The Law Office of John T. Allen

Legal musings about small-businesses

INCUBATOR

The Thursday Free Legal Clinic started not long after the Incubator moved to 1840 Oak Street in Evanston. The ground rules are relatively simple. I show up for lunch at noon in the Dixie Kitchen for longer chats with incubator affiliates. At 1:30 we wander back to 800 Davis Street for a series of 45 minute conferences with whoever has signed up. Generally I quit between 5:00 and 6:00, and go for chips and chats at the weekly Face to Face meetings.

“The discussion can explore why a contract is better than a handshake, why limited liability entities beat riding bare back, and how to calibrate their risk.”

I do not provide legal services in the usual sense of drafting contracts, structuring deals or preparing for court. Rather, I do “issue spotting.” Incubator companies tell me what they do, how they do it, why they do it, and what they hope to achieve. I listen and ask questions if the conversation flags. I try to introduce them to the business legal structure they must navigate. They will encounter that structure whether they know about it or not.

At entry level, the discussion can explore why a contract is better than a handshake, why limited liability entities beat riding bare back, and how to calibrate their risk. But, we can and do talk about reverse triangular mergers and other M&A esoterica. The Clinic is free. I encourage the entrepreneurs to come back as frequently as they find the sessions useful. I can’t learn what I need to know about their activities in 45 minutes. They can’t understand what they need to know in the same period. Moreover, like most clients, they do not engage in useful conversation if the meter is on.

If they need something substantive, such as a new corporation, or a contract, I do this outside the Clinic.  I know a great deal about business law and the virtues of staying out of court. But my charges often need specialized services from lawyers focused on a particular field, such as patent law or taxes. I give them references to lawyers I know and trust.

Why do I do this? First, because I love it. More importantly for the entrepreneurs, a modest dose of preventive law can avoid devastating, and unnecessary, mistakes. I have helped many companies on their journey. I have made a difference. I have no doubt my services have been critical to the phenomenal survival and success rate of my Clinic clients. One rule of thumb warns that if ten businesses start today, only one of them is likely to be around next year. I have personally tracked our Incubator companies through and beyond the Incubator experience. Our first comprehensive Clinic participants survey suggested that over a nearly 20 year period almost 40% were still functioning. Some had disappeared only because they had been bought out at handsome prices.

Beyond a major, beneficial, impact on the local economy, we have made a difference for entrepreneurs in the Chicago metropolitan area. Some years ago, a Northwestern law student, Carrie Cavalier, decided to use the Clinic as a base for learning whether entrepreneurial law could be taught as a course. Her third year thesis on the subject convinced Professor Thomas Eovaldi that the law school should try it. Tom, attorney Thomas Morsch and I set up and taught that course. Northwestern has continued and developed entrepreneurial law courses. Tom Morsch established the Bluhm Clinic as a practical means of acquainting law students with real entrepreneurs running real businesses.

“More importantly for the entrepreneurs, a modest dose of preventive law can avoid devastating, and unnecessary, mistakes.”

Oddly enough, throughout this entire period I have had no official relationship with the Incubator. I think this has worked to our mutual advantage. Much more can be said about the Clinic and its Incubator role. That story must wait for another day.

Click here to visit the Incubator website.