Good Counsel: Free Legal Help for Small Businesses
Todd Price: Welcome to Short Talks from The Hill, a research and economic impact podcast of the University of Arkansas. My name is Todd Price.
Building a business is not easy. Entrepreneurs pour their time and resources into making a fledgling business a success, and sometimes they must cut corners. Too often, they skimp on legal services, which can lead to bigger problems as their business grows.
The Entrepreneurial Law Project, here at the University of Arkansas, aims to help small businesses across the state with their legal needs. The program, a joint project of the School of Law and our Office of Entrepreneurship and Innovation, holds free legal checkups here in Fayetteville, at locations across the state and online. At the pro bono checkups, law students and volunteer lawyers help small businesses understand their legal needs.
Rachel Sullivant, managing director of the Entrepreneurial Law Project, and law professor Will Foster join us today on Short Talks to discuss the program.
Rachel Sullivant, Will Foster, welcome to Short Talks.
Rachel Sullivant: Thank you for having us today.
Will Foster: Glad to be here.
TP: Rachel, the Entrepreneurial Law Project grew out of a study on Arkansas’s legal ecosystem for entrepreneurs that you did while in law school. How did you first get interested in the legal needs of entrepreneurs?
RS: I worked in entrepreneurship and entrepreneurial ecosystem building prior to law school and actually worked for the Office of Entrepreneurship and Innovation while in law school. And I have always been interested in that intersection of entrepreneurship and law. From my work in the community with entrepreneurs, I knew anecdotally that there were pain points for legal support for entrepreneurs. I interned with the Northwest Arkansas Counsel while in law school and did a deep dive and decided to put data, or research, behind these things that those of us who work in this space know, at least from stories and interacting with founders. Hoping to quantify that.
Through that, it really proved what we had assumed. Eighty-five percent of the entrepreneurs that we talked to said that they didn’t hire legal counsel at some point or another because of cost. Many people said, I don’t even know when to talk to an attorney. A lot of people also said that they don’t even know how to connect with our legal ecosystem or our legal industry, because it feels intimidating.
So it was really from that initial research that this project was born.
TP: One of the things you found in your study was that there just aren’t enough lawyers who specialize in helping small businesses. Will, is that typical in the United States? Or is that an Arkansas problem?
WF: It’s both. I mean, it’s common, throughout the United States, particularly states with large rural areas like we have in Arkansas. You’ll see, obviously, in Northwest Arkansas and in Little Rock that there are plenty of lawyers who regularly help small business owners with basic business formation, with funding, with the ownership structures and all of those things.
But it is a challenge for those who are outside of Northwest Arkansas and Little Rock. Affordability is still an issue in those areas where you do have plenty of practitioners for the reasons that Rachel identified. This is not a problem that’s unique to Arkansas, but we are trying to do some limited measures here to try to bridge that gap.
TP: What happens to small businesses when they don’t get the legal services they need?
WF: More and more, you’re definitely seeing self-help, where folks will go to the internet, they’ll throw it into ChatGPT or they’ll try to find a form online to put together a basic structure, or if they’ve got an organization, a business entity, to try to work out some kind of an agreement—maybe they’re giving someone some share of the entity or services or something like that.
And frankly, it gets messy when people do this on their own. Maybe they’re just responding to the bank, who has said, “We’ll set up banking services for you, but we need an operating agreement.” And so someone tries to put it together themselves. We’re dealing with entrepreneurs. We’re dealing with self-starters. We’re dealing with people who want to figure this stuff out on their own.
So it’s natural that their inclination is to try to figure it out and put something together.
TP: Will, you talked about situations where small businesses are required to set up some sort of legal structure? Maybe the bank is demanding it. But Rachel, I’m curious, in your study how often did you find that businesses need some legal services but aren’t even aware of that, don’t even understand what their needs are and why they need to consult an attorney?
RS: Very frequently that is the case, and we see that not just in the study but in our operations now at the Entrepreneurial Law project and our checkups. We have people who come in and frequently don’t know what they don’t know. I think the great thing—or the benefit—of what we’re providing is it’s a space where they can come and say, “Here’s what I’m working on, here’s what I’m doing.”
And an attorney can then say, “Okay, based off of what I’m hearing, here are some issues that you may not be aware of. And here’s how you should prioritize those issues. Here’s what you should tackle first.”
TP: Let’s talk about the history of the Entrepreneurial Law project and these checkups. How did the two of you come together with this idea and decide to launch these?
WF: This was definitely Rachel’s idea when she was in law school, and she was doing this study and identified this prevalent need for small business owners. And we had this idea of maybe we can ourselves reach out to lawyers in the area. I had practiced law here. We’ve got lots of classmates and former students and friends that practice law in this area. We said, “Well, let’s try a one-day program where we recruit some volunteer lawyers and volunteer law students.”
Rachel used her organizational skills, and I used my Rolodex, and we got some folks there to give a trial run. And that was 2023.
