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Meet Ryan Shaening Pokrasso

Ryan Shaening Pokrasso

This episode of the Innov8social Podcast features an interview with Ryan Shaening Pokrasso—who studied biology and worked in a remote lab in Alaska, served as a policy specialist and program director lobbying for environmental and climate change at the New Energy Economy, and is now an attorney and partner focusing on empowering entrepreneurs, founders, and leaders with legal tools and knowledge to create meaningful and sustainable businesses, organizations, and initiatives.

Based in Oakland, Ryan founded Elevate Law and Strategy in 2014 with the belief that law should be a tool for social change and environmental stewardship. While his law firm serves a broad range of companies and nonprofit organizations, its sweet spot is with mission-driven organizations seeking counsel on issues including entity formation, legal structure, employment law and regulatory compliance, and intellectual property issues including trademark and copyright.

Listen in to hear Ryan’s story about his path into social impact law, tips he has for social entrepreneurs considering their legal entity options, and what excites him on the horizon ahead.

 

More About Ryan Shaening

 

More About Elevate Law and Strategy

  • Website: http://legalelevation.com/
  • Value proposition: “Elevate Law and Strategy is a San Francisco Bay Area based firm that provides legal and strategic consulting to entrepreneurs…While we look forward to serving entrepreneurs of all kinds, we have a particular focus on those with a social mission.”

 

Listen to the Interview

 

Meet John

John Montgomery

This episode of The Innov8social Podcast features an interview with John Montgomery, a longtime voice and leader in the movement to re-think legal  structures and leadership frameworks for companies seeking to create impact and profit.

John has deep experience in the field. He is a Silicon Valley corporate attorney, has co-chaired the legal working group behind California’s benefit corporation law (passed in 2011),  and is the author of the book Great from the Start : How Conscious Companies Attract Success.

And John is also a bit of a serial entrepreneur. He co-founded the law firm Montgomery & Hansen, as well as technology incubator, Startworks, and health company Chrysallis among other initiatives.

John is someone who I have looked up to since starting Innov8social as a blog a few years ago. His commitment to a holistic approach to consciousness-based leadership is evident in every interaction, and tends to inspire those he meets.

Find Out More

 

More About John

 

 

More About His Book, Great from the Start

 

  • Website: http://www.greatfromthestart.com/
  • Value proposition: “Great from the Start not only prepares entrepreneurs for success in the prevailing economic Great From the Startparadigm where the corporation exists solely to maximize profits for shareholders as well as such business classics as Built to Last, The Art of the Start and The Lean Startup, but also shows you how to design your business for success in the emerging economic paradigm in which corporations exist to optimize both good and profit.”
  • Free excerpt downloads – including introduction, bibliography, and more

 

More About Startworks

 

  • Website: http://startworks.biz
  • Value proposition: “Startworks’ first project was Great from the Start, then in 2014 Startworks began producing consciousness based educational programs through its affiliate, The Global Consciousness Institute.  These programs are designed to help leaders optimize their effectiveness and lead from the heart.”
The first Berkeley “Social Enterprise Law Symposium” took place in the first week of April 2014. The Boalt Social Enterprise Group (a student organization of UC Berkeley School of Law) and the Impact Law Forum hosted the insightful event to take a closer look at financing & exits for social enterprises. The event comprised of two panel discussions and surveyed the finance and legal structures for social enterprises from startup stages to scale– focusing more on scalable social enterprises backed by foundation or grant funding.Scroll down below for links to watch videos of the sessions.From the perspective of covering social enterprise law in various posts on Innov8Social about the introduction and passage of benefit corporation legislation in California and beyond; hybrid corporate forms including L3C, CA flexible purpose corporation, and others; the merit of tandem structures (i.e. for-profit + nonprofit combinations); potential of crowdfunding for equity; and impact financing possibilities and constraints—-the panel talks validated some overall trends that have been emerging and brought to light interesting nuances by active legal practitioners in the space, social entrepreneurs, funders, returns-focused venture capital, and policy experts.

Below is a photo essay from the talk, along with a few notes about notable quotes and points raised. You can also read literature handed out at the Symposium on the Impact Law Forum website.

Attorney Gene Takagi also posted about about the session in his blog post, “Financing Social Enterprises: From Start-up Through Exit”.

