Welcoming Charli, Some Reflections, and Some Announcements
First and foremost, I want to welcome Charli Cleland to the firm as our second Of Counsel, which we fully expect to evolve into a full-time role by early next year. Charli brings an exceptional and eclectic background as a former public defender, civil litigator, and consultant to non-profits on hiring equity. These experiences, Charli’s passion for the same causes that we care about, and Charli’s potential to build this organization into something that contributes meaningfully to them in unique ways has me incredibly proud to announce Charli as the newest team member. In the coming months and years, Charli is going to be an incredible resource for our clients and I’m just proud he can continue his career doing meaningful work as part of our team.
Between, Charli, Jennifer, and Ehsan as attorneys bringing varied backgrounds and perspectives and Michelle, who is unquestionably the best managing paralegal and business partner anyone could ask for to create a firm and culture like this, I am truly overwhelmed by the team we have. The fact that they are all here together working on this project with me before our 6 months’ anniversary (Happy 1/2 birthday to us on December 15th!) is incredible and has me more confident than ever that we can actually achieve some of the ambitious ideas I’ve had that I have mostly kept to myself (unless you’re one of my good friends that is tired of hearing about them).
So, let’s take a moment to run down those ideas that will start becoming reality in the next few weeks and months (full disclosure: this may be of zero interest to anyone outside of this firm — but one of the parts of this adventure I am excited about is writing about the experience and sharing the lessons learned with other lawyers that want to start similar law firms):
Mill Law Center is becoming…. Mill Law Center, Inc. I know, boring name still, but it means we are incorporating as a California professional corporation what has been up until now a sole proprietorship. Why a corporation and a C-corporation for tax purposes at that? I won’t bore you too much (unless you reach out to talk about it with me, in which case I will relentlessly bore you about it), but (1) law firms are pretty limited in California in terms of what entities they can choose, and (2) after doing the research, this is the structure that will let us achieve all of our other unique goals.
The first of those goals: operate like a workers’ cooperative. As someone living at a time of rapidly accelerating inequality, I am very low on the economic structure of law firms and, more broadly, traditional, extractive models of equity ownership. Thanks to the work of wonderful organizations like the Sustainable Economies Law Center, Democracy at Work Institute, and Purpose Network, I am very positive and excited about creative alternative ownership structures geared towards, broad, equitable distribution of surplus.
As a law firm, we cannot quite be a workers cooperative — only lawyers can be “owners” of law firm under the California Rules of Professional Conduct (though this is under review for equity reasons!). But, those rules do specifically permit “profit sharing” with non-lawyers. And, we’re corporate lawyers who come up with creative structures all the time — there has to be a way to take the concepts of a workers cooperative,i.e., distributing profits to workers by virtue of being workers and democratic governance), while still complying with our ethical obligations.
Here’s what we are doing to try to make that happen:
To make sure there is as broad ownership as the rules allow: ALL lawyers will be shareholders. No associates, no partners. Just Attorneys. (Yes, there are a few checks I have as Founding Attorney so I can prevent against “mission drift” and lock in the compensation policy described below, but that’s about it). Our Of Counsel are full employees too — that title just refers to Attorneys who are not yet full-time.
To ensure democratic governance goes beyond just attorneys and empowers all the non-attorneys we plan to hire in the future to serve our clients cost-effectively: an Employee Council. The Employee Council will have every employee as a member with one vote. The Employee Council will be an Advisory Committee to Board, and the Board will delegate authority to the Employee Council to make operational decisions to the fullest extent permissible. In other words, the Board (which can only be lawyers under California law) still has fiduciary duties and certain non-delegable functions, and lawyers need to make decisions on advice to clients. But within those confines, Employee Council makes the decisions that would normally go up to a Board, to be implemented by officers and senior staff.
To ensure broad, equitable profits sharing comparable to a workers cooperative, a Compensation Policy, locked in under our Bylaws, that provides:
Capped Salary. A cap on the highest base compensation so that it is no more than 2.5 times the lowest full-time salary. Honestly, I wish we could get that cap lower (or put another way, make the floor higher), but there are going to be attorneys with significant student loans or other personal obligations and we want to make sure we have access to exceptional talent. But, even a 2.5 cap is meaningful. If an attorney wants a base salary of $250k per year, that means the lowest paid member of the staff is paid $100k. And, from my perspective, that’s great. If we’re a successful business, ALL of our employees deserve a salary that (at least outside of the Bay Area) represents an upper middle class income. If the group decides higher salaries for attorneys is important to attract talent, that’s great — but our corporate structure will require them to bring everyone along with them.
Surplus Distribution. After that compensation, all net profits (after a reserve and distribution to the affiliate described below determined by the Employee Council) distributed twice per year on a one share per full-time employee basis. So, while non-employees are not equity owners under the law, the compensation policy will share profits with them as though they were all equal owners in the business.
The other unique goal: forming MLC Collective, a non-profit affiliate that the Employee Council will distribute profits to in order to build out charitable, educational, political, or social welfare activities other than legal services that advance our mission. At the beginning of next year, we are forming MLC Collective and applying for tax-exemption as a 501(c)(4) organization to be that affiliate. More on this to come (why a 501(c)(4) and not a 501(c)(3)? why a separate entity? what is it going to do?) as part of a larger article on for-profit and non-profit affiliates. But MLC Collective, as a non-law firm, will be free to be a “nonprofit cooperative” — which means that every employee will have equal governance rights as members (the non-profit equivalent of shareholders). MLC Collective will house so many of the other projects we are passionate about, that I’ve run out of time to mention, and provide our employees with the opportunity to pursue their passion projects as part of their time here.
Will all of this work? I have no idea. But I’m so eager to find out and make the changes needed to make it work, so we can all share something that feels meaningful and equitable. I look forward to reporting on our successes and (hopefully only occasional) failures.
The last thing I’ll say: we approach the end of year, I feel deeply fortunate and grateful that I can even make this post and it is not just a ‘vision board',’ but an actual series of actions that are in process and will be fully implemented in a matter of months. A sincere thank you to our amazing team and to our inspiring clients.