TP: What was the first checkup like? Where did you have it? Who came in? What was that first experience like?
RS: Our first checkup was in March 2023. We had at the Brewer Family Entrepreneurship Hub here in Fayetteville. We had over 20 entrepreneurs who registered for the event. We had probably 16 attorneys who came in and had one-on-one sessions with folks. We had some educational content that we shared. It was really well received.
We consider that our prototype event. We had law students who were involved and got to sit in on those consults that were happening, and we realized that’s a huge benefit for a law student—just to see what those initial consults look like and how attorneys are advising their clients. And from that prototype, we begin to ideate what this could look like if it were fleshed out.
It was then written into a grant and is now funded for the next year and a half through a grant between the Economic Development Administration and the State of Arkansas.
TP: Talk about the businesses that you see at these checkups. Are these startups? Are they tech or are they low-tech? What are you seeing?
RS: We see all sorts of things. We see startups that are coming from the university. These can be student startups. Some of them are high tech, high growth. We see a lot of small businesses—people starting food trucks or starting small restaurant here in downtown Fayetteville. We see a lot of outdoor recreation companies coming through as well. There’s not a specific type of business, but we see a lot.
TP: Take me through this. When a business comes in to the checkup, they sit down with an attorney. How does that conversation go? What does the attorney ask? What do they want to find out? What’s that like?
WF: The first thing that we do is before someone comes into one of the checkups at the library, we’ll have them fill out just a little bit of information. And that helps us understand, is this someone that one of the three of us, Rachel, Michael [Cummings] or myself, could work with and get them where they need to be?
Or is there something flagged in their initial questionnaire that makes us think, okay, we should go recruit someone in that area. If we’ve got someone who needs intellectual property consultation, if we’ve got someone who’s got an employment law question, there are folks in our network who focus on those areas that we can bring in.
And we’ve been very lucky to have a group of lawyers who are excited to get involved, who are happy to donate their time for these brief consultations. And, you know, there’s no substitute for an attorney who’s been doing this particular area of law for 20-plus years.
You asked what kinds of issues folks have when they come in. What does that look like? Well, after we’ve done some initial screening and pairing, then we sit down with someone. And first, this is probably their first experience with a lawyer. So we’ll ask them about something that’s pretty comfortable. You know, tell us a little bit about your business. Tell us about who’s involved. Tell us who owns it. What kind of people are working there. What do you want to do now? What are you doing now? What do you want to do in the future? What are your plans?
Those questions are pretty easy to answer, even if you don’t have a legal background. And that gives us information that we can take and direct the conversation to the more specific legal questions that we might have.
TP: And what do you mean by legal entity?
WF: A lot of people will come in and they may just be operating with a bank account. They try to keep their costs separate for this business from non-business costs. But for a lot of folks, they might need a limited liability company, an LLC. Every once in a while, we’ll set up an S-corporation or a different type of legal entity. Those are oftentimes really important for someone who’s operating a business, who is selling something to the public, who is providing services. You want to keep separate your business, the costs and revenue. You want to keep separate your business assets from your personal assets.
So, if something doesn’t go well—and a lot of small businesses, you know, it’s going to be trial and error, they don’t always work out. You want, to the extent you can, protect your personal assets from the assets and operations of the business, the liabilities and expenditures of the business. One thing we can do to help people do that is to set up a simple business entity like a limited liability company.
TP: And these checkups are, what, typically an hour that the business sits down with an attorney. Right?
RS: 30 minutes.
TP: 30 minutes. Okay. Not even an hour. What can you accomplish in 30 minutes? What can you actually do for a business?
RS: We can answer specific questions that they share with us beforehand. We have a registration process that companies can upload documents to. They can put in specific questions that they have during the 30 minutes. The attorney can really dive deeper with the client on a particular question. Oftentimes, though, it can be uncovered that that’s not even the question that they should be focusing on.
So in that time frame, typically an attorney can help them figure out what are the right questions they should be focusing on or what they’re not prioritization of what their issues are. What they should be focusing on legally. If they upload documents before the session, we can typically review of those documents and walk through with the client in the session whether there are changes that need to be made to particular documents. Or if we have a particular form that we think may be better suited for them, we can provide that to them in the session.
We also have a library of forms. I should mention in those sessions, they’re brief, 30 minutes, but an attorney can provide an entrepreneur a single-member operating agreement and say, “Here’s what this means. Here’s how you would complete this yourself,” and then go from there.
TP: You’re doing these checkups here in Fayetteville, across the state and you’re doing them online. But obviously, they are somewhat limited. There’s only so many businesses you can get to in each of these. What are some other ways that the two of you are looking at expanding legal services to small businesses across the state?
WF: There is definitely the need to reach people who can’t show up in person in Fayetteville, or Little Rock or, you know, Morrilton, on the particular dates that we’re going to be there. We have, over the last year, started developing some online content. We’ve started working with volunteer attorneys who are experts in state and local taxes, in intellectual property and in employment law.