Social Enterprise Law Symposium

The panel talks afforded legal practitioners continuing legal education credit and brought together a diverse group of individuals engaged or curious about the social enterprise space.

Panel 1: Early Stage Financing and Mission Preservation

Social Enterprise Law Symposium

Panel 1 included (from the left): Rick Moss (Founder and Managing Director of Better Ventures); Ayesha Wagle (President of KOMAZA, a social enterprise); Will Fitzpatrick (General Counsel and Secretary of the Board of Omidyar Network); and Susan Mac Cormac (Partner at Morrison & Foerester’s Clean Technology Group & PRivate Equity and Venture Investment Practice, and Co-Chair of the Working Group for the Flexible Purpose Corporation). The panel discussion was moderated by Berkeley law student, Jen Barnette (extreme right)

 

Social Enterprise Law Symposium
To put the social enterprise sector into context, Susan Mac Cormac (center) noted that social enterprises represent less than 1% of the total capital market. She also framed the stage of development and reporting of the infrastructure for social enterprises, in her reflection that “if hybrid structures are in the the ‘1st grade’ of development, impact measurement is in ‘kindergarten.'”
In addressing his perspective on hybrid legal structures, Will Fitzpatrick (left in photo) of Omidyar referenced a quote by famous Silicon Valley venture capitalist Marc Andreesen, likening hybrid structures to a “houseboat” because, in Andreesen’s view, “they are neither a good house, nor a good boat.” He also emphasized the weight Omidyar Network places on the scalability of the social enterprises and nonprofits it funds and supports.
Moderator Jen Barnette (right) covered questions surround legal structure options as well as ways social enterprises can avoid “mission drift” and the impact of legal structures and channels of funding.
Social Enterprise Law Symposium
Ayesha Wagle (right) discussed the emerging view of social enterprises as a new asset class in investing. She also reflected on social enterprises pursuing funding, noting the importance of choosing funding types wisely, based on risk tolerance and ability to bear debt or give equity.
Rick Moss (left) brought up an interesting point that his venture fund prefers social enterprises to come in for funding with no legal form rather than an overly-complex of “bad” legal structure.


Social Enterprise Law Symposium
Social Enterprise Law Symposium

 

Panel 2: Exits

 

Social Enterprise Law Symposium

Panel 2 included (from the left) Mark Perutz (partner at DBL Investors & Board member of Revolution Foods); Kendall Baker (CFO at Revolution Foods); Jan Piotrowski (Head of Venture Coverage at Credit Suisse); and Eric Talley (Berkeley Law professor and co-director of Berkeley Center for Law, Business, and the Economy). The panel was moderated by Berkeley JD/MBA candidate, Libby Hadzima.

Social Enterprise Law Symposium
Jan Piotrowski (left) noted that while we haven’t seen big exits in the social enterprise space yet, the time is coming.
Professor Eric Tully (center) expanded on the case of Ben & Jerry’s as a “zeitgeist” of social enterprise M&A and expanded on the implications of the legal case Revlon and “teeth” that new legal structure provide in preserving a social enterprise’s mission in exists.
Moderator Libby Hadzima (right) posed questions framing typical exits for social enterprises, what venture capital firms seek when engaging with social enterprises, and ways social enterprises can pursue mission even in exit scenarios.

 

Social Enterprise Law Symposium

Mark Perutz (left) emphasized that DBL Investors seeks big returns so as to be making “absolutely no sacrifice on financial return” when investing in social enterprises.


Kendall Baker (right) shared Revolution Foods’ mission to become the first mission-based company to go public and expounded on the “halo effect” of health/wellness companies trading higher than companies not dedicated to those goals in similarly situated companies in their class. (i.e. Annie’s brand).

 

Social Enterprise Law Symposium

 

Reception

After the panel discussions, speakers and attendees gathered on the patio—continuing conversations and sharing insights from diverse perspectives and experiences in the social enterprise space.

