your project.

See http://www.lawyers.com/, "Twelve Questions to Ask Your Lawyer" and other material, for some helpful discussion about hiring a lawyer. Click on "Get Legal Tips" and see the articles there and the link to the 12 questions. Find out about the retainer agreement and/or letter of scope of service - they are important for details about what the ultimate product will be, and if not pro bono, what you are paying for.

The difficulty may occur in access to the pro bono lawyer. When you pay for time, access can be better, but you pay for each contact. When the service is free access may be less. My experience is that most pro bono attorneys do an excellent job, develop a retainer agreement or a letter describing the scope of service with time deadlines and provide other helpful advice. Your group will still be responsible for all filing fees with the state and the IRS.

If you are going to incorporate, realize, however, you are probably going to pay for legal assistance. In that case, at the first meeting ask about the costs for the attorney time. Associates and paralegals bill at a lower rate; ask about their role. Will charges be by the hour or for the project, such as one fee for getting the State incorporation processes completed, another for the bylaws and then another charge for the IRS designation? Will there be a retainer agreement or letter of scope of service with deadlines and a payment plan?

You may secure a pro bono attorney but you have to be prepared in case you do not succeed. The cost of filing all the legal papers with the State and the IRS along with paying an attorney can rise quickly. Planning early on for these initial costs is part of developing a business plan.