The unique struggles of non-profit law practice

Although similar to their for-profit counterparts, non-profit lawyers encounter interesting challenges

Over the years, I’ve concluded that there is not a non-profit way to practice law. We in-house lawyers for non-profits do all the things other in-house counsel do. But, while they might have to deal with the Securities and Exchange Commission, we spend time with the Internal Revenue Service (IRS). And our corporate cultures tend to be different because profit is not our motive. Otherwise, we have pretty much the same roles in our respective organizations. 

But lately, I’ve been wondering whether our organizations think about us in the same way the for-profits think about their lawyers. Businesses tend to put a dollar value on everything, which means they won’t spend money on lawyers unless the expense aids the bottom line. If there is an in-house counsel, it is only because having one is less expensive than not. Outside counsel are brought in, or not, on the same basis. In other words, the lawyers are paid for because they are seen as necessary to the success of the business.

That isn’t how many non-profits view lawyers. Some of them see lawyers as too expensive, or as making things unnecessarily complicated. Some non-profits would rather act without legal counsel or try to get by with the advice of a less expensive professional—an accountant, perhaps. Even when the need for a lawyer is acknowledged, some executives will go to great lengths to get free advice from the family solicitor or from an attorney who serves on the organization’s board. If those things happen, lawyers are clearly not sufficiently valued as contributing to the organization’s mission.

I don’t want to paint with too broad a brush, but I must be onto something because another non-profit lawyer, Morgen Cheshire of Philadelphia, made the same point in a recent interview in the EO Tax Journal. In describing her still-new solo practice, she said, “I hope to change the way that non-profits think about and use legal counsel—and train [them] to become better consumers of legal services.” She noted that the tax-exempt sector is as highly specialized as any other field of law and that it is facing more regulation. That alone, she argues, should persuade non-profits to stop the old practice of “relying on legal counsel on their board[s] to spot issues,” which she says has led to “trouble for more than a few” organizations.

Cheshire, who clerked for a federal judge before spending time at a big national law firm, made the obvious (at least to me) point that lawyers “wear a different hat” when they walk into the boardroom as directors. For one thing, they have very specific fiduciary duties as board members that do not always sit easily side by side with the rules of professional conduct for lawyers. In addition to conflict of interest problems that could arise, it is the rare lawyer on a charitable board who also is expert in non-profit and tax-exemption issues. You might get a cheap lawyer, but at what cost?

Cheshire also expressed “amazement” at “the number of organizations that have zero legal expenses listed on their IRS Form 990s.” She thought it troubling that at a time of much closer scrutiny of nonprofits, many don’t have a budget for good legal advice. Obviously, it is in her interest as a solo practitioner for such budgets to exist, but her point is well taken regardless. I can’t disagree with her that “our work as [exempt organization] lawyers is to make our value known.”

Unfortunately for us, it is the very nature of a non-profit company that prevents the lawyer from pointing to the quarterly spreadsheet and saying, “See? This is where I helped us succeed.” Our successes tend to be the bad things that didn’t happen, but bragging about that doesn’t make much of an impression come budget time. That’s why I tend to drop comments about how I kept the CEO out of jail this year. Seems to work.

Bruce D. Collins is corporate vice president and general counsel of C-SPAN, based in Washington, D.C. Email him at collins@c-span.org.

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Bruce D. Collins

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