Social Enterprise Law Symposium

 

Social Enterprise Law Symposium

 

Social enterprise Law Symposium 2014

Watch the Videos

PANEL 1: EARLY-STAGE FINANCING & MISSION PRESERVATION
PANEL 2: EXIT

Attorney Zoe Hunton, shares something in common with many of her social entrepreneur clients. Not only is she their attorney, but she is a fellow entrepreneur as well. It wasn’t always that way, after completing her undergraduate studies at Brown, attending law school at University of California, Davis, and clearing the California bar exam, Zoe took the fairly-traveled path of accepting a role at a law firm.However, after a persistent sense that her job didn’t mirror her core values, she took a detour.

Meet Zoe Hunton

Zoe left the firm and started her own solo practice, Hunton Law,  specifically focused on social enterprise and nonprofit law.

photo adapted from Full Circle Fund image here: goo.gl/UQ86a2

photo adapted from Full Circle Fund image
here: goo.gl/UQ86a2

It was a bold decision for a newly-minted attorney to devote her practice to a still-emerging space. In doing so, she has had to adopt the mindset of an impact-minded entrepreneur—in addition to understanding their legal needs.

With a renewed sense of purpose and alignment with her personal values, she is not only making her decision work—but is also contributing to creating an ecosystem within the social enterprise law space through her efforts outside of her practice.

In 2012, Zoe and Natalia Thurston (audio interview here) launched the Impact Law Forum (ILF) in the SF Bay area.

Innov8Social has covered interesting ILF events in the past including a brainstorming session at StartX led by the founders of LawGives, and a talk on human-centered design in law by the General Counsel of IDEO.org.

Listen to Zoe’s Interview

Innov8social had a chance to catch up with Zoe to ask her about her experience being a solo practice attorney and the (nonlinear) path that led her to the space. The interview explores trends that Zoe has noticed with the various company formation options social enterprises have in California and her advice for legal professionals and law students looking for a spot at the social enterprise table.

Gene Takagi has been a friend of Innov8Social nearly from the start. He demonstrates a dedication to nonprofit and social enterprise law and uses social media in innovative, nuanced ways. It was a pleasure to interview him and learn more about his path into the the social enterprise law space as well as the future he sees for the field.

Meet Gene Takagi

Gene TakagiGene is a leading attorney in the nonprofit law space and is an active voice for social impact on social media.

He is the Managing Attorney of NEO Law Group (Nonprofit & Exempt Organizations), based in San Francisco, CA. His presence on social media includes regularly blogging on the Nonprofit Law Blog and tweeting as @Gtak. He also posts a weekly series called “Nonprofit Tweets of the Week“.

Listen to the Interview

Interview with Gene: key takeaways

How did you get involved in social enterprise law?
  • Gene started as a science major in college, graduated with degrees in Zoology and Oceonography
  • First worked in for-profit sector, including role in operations of Duty Free Business in San Francisco.
  • Realized he wanted to work in non-profit sector
  • Then pursued graduate studies in non-profit
  • Worked at SPCA in San Francisco, learned about the power of advocacy
  • Attended law school to develop skills in nonprofit law school
  • Worked at a big law firm as an associate in corporate and securities law, leading him to reassess his interest in working in nonprofit law
  • So, started own law practice focusing on nonprofit 8 years ago
What role do you see social media playing in the nonprofit/social enterprise space?
  • Plays a huge role in sharing of information, potential development of networks, collaboration among organizational leaders—it is already showing an impact
  • In social enterprise law space, however, there aren’t currently a lot of players on social media—why? Lawyers tend to be risk-averse and there are not many attorneys in this space.
  • However, for small firms/solo practice firms—they can share more valuable information that can be helpful and informative. There is more of a willingness to share over social media.
  • Tries to get the conversation started about key issues in the space through his social media
What do you think of new legal structures for social change? 
  • The movement is tremendously valuable and the time has come
  • Sees a gap between for-profit and nonprofit that new legal structures might fill
  • It is incredibly valuable
  • There is a misconception that as a board member of for-profit, the primary purpose is to maximizing shareholder valuable. Gene doesn’t think that is exactly true, but notes that there is a grey area in how board members can promote social cause.
  • On a case by case basis, it can be more challenging to recommend a new structure because of the lack of case law and untested treatment by courts, ability to attract institutional investors
What tips or advice do you have for social entrepreneurs who are considering what legal structure to adopt?
  • Become educated about the process
  • Read For Love or Lucre, Stanford Social Innovation Review which outlines some key considerations and options for traditional and new legal structures
  • “Hybrid” legal structures used to refer to situations in which for-profit and nonprofit entities were affiliated in some way
  • Talk to a knowledgeable consultant or attorney early in the process before setting your heart on a particular structure
Do you have any tips for new attorneys, JD’s, and policymakers interested in the social enterprise space?
  • First off, follow your passion into the social enterprise space
  • You can maintain a traditional career and also start working with clients in the nonprofit space
  • If seeking to work at a traditional firm, get tax and corporate securities background before joining a firm dedicated to nonprofits
  • If you do engage in a solo or small firm practice, cultivate a business acumen so you can effectively run a practice
  • Invest in your networks and developing knowledge in the social enterprise law

