Social Purpose Corporations: Making money and making the world a better place

Entrepreneurs are interested in both making money and making the world a better place. Social Purpose Corporations provide an opportunity for a company to go beyond aspirations of doing good and actually define a social purpose in its WP_20140731_001articles of incorporation. Last summer, I discussed the dozen-plus business entity choices available in Washington when I blogged about our state’s recently implemented business entity conversion law. The subject-matter of the post – the wide range of business entity options in Washington – only provided for a brief mention of Social Purpose Corporations, but they deserve more attention than that. Social Purpose Corporations are an exciting addition to our state’s business community, exciting enough to deserve an entire post.

What is a Social Purpose Corporation? Social Purpose Corporations are for-profit businesses, subject to the same legal requirements as any other corporation registered in Washington State. However, Social Purpose Corporations must also declare a “social purpose” – defined in the statute as promoting the positive effects of or minimizing the adverse effects of the corporation’s activities on 1) its employees, suppliers, or customers; 2) the community; or 3) the environment.

Social Purpose Corporations are also required by law to produce annual social purpose reports that are to be furnished to shareholders and made publically available on the corporation’s website. These social purpose reports must include a narrative discussion the corporation’s social purpose and describe the corporation’s efforts to promote this social purpose. The report may also discuss 1) the corporation’s objectives related to its social purpose; 2) the material actions taken by the corporation to achieve its social purpose; 3) actions the corporation expects to take in the future to achieve this social purpose; and 4) the financial, operating, and other measures used by the corporation to evaluate its performance in achieving its social purpose.

Social Purpose Corporations are a relatively recent development in our state, becoming available as a business entity choice in Washington in June 2012. A little more than two years later, there are now 97 active social purpose corporations registered in the state, according to a recent search on the Secretary of State’s website.

For some corporations, giving back to the community is a longstanding tradition and an integral part of their corporate identity. How is a Social Purpose Corporation different from a “regular” corporation with a social conscience? In a nutshell, the shareholders and directors of a Social Purpose Corporation have the ability to take the social purpose of the corporation into consideration when making a decision, even if the ultimate decision will benefit the social purpose but not the overall bottom-line.

Social Purpose Corporations are distinguishable from Nonprofit Corporations, as well as Benefit Corporations, which exist in several other states. Unlike Nonprofit Corporations, Social Purpose Corporations are taxable entities organized to make a profit. And, unlike Benefit Corporations, shareholders of Social Purpose Corporations do not have a separate right of action against the corporation, its directors or its officers for failure to pursue its social purpose.

Is a Social Purpose Corporation an appropriate business entity choice for your company? For entrepreneurs who want to emphasize giving back to the community even, on occasion, at the expense of enhancing profitability, this entity choice may garner serious consideration.

The Virtual Truth: Four Tips for Creating and Maintaining an Efficient and Productive Virtual Law Firm Team

Reprinted from the GPSOLO eReport, American Bar Association, Vol. 3, No. 10, by Stacey Romberg.

This article is the third of four installments, designed to provide insight into operating a virtual law firm.

  • What unique issues should a virtual law firm expect to address in meeting its staffing needs?

  • How can remote staff most effectively communicate as a team?

Since opening my virtual law firm in 1999, I’ve found that, more than any other component of running a small business, developing an effective virtual team has proved challenging. After many mistakes and hard-learned lessons, along with some sleepless nights and occasional painful dramas, my current remote team consistently achieves high marks. Each person fulfills a defined function on our team and contributes positively to the team’s collaboration, work flow, and perhaps most importantly, strong sense of collegiality and commitment despite the lack of daily in-person communication.

My remote team currently consists of an office administrator, administrative assistant, paralegal, and two of counsel attorneys. I am the only full-time member of the team (and, as anyone who manages a small law firm knows, the term “full-time” generally extends well beyond a standard 40-hour work week!). My office administrator and administrative assistant job share one full-time administrative position. My paralegal and one of counsel attorney work half time, and the second of counsel attorney works one quarter time. Each member of my team chooses her own unique work schedule based on her individual life circumstances, including additional work commitments, family commitments, personal interests, and time spent giving back to the community. Although previously I’ve had male team members and worked with team members from out-of-state, my current team is all female and local to the Seattle area.

Tip #1: Recognize the Uniqueness of the Virtual Model

To illustrate the nuances of staffing a virtual business, let me present two imaginary workers: Joe Average and Vanda Virtual.