They’re recording very short videos that help small business owners understand the legal aspects of starting that business, funding the business, the legal aspects of that. That’s one of the areas that we’re addressing.
RS: We’re also increasing the frequency of our checkups. For example, we’re now offering checkups over the summer. There are ways that we can grow by increasing our volunteer attorney network. We have more volunteers who work with us, so we can have more time slots available for folks to hop on a call or come in person to meet with an attorney.
TP: Earlier, Will, you talked about how this issue of a lack of enough lawyers for businesses is common to a lot of states with rural areas. Is there something the University of Arkansas Law School can do to train more attorneys, to get more attorneys out there into the state to help these businesses?
WF: That’s a great question. I mean, we certainly are one part of a larger program at the law school. Professor Peter Norman has a clinic, the Community and Rural Enterprise Development Clinic, that trains students in a longer, full semester situation where they dive deep into an issue. They have a full representation of a client that may have a more robust legal issue that also serves as good training for the students. Professor Norman is certainly turning out some very qualified new attorneys who have gone through the clinic.
We have students sit in on every session that we have between a lawyer and an entrepreneur. Oftentimes, if there is a follow-up project and we’ve got a client who does not have the resources to hire an attorney, we will sometimes do a follow-up project for them.
We may draft a waiver or a simple operating agreement or modify a document that they brought to us. And what’s really fun is we’ve got a second- or third-year law student who’s got some experience, and we let them take the first crack at the draft. We’ll review it, or the supervising attorney will review it, make some modifications, and then there’s a real back and forth. The perfect situation is when then the law student can then take the lead in the conversation with the client when they return.
So these are all things that we’re doing to at least get students some exposure to this area, to give them the skills and the confidence to work with small business owners who can present a lot of different issues. And, as we’ve said throughout the conversation, even for those of us who’ve worked with small business owners for 15 or 20 years, there are things outside of our comfort zone, and we’ve got to call other people. Getting law students or early professionals to understand that, yeah, you might need to call someone else and make a referral out or get some advice on something that’s outside of your area. But that doesn’t mean you shouldn’t work with small business owners at all.
I do think that there is a lot that we can do as a land grant, as a flagship state university, to promote lawyers in rural areas. There are other schools, Washburn in Kansas does a great job of both supporting and getting students out into more rural areas, doing clinics, doing small programs in those areas, connecting them with the business leaders and other legal professions and the professionals in that area.
I think it would be a wise investment of university time and money to support more scholarships for people that intend to go back to these areas, people that make a commitment to get back to those areas. Some schools even have loan forgiveness programs that are tied to working in rural areas. So there’s lots of ways that you could do that.
But I think a simple thing that we are trying to be a part of is making sure that students at least have some exposure to these areas and understand what the opportunities are in rural parts of the state.
TP: Normally we think about pro bono legal services as something for people who can’t afford a lawyer, or maybe to support a charitable cause. Here you’re offering help to for-profit businesses. How does helping entrepreneurs get access to legal services benefit the broader community and the state of Arkansas?
RS: I think it’s economic impact. If we have more people who are supporting them in building businesses, hiring people, that’s nothing but good for the state of Arkansas. The other thing, though, is that oftentimes—and we see this frequently with the people who come in—is most folks are doing a business on the side. They have a job that they’re doing. They’re trying to build out their business. And all of their resources are going towards getting that thing built. It’s towards developing the product, and legal is oftentimes the last thing that people have extra funds to deploy towards. So when we think of pro bono for entrepreneurs, we think it’s critical to be able to provide all people who are trying to start things at least some basic legal support.
WF: This is different from representing someone in a case before a court. There is a lot of good that you can do in a very short time with someone who’s starting a small business or thinking about starting a small business. You can give them a little bit of information. You can steer them one direction or another. And again, these are self-starters. They’re going to take this information. They’re going to run with it. But they are going to walk away from this interaction having worked with a lawyer, understanding a little bit better what a lawyer can provide. And then hopefully in some cases, you know, resolving a legal question that they might have, or maybe being a little bit closer to a structure or a document that they’re going to employ in their business.
And then when the lawsuit comes or when they’re ready to step up to the next level and get investors, or they want to grow into a different market or whatever, they know that a lawyer is someone who can help them with that. And this is both beneficial to the folks who receive the services, but also to the legal profession.
RS: I think the hope, too, is that they’re making connections with lawyers through this program, that then when the day comes, they can give them a call.
TP: Great. Rachel, Will, thanks for coming on Short Talks. It’s been a great conversation.
RS: Thank you. Thank you.
TP: To learn more about the Entrepreneurial Law Project, visit ELP.UArk.edu. Short Talks from the Hill is now available wherever you get your podcasts. For more information and additional podcasts, visit ArkansasResearch.UArk.edu, the home of research and economic impact news here at the University of Arkansas. Music for Short Talks from the Hill was written and performed by local musician Ben Harris.