What does Janelle Orsi have in common with the Dalai Lama, Buckminster Fuller, Mahatma Gandhi, and Dr. Seuss? She joins them as one of 100 individuals named on the (En)Rich list of inspirational leaders whose work contributes to a sustainable future.

I was introduced to Janelle by Jenny Kassan last year—they both co-founded the Sustainable Economies Law Center (SELC) in 2009. Based in Oakland, California, SELC is a 501(c)3 nonprofit that provides legal resources, education, and advocacy to support more sustainable, localized, and just economies.

Meet Janelle Orsi, a leading attorney for the sharing economyJanelle Orsi

Janelle continues to actively run SELC, serving as its Executive Director. She also manages a law practice focused on meeting the needs of the sharing economy.  The sharing economy encompasses social enterprises, collaborative consumption startups, local food initiatives, cooperatives, and co-housing projects that are shifting the way we seek, use, and spend on products, services, and space.

How is Janelle a leading attorney in the space? She wrote the book on the topic, literally.

In 2012 ABA published her latest book, “Practicing Law in the Sharing Economy: Helping People Build Cooperatives, Social Enterprise, and Local Sustainable Economies”.

Listen to the interview

I had a chance to catch up with Janelle for the first time at a coffee shop in downtown Oakland, along with SELC staffer and law apprentice Christina Oatfield in 2012. More recently, we sat down to learn more about her path to social impact law, her interest in the sharing economy, and the future challenges and successes she envisions.

Key Takeaways:

  • Janelle was originally interested in defending juveniles in the court system
  • Her focus shifted after taking a transactional law class taught by Professor Bill Kell at Berkeley
  • She then looked at the types of organizations that impact change—and focused on shared resources (i.e. car-sharing, shared housing, food cooperatives, etc.)
  • She started her own practice in “sharing law” out of law school because this was an emerging field
  • She has been surprised by barriers encountered in sharing economy—regulations that were intended to protect, but don’t fit will in highly-collaborative, highly-democratic sharing initiatives
  • Has seen that even in the past 3 years, we have gone from not using the phrase “sharing economy” to an explosion of the use of the phrase. She foresees the sharing economy and social enterprise will bump up against the existing law, causing law to evolve to include these new ways of thinking of consumption and business.
  • Her advice for attorneys and law graduates interested in this field: start a law practice

 

SELC goal: raise $300K in 2013

SELC has some exciting projects it is working on, including building a legal apprenticeship program, hosting a regular “legal cafe” to make law more accessible to those in the community, and working on legislation to legalize cooperative housing. An overarching goal for SELC is to raise $300K in 2013.

Learn more in the cartoon (ahem, with narration and guitar by Janelle!)

Jenny Kassan is a pioneering attorney in the social enterprise space. I first met her two years ago when she delivered an insightful presentation at the San Jose Green Business Academy. There, she detailed ways that social entrepreneurs can raise capital.When we met last, she recapped her involvement with the federal crowdfunding legislation (part of the JOBS Act), which at the time was still making its way through Congress. (See her Huffington Post article here). Since then, the bill has passed and is awaiting official rule details from the Securities and Exchange Commission (SEC).

Meet Jenny Kassan, a pioneering social enterprise attorney

Jenny is incredibly personable, experienced, and passionate about connecting law, sustainability, and small businesses to create Jenny Kassansocially responsible ventures. She is the CEO of Cutting Edge Capital (check out their great blog), and a Partner at Katovich & Kassan Law Group.