Joe Average, a worker in a brick-and-mortar law firm, typically arrives at his nine-to-five job each Monday morning wearing an appropriate business-casual outfit. Joe greets the receptionist, several attorneys, and his secretary on his way to the break room to pour his daily cup of coffee. They exchange humorous stories about their weekend activities, and also discuss several significant work issues that they’ll be facing over the coming week. During the day, Joe personally interacts with his coworkers numerous times on both a personal and professional level, including attending several in-person meetings and enjoying lunch with a colleague. He leaves his office at approximately five o’clock, dreading his one-hour commute but looking forward to dinner with his family and a good night’s rest.

Vanda Virtual, a worker in a virtual law office, enjoys her work and loves her second job as the lead singer for the Seattle band Meat Market Surfers. She spends about 20 hours a week with the band including rehearsals, road trips, and late-night gigs. Each Monday morning, Vanda usually wakes up at about 10 a.m. She eats breakfast, exercises, showers, and then by 1 p.m. is ready to go to work. Wearing ripped jeans and a gray T-shirt, Vanda opens the door to the spare bedroom that serves as her office, and settles in for a six-hour workday. By 7 p.m., Vanda needs to sign off so she can make it to the band’s evening rehearsal.

In all likelihood, if Joe Average worked in a virtual environment, he would feel isolated and miss the daily routine and personal interaction with his colleagues. And, in all probability, if Vanda Virtual worked in a traditional brick-and-mortar job, she would feel confined due to her long commute, set hours, professional dress requirements, and the fact that her lifestyle significantly contrasts with that of her coworkers.

Of course, in real life, the lines between Joe Average and Vanda Virtual tend to be blurred and often difficult to discern. In order to develop an effective virtual team, you need to recognize that a virtual workplace contrasts dramatically with a brick-and-mortar office. Many candidates who may seem ideal on paper will simply wither and die in a virtual environment. Others will blossom. As a law firm owner, in addition to spending the time to ensure that potential team members possess the requisite skill sets, you need to spend an equal amount of time determining, to the best of your ability, whether the applicant can successfully transition to and thrive within a virtual environment.

Tip #2: Make the Talent Pool Work in Your Favor

The second of counsel attorney to join my team, Sherry Bosse Lueders, boasts a highly competitive resume including having attended superior schools, earned top grades, and successfully completed her clerkship with a highly respected King County Superior Court judge. Sherry participates significantly in various bar groups and stands committed to providing pro bono services. Sherry also enjoys her role as parent of her two-year-old son and found that the strenuous billable requirements and the need for physical presence (a.k.a. “face time”) imposed by most Seattle brick-and-mortar law firms stifled her ability to fully engage as a parent. Recognizing the dearth of part-time law jobs in Seattle, Sherry took the initiative of starting her own law firm and spent a year gaining additional legal skills and business acumen prior to becoming a part of my team.

Every member of my team offers a different version of the same story. Each is a highly talented and attractive candidate—the type of person that most brick-and-mortar law firms would covet. However, for various reasons, including but not limited to parenting responsibilities, each team member thrives best in a virtual environment because of the opportunities afforded to achieve professional success while realizing other meaningful personal goals. By allowing people to work virtually, and according them flexibility in choosing a part-time work schedule, a virtual law firm often has its pick of the region’s top talents.

Tip #3: Create Communication Structures

Once your virtual team is in place, how does it become a “team”? Because by definition you will not personally meet with them on a daily basis to discuss work, you will need to establish communication structures that will enable your team to collaborate effectively within a virtual environment. My office has established the following channels of communication:

  • Each day, when either of my of counsel attorneys begins her work, we briefly communicate via Time Matters Messenger, an instant chat tool, about the day’s work priorities.
  • Each Monday afternoon, the three attorneys in my office participate in a half-hour teleconference to discuss the client files.
  • Each Wednesday morning, I personally meet with the office administrator for a 15-minute “exchange.” We briefly discuss the upcoming needs of the office, and then she brings documents for my signature, picks up various items that need to be mailed, scanned in, sorted out, etc.
  • Each Friday, I send out a team email outlining the week’s successes and opportunities for improvement. The email also informs the team of various deadlines for the following week. This weekly email keeps my team informed, in a holistic sense, about firm activities.
  • Each quarter, I speak with each team member individually, either in person or by telephone, to provide feedback on work performance and to listen to their perspectives regarding workload, schedules, and ideas for enhancing the firm as well as their own sense of professional fulfillment.

Tip #4: Promote In-Person Team Building

Because my team members all reside in the Seattle area, we meet as a group several times a year to personally connect and share a meal. In addition, I truly appreciate having my team members and their spouses attend the annual auction for the nonprofit Tennis Outreach Programs in support of my work on its board of directors. These in-person activities create a sense of camaraderie and trust, and help us to work together positively and collaboratively.

