Distinguishing Social Enterprise Lawyering

The rise of for-profit, mission-driven (“hybrid”) entities has prompted legal scholarship on corporate law innovations and governance considerations in the social enterprise context. A consistent theme of this scholarship is skepticism of whether these hybrid entities create value, given the inherent flexibility of business associations and judicial deference to management in operational business decisions. It nonetheless seems clear that social entrepreneurship – achieving social missions using market-based strategies – and hybrid entities are here to stay.

Given the likely growth of social entrepreneurship, it is important that legal scholars devote attention to how social enterprise clients shape or influence corporate lawyering. In a new article, I identify and describe a cadre of “social enterprise lawyers” – transactional lawyers who not only understand the conventional business law issues of social enterprise clients but can also intuit how their social justice objectives affect those legal issues. Social enterprise lawyers need to conduct their corporate lawyering consistent with the social change ethos of social entrepreneurship. In the same manner that social entrepreneurship calls into question fundamental assumptions about standard market-based practices, the concept of social enterprise lawyering invites a reexamining of conventional corporate lawyering.

Representing social enterprise clients requires the transactional lawyer to command more than the technical aspects of business law expertise. For social enterprises, their theory of social change is perhaps the most significant and harmonizing aspect of their business. Thus, in addition to understanding how to marshal private ordering to advance business objectives, the social enterprise lawyer must understand the social mission and theory of change model of their social enterprise clients. The relevant literature refers to social entrepreneurship’s commitment to addressing sustainable development goals (or “SDGs”). Social enterprises often link their social mission to SDGs or articulate their mission within the context of SDGs, such as ending poverty, providing access to clean water and sanitation, creating economic opportunities, reducing inequities, and mitigating climate change. A social enterprise’s theory of change articulates not only the company’s goals for social change, but also their strategies for transforming that vision into a reality.

Much like their clients, social enterprise lawyers need to distinguish themselves in the legal market by their understanding of social marginalization, structural inequity, and, ultimately, theories of social change. Without this understanding, social enterprise lawyers cannot comprehend the systems that create and sustain the social problems their social enterprise clients are seeking to address. Social enterprise lawyers are tasked with advising their clients on legal mechanisms for how to achieve their business objectives consistent with their values and social mission. Of the various functions transactional lawyers fulfill, client counseling has been repeatedly identified in lawyering theory literature as the most critical. The social enterprise lawyer cannot fulfill the critical function of client counseling without a deep understanding of the client’s theory of change embedded within its business.

A significant critique of social entrepreneurship is that it does not achieve social change. If transactional lawyers are not advising their social enterprise clients on how a particular transaction or contractual provision inhibits the clients’ social mission, then their clients are vulnerable to this critique. Thus, social enterprise lawyers must develop strong competencies on social justice issues and applicable theories of change to contextualize their advice and counsel to social enterprise clients.

This is a considerable task for social enterprise lawyers to accomplish, given current course offerings at most law schools. Unlike many business schools, few law schools have augmented their business law curriculum with social entrepreneurship courses. Thus, aspiring social enterprise lawyers must cobble together various courses on conventional business law, on the one hand, and courses on law and society on the other hand, in order to gain exposure to the complexities that representing social enterprise clients will present. Moreover, social enterprise lawyers also need to spend significant time engaging with the populations and injustices their social enterprise clients seek to affect.

Community-lawyering scholarship provides a useful theoretical framework for how to incorporate social mission and theory of change into social enterprise lawyering. Community lawyers view their clients as interconnected members of communities with shared experiences and aspirations. Community lawyering’s commitment to anti-subordination should also inform how social enterprise lawyers incorporate their clients’ social impact missions in their lawyering to achieve connected and shared political power for the social movement. The social enterprise lawyer needs to understand their social enterprise client as an actor within not merely an industry, but also a larger social movement – and tailor her advice accordingly.

A social enterprise lawyering theory is needed given criticism of social entrepreneurship for its out-sized emphasis on the individual entrepreneur or business.  Social enterprise lawyers who understand their clients as members of and connected to larger social movements would serve as a counter-balance to this criticism.  Social entrepreneurship and, by extension, social enterprise lawyering disconnected from social movements has the danger of being paternalistic and ineffective. But social enterprises seeking to support an improved political process by working in coordination and collaboration with government agencies, traditional nonprofits, and mobilized subordinated populations could be transformative. Social enterprise lawyers have not only an opportunity, but also an imperative to reimagine and redefine conventional assumptions and practices of transactional lawyering when representing social enterprise clients.

This post comes to us form Professor Alina Ball at UC Hastings College of the Law.  It is based on her recent article, “Social Enterprise Lawyering,” available here.

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