It was a sincere pleasure interviewing Jenny for Innov8Social. It was an opportunity to hear more about her path to social enterprise law,  her interest in pushing for equity crowdfunding for non-accredited investors, her current work with creating new financial tools, and advice she has for individuals entering the social enterprise law and policy space.

Listen to the interview

A few interesting takeaways:

  • After law school, Jenny became interested in community development
  • Saw that law alone didn’t necessarily help individuals in disadvantaged communities—legal remedies do not always address the root of issues
  • Completed a Masters in City Planning after law school
  • Worked at community development nonprofit, Unity Council for 11 years, in the commercial district in Oakland
  • Loves working with small business owners
  • Joined John Katovich’s firm and worked to find new ways for small businesses to pursue financing
  • Launched Cutting Edge Capital in 2011, focused on creative financing tools for social enterprises—with focus on raising funds from their communities
  • Direct Public Offering (or investment crowdfunding) is a financial tool small businesses can use to raise funds: is legal, but must comply with strict legal compliance guidelines, open to accredited (wealthy) and non-wealthy investors
  • Suggests law students interested in social enterprise law take classes and electives in corporate law subjects

 

Big news for Cutting Edge Capital!

*Note: Since our interview, Cutting Edge Capital successfully raised $150K in a Direct Public Offering of their own. Congratulations! You can contribute until July 1, 2013. More information here.

Widely reported on yesterday were the multiple civil lawsuits, including a complaint filed by the Department of Justice, being brought against Standard & Poor’s (S&P) for charges related to fraud and misrepresentation regarding mortgage-related investments leading up to the financial crisis of 2008.

Would a triple bottom line system for assessing the success of corporations be more effective? Social entrepreneurs have been asking the question for some time, but now, the state of credit agencies renews the discussion in a big way.

Ratings Agencies: Gatekeepers or Toll Collectors?

The California attorney general’s lawsuit, as quoted in CT Post, posed the issue in this way. “In reality, S&P corrupted its ratings process to curry favor with large banks, which paid S&P billions of dollars in return,” the lawsuit states. “In other words, S&P claimed to be a gatekeeper, but it acted like a toll collector.”

The sentiment was echoed across at least fourteen states with Illinois, Connecticut, Mississippi, Arizona, Arkansas, California, Delaware, the District of Columbia, Idaho, Iowa, North Carolina, Maine, Pennsylvania, Missouri, Tennessee and Washington filing suits against S&P.

The federal civil suit against S&P claims damages of $5B. There has been no word on whether similar suits will be filed against other rating agencies.

An Argument For a Triple Bottom Line?

Reading the news makes me think one of the early sessions of Agency & Corporations class in law school. The idea of the bottom line was emphasized not only in the purpose of legal entities such as general partnerships and corporations, but in the fiduciary duty owed to shareholders of various entities. The end goal, broadly speaking, is to find the green and multiply it.
Triple bottom lineI remember thinking, what does a single bottom line (and legal ramifications for not pursuing it) incentivize? What kinds of behaviors does it reward, and which kinds of actions does it penalize.
It was one of the features of social innovation that has fascinated me and catalyzed this exploration, i.e. that there are new, more-inclusive ways to define and measure success. The concept of a triple bottom line is to measure not only profits, but also an entity’s impact on society and the environment to determine their success.
Would a triple bottom line help? If there were multiple paths and factors by which a company or corporation could gain credibility and favor, would it reduce a need for deception in ratings?  Or just create more factors that could be fudged…
It is an open question, but one that is worth exploring. A system pursuing a single end, to the exclusion of others, may yield a certain kind of result—to exclusion of others. If we seek to maximize transparency, sustainability, and community, the entities and measures we use to assess those qualities perhaps should also mirror them.

Social Entrepreneur Considerations

What’s a social entrepreneur to do? Beyond thinking about the core business, the idea, and the innovation—there are all of the legal considerations too. What kind of entity will you be, will you pursue a traditional legal structure and certification (i.e. B corporation certification) or test out a hybrid legal structure?
If you opt for a certification, should you research how the rating agency is monetized. Should it matter whether they are funded by the entities seeking certification, or by those procuring the ratings? How do entities like the Global Impact Investing Ratings System (GIIRS) analyze the triple bottom line?
The S&P lawsuits make these valid and relevant questions, also worth an open discussion. As the field of social enterprise is being defined through legislation, policy, and structure—it is in an ideal phase of the life cycle to look critically at what works with traditional systems, and what can be improved upon. The best place to use what we see in the rear-view mirror to make good decisions about the best way to traverse the road ahead.