In creating and maintaining a virtual office team, you should expect to work a little harder and apply much more creativity than you would in setting up an office staff for a brick-and-mortar law firm, but you can also expect to reap the rewards of cherry-picking highly talented workers and seeing those individuals thrive within the flexibility and independence offered by your firm.

LexisNexis – Legal Tech Briefs: Virtues of Virtual Law with Stacey L. Romberg

After a decade in the industry, including a stint writing legislation for the U.S. Senate, Stacey L. Romberg made the leap – she hung out a shingle and opened her own law firm. By measure of her legal services – a split between business law and estate planning & probate – it might be easy to miss one important distinction that sets her firms apart from many others: Stacey L Romberg, Attorney at Law, is a virtual law firm.

Ms. Romberg employs two attorneys on an “of counsel” basis, one paralegal, and an office manager. She recently wrote about her experiences in the first two pieces, of a four-part series, in the ABA’s GPSolo eReport.

In her article, The Virtual Truth: Seven Factors to Consider Before Opening a Virtual Law Practice, she wrote:

As I write this, I am sitting in my virtual law office—more specifically, a spare bedroom in my townhouse that has been converted into an office. My attire, admittedly, is quite casual: black running tights paired with a T-shirt. Tonight, I’m attending the annual Washington Women Lawyers dinner in downtown Seattle. I’ll need to change clothes at some point, but for now I’m quite comfortable. My cat, Roger, snoozes contentedly downstairs on the sofa. The tea kettle simmers in the kitchen. And, consistent with the stereotype of a home office, the washing machine spins away while I work.

We invited her to a Google+ Hangout to share a little more about her experiences, observations and suggestions for other attorneys considering a virtual law firm. The entire broadcast is embedded nearby, runs about 15 minutes and a summary (paraphrase) is presented below.

What is a virtual law firm and what’s the case for going virtual?

A virtual law firm is when attorneys work outside the traditional brick and mortar environment – for example, working from home, a coffee shop or anywhere except a central law office. Ms. Romberg makes a strong case for virtual firms in cost, time management and work-life balance.  She is especially passionate about the environmental friendliness of practicing virtual law, given the paperless characteristics of a virtual office and the reduction in carbon footprints from avoiding a daily commute.

What are the disadvantages to a virtual law firm?

Ms. Romberg sees two primary disadvantages in creating a virtual law firm.  First, there is an increase in technology expenditures, and second, concerns over professional isolation.  Technology costs are arguably offset by reduction in overhead from managing a physical office; the work around for isolation is to getting out to professional events.  Ms. Romberg notes however, such an arrangement isn’t ideal for those people who thrive on the collaboration of a physical office, so it’s important to conduct an honest personal assessment.

Can a brick and mortar firm transition to a virtual firm?

A traditional brick and mortar law firm can transform itself to a virtual business – there are three prerequisites for making it happen:

  1. Paperless. A firm must be generally paperless and a traditional firm with a history of paper should consider a plan for scanning files it intends to keep.
  2. Case management. A firm must have case management software to operate virtually.
  3. Firm personalities. Will other attorneys in the firm be on board?  Will they have a comfortable place to work in a virtual law firm? Some prefer the office environment, so it important to conduct an assessment before charting this path.

What are the differences in terms of technology between a virtual and physical law firm?

Perhaps the single most important factor is to have a plan for how attorneys and staff will perform their work.  Ms. Romberg’s firm started on a server-based system and later transitioned to a “headless workstation.”  She keeps small computers – just the boxes without screens – (headless workstations) in a closet that are configured with all the software and tools her staff needs.  Her staff can log into these stations from their home office.  She’s careful to point out virtual firms must be sure to create – and stick to – a technology budget to manage the firm’s IT needs.

As a LexisNexis Time Matters customer, what tips would you offer to other customers for getting the most out of the software?

Time Matters serves as the platform for running Ms. Romberg’s virtual law firm.  It provides office calendaring, digital client files and is the time and billing system.  It also serves as a means for collaboration – she and her staff communicate through the “to-do” lists and messaging services within the platform.  Often she observes independent attorneys put off investing in a comprehensive system for running a law firm because of the cost.  However, she notices that firms end up purchasing five or six different programs, to solve different business problems, which cumulatively add up to the same cost.  Her advice is that technology for law needs to be implemented in a cohesive, rather than piecemeal, fashion.

* * *

Many thanks to Ms. Romberg for taking a few moments with us and answering a few questions; connect with her on Twitter or Google+.  Her second article in a series on virtual law for GPSolo is linked above; her first article can be found here:  The Virtual Truth: Taking on Technology.

Reprinted from LexisNexis Business of Law Blog