Lawyering for Social Enterprise

20 Transactions: Tenn. J. Bus. L. 797 (2019)

19 Pages Posted: 24 Jul 2019 Last revised: 19 Sep 2019

Date Written: April 4, 2019

Abstract

Social enterprise and the related concepts of social entrepreneurship and impact investing are neither well defined nor well understood. As a result, entrepreneurs, investors, intermediaries, and agents, as well as their respective advisors, may be operating under different impressions or assumptions about what social enterprise is and have different ideas about how to best build and manage a sustainable social enterprise business. Moreover, the law governing social enterprises also is unclear and unpredictable in respects. This essay identifies two principal areas of uncertainty and demonstrates their capacity to generate lawyering challenges and related transaction costs around both entity formation and ongoing internal governance questions in social enterprises. Core to the professionalism issues are the professional responsibilities implicated in an attorney’s representation of social enterprise businesses.

To illuminate legal and professional responsibility issues relevant to representing social enterprises, this essay proceeds in four parts. First, using as its touchstone a publicly available categorization system, the essay defines and describes types of social enterprises, outlining three distinct business models. Then, in its following two parts, the essay focuses in on two different aspects of the legal representation of social enterprise businesses: choice of entity and management decision making. Finally, reflecting on these two aspects of representing social enterprises, the essay concludes with some general observations about lawyering in this specialized business context, emphasizing the importance of: a sensitivity to the various business models and related facts; knowledge of a complex and novel set of laws; well-practiced, contextual legal reasoning skills; and judgment borne of a deep understanding of the nature of social enterprise and of clients and their representatives working in that space.

Keywords: social enterprise, social entrepreneurship, entity formation, choice of entity, entity choice, firm governance, lawyering, professionalism

JEL Classification: K22, M14

Suggested Citation

Heminway, Joan MacLeod, Lawyering for Social Enterprise (April 4, 2019). 20 Transactions: Tenn. J. Bus. L. 797 (2019). Available at SSRN: https://ssrn.com/abstract=3424469

Joan MacLeod Heminway (Contact Author)

University of Tennessee College of Law ( email )

1505 West Cumberland Avenue
Knoxville, TN 37996
United States
865-974-3813 (Phone)
865-974-0681 (Fax)

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