Does the Spotlight Change the Art?

The age-old argument of whether art imitates life or the opposite, plays into this discussion in an interesting way.

Christopher Matthews, Times columnist, touches on the role and weight given to credit agencies in his article, “Justice Sues S&P; Is It Time to Rethink the Role of Ratings Agencies?” Mathews cites a study by San Diego Law School professor Frank Portnoy that found that the federal government started incorporating rating agency reports into rulemaking starting in the 1930’s. And then, in 1973, the SEC took the ratings game one step further by designating specific firms as “Nationally Recognized Statistical Ratings Organizations.” Matthews notes, “Predictably enough, it was right around this time that the ratings agencies shifted their business models from charging investors fees for their reports, to charging issuers for being rated.”

In her article, “Sue S&P, Sue Everybody”,  Forbes columnist Lara Hoffmans expounds the theory (and focuses the blame) to Congress as a whole. Says Hoffmans, “[Congress is] directly responsible for the laws requiring major debt issuances to have at least one rating from a rating agency the government certifies as “credible.”

Could it be that rulemakers, in trying to protect Americans by championing independent rating agencies, may have inadvertently incentivized the rating agencies to be less independent? The months ahead promise a deep dive into the issues at hand, at the state and federal level, and from commentary left, right, and center. Heads up, social innovators, stay in the conversation.

On Tuesday, January 29th 2013 Ashoka Legal brought together a few top law firms specializing in social enterprise law and hybrid structures. The session was created to be an open discussion and training on some of latest trends, tools, and resources for setting up nonprofits, for-profits, hybrids, and new corporate structures.
Hybrid Structures Webinar: Nonprofits, For-profits, and New Corporate Forms
The event, held at the Morrison & Foerster offices in San Francisco, was live-streamed online. The presenters’ list included:

Watch the Webinar

For social innovation attorneys, law students, and social entrepreneurs seeking to research legal entity options, formation, and restructuring—this webinar is an excellent tool to begin unpacking the many options available. And, the experience is made more meaningful as it is guided by attorneys at the forefront of the social enterprise legal space.
If you missed the the live webinar or live session, Morrison & Foerster is making the archived webinar available for viewing until April 2013.

Legal Structures

The speakers spoke in detail about legal structures that have been covered on Innov8Social, weaving in practical experience, policy history, and examples into their assessment of how each structure may benefit a social enterprise or non-profit.
Legal structures for social enterprise law covered in the webinar
Hybrid legal structures
  • For-profit subsidiary of a nonprofit
  • Nonprofit under control of for-profit
  • Sibling relationship of for-profit and nonprofit
  • Independent, but aligned entities
Other tools that can create value, and enable entities to remain mission-driven 
  • Licensing
  • Trademark
  • Integrated reporting: to integrate social, environmental impact alongside financials
There are seven states that offer some form of apprenticeship program to pursue practicing law. While all states require passing the state bar examination to practice law, these seven states let people pursue some combination of apprenticeship and/or independent study instead of the traditional three-year law school route.At a time when financial publications such as Forbes add their sentiments to the debate on the future of law school with headlines like, “Why Attending Law School Is The Worst Career Decision You’ll Ever Make,” exploring the possibility of the apprenticeship route to practicing law can be a constructive, empowering tool for a certain type of aspiring lawyer.Innov8Social recently interviewed Christina Oatfield who is a policy director at a legal non-profit and is pursuing independent study to practice law through program through the State Bar of California. California Lawyer, in their article “The Path Rarely Taken”, also profiled seven lawyers who pursued the apprenticeship route to practicing law.

7 States that Allow Apprenticeship Route to Practicing Law

  • California
  • Maine
  • New York
  • Vermont
  • Virginia
  • Washington
  • Wymoning

You can find each state’s requirements in the Comprehensive Guide to Bar Admission Requirements (2012) [PDF]  published by the National Conference of Bar Examiners and the American Bar Association, Section of Legal Education and Admissions to the Bar.