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Practising for a good cause

News

Cite as: March 2015 89 (3) LIJ, p.24

NFP law is a growing area of practice providing paid work for lawyers.

Not-for-profit and charity law was once the preserve of pro bono. But now it’s a growing area of practice providing paid work for lawyers and law firms – and opening a door to opportunity and innovation.

Working with the charity and not-for-profit (NFP) sector generates a distinctive outlook among lawyers who work in, or with them.

Special counsel in Herbert Smith Freehills’ charity law practice Alice Macdougall explained: “The law is complicated and the clients, they make you want to get out of bed in the morning.

“What I do for them assists and enables them to go out and help a whole host of people in need, or help the environment, that’s pretty great.”

At the boutique end of private practice, DF Mortimer & Associates principal Derek Mortimer, who recently founded the LIV NFP and Charities Committee, agrees: “I am working with people who are passionate and energetic about what they do – whether they are supporting people with acquired brain injury or something to do with the environment or cancer prevention. I feed off that energy.”

Sitting between the two are firms such as Moores, a mid-sized firm with a well-established NFP practice (led by principals Libby Klein and Catherine Brooks) which has recently struck a deal with Our Community, a social enterprise and online resource for Australia’s 600,000 plus NFPs, to provide varying levels of legal support to members. It will undoubtedly broaden the exposure of the Box Hill-based firm, boosting its profile nationally in the sector.

Working with charities and NFPs is paying dividends beyond a warm inner glow. These are fee generating practices with pro bono commitments retained separately. For Ms Macdougall, “Half my practice is pro bono, but 100 per cent of my practice is charity law – the practice has revenue targets like any other”.

Based in the west of Melbourne, Mr Mortimer charges fees in line with suburban rates and NFPs account for his total revenue base. Moores applies its value-based billing model, setting a fee upfront by negotiation and taking into account the client’s budget context, regardless of the sector the client is from.

“More and more charities and NFPs are realising they need help,” Ms Klein said. “Charities that may have in the past been able to rely on pro bono advice are now more likely to realise they need to beef up their legal support. It’s not good enough anymore to think ‘we’re just an NFP and we can bumble through’.”

Money can also buy continuity of service and responsiveness, and great return on investment. Mr Mortimer cites many examples where “for a few thousand dollars of legal work a client was able to go on and hold a fundraiser and raised more than $100,000”.

Sheer growth of the sector (including turnover) points to capacity, as well as need, for legal services. Curtain University’s Australian Charities 2013 (http://acnc.gov.au/curtincharitiesreport2013), reports that registered charities alone (around 10 per cent of the total number of NFPs nationally) turn over around $100 billion excluding donations, employ 8 per cent of Australia’s workforce and engage around 2 million volunteers. It is the fastest growing sector in the Australian economy, with an estimated 8 per cent of year on year growth.

Pro bono support remains a necessity for the sector – and the way most lawyers interact with the sector. Justice Connect’s Not-for-profit Law service coordinates the matching of demand with firms and individuals willing to offer support, as well as providing training and information services direct to the sector. NFP Law employs seven lawyers in Melbourne and Sydney drawn from a range of legal backgrounds, including commercial law firms.

Around 20 per cent of funding for the NFP Law service is generated through activities such as training, with the remainder from government and philanthropic organisations directing their funding where it can provide maximum value and support to the largest number of NFPs.

NFP Law’s director Juanita Pope added that the sector is innovating and lawyers need to keep up. “Increasing outsourcing of community services by government is another factor in the growth in demand for legal services for the sector. It is an increasingly professionalised environment in which organisations are required to maintain robust governance and risk management frameworks. As government and philanthropic funding avenues contract, more organisations are exploring new ways of doing things – from establishing social enterprises, to mergers, collaborations and social impact investment opportunities – and often these innovations require the help of lawyers to be successful.”

One example of this is in the form of a law firm – Sydney-based social enterprise Salvos Legal – which brings new meaning to NFP return on investment in legal services. Founder and managing partner Luke Geary left a thriving commercial partnership to establish the firm which provides access to free humanitarian legal help made possible through revenue generated by its commercial arm. Last financial year fees revenue totalled $4.3 million, enabling $8 million of pro bono work.

With 30 employees and 180 volunteers, the firm is receiving awards and building its commercial base by competing in the market for commercial work (with rates in line with mid tier commercial practices). Growth means opportunity: “I am not protective of the idea. I like to think that the more organisations think this way, the more sustainable and independent they will be, allowing them to impact communities in an effective way. My advice to individual lawyers is simply, don’t accept what has always been the method of doing things is the only (or even the best) way to do them. Don’t accept convention; create change for good,” Mr Geary said.

Changes to regulations and governance requirements, and sector growth to meet service needs, have driven demand for legal services.

Australian Charities and Not-for-profits Commission (ACNC) assistant commissioner and general counsel Murray Baird, who left Moores to take up the ACNC position after decades developing and leading its NFP practice, said much of the change has occurred in the last 15 years. “Thirty years ago the sector tended not to have any involvement in litigation, for example, or regulation,” he said.

Changes to the tax system in 1999 included a new, more involved, registration system for charities in order for them to receive important tax concessions, including FBT and GST concessions. Increasing governance and compliance requirements in a challenging context has led to demand for specific expertise. In one sense, the NFP sector can be viewed as another market segment in which lawyers can apply their expertise in tax, trusts, legal structures and governance.

The growing body of NFP and charity specific legislation is another area of occupation. Apart from the relevant sections of tax legislation and the ACNC Act 2012, there is the Charities Act 2013 and associated Acts.

Melbourne Law School associate professor Matthew Harding said there is still much work being done on what the definition of charity is, which was previously mostly defined by 400 years of case law. “There is now recognition that it’s not just what’s left behind when you take out government and business,” he said. He added that the application of law in this sector is a fruitful area of academic interest and research being led by North American activity, but emerging in the UK, Canada and Australia. Law schools and universities, recognising the growth of the sector and the complex legal environment have responded by broadening study offerings – an example is the intensive Masters subject offered this year by MLS in partnership with Justice Connect.

Another driver of demand has been the pattern of government outsourcing of community and social services to the NFP sector (housing, social supports, even prisons) – and the transference of risk in what can be onerous contracts. In addition, NFPs, including charities, are realising the value of their reputation and intellectual property and the importance of protecting an asset that enables them to attract significant community, volunteer and financial support.

Those who work exclusively within the sector are more likely to be generalists, applying deep knowledge of the sector and generalist legal expertise in everything from human resources, occupational health and safety, contracts, supplier agreements, leases, intellectual property, governance, privacy and more.

“NFPs operate in such a complex landscape,” Ms Pope said. “Their legal issues are often entwined with other issues like funding concerns, infrastructure issues or relationships with other organisations. Our lawyers can be in court arguing a charity law case one day, on the phone advising a small neighbourhood house or disability support group the next and then delivering training for social enterprises. It’s incredibly varied and rewarding work.”


ALICIA PATTERSON

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