Counting The “Pros” To Pro Bono Work: Law Firm Gift Giving & Tax Write-Offs

It’s the season for giving. But, instead of wrapping something under the tree, consider giving the gift of time.

Pro Bono. Three words that—in this economic uncertainty—no lawyer wants to hear.

Or maybe they do?

Pro bono is essentially providing legal services to poor, marginalized, or at-risk individuals, groups, and communities without pay in order to serve a higher purpose—the provision of justice.

Some say pro bono work is altruistic and therefore difficult to incentivize among attorneys. Economists at Princeton University, however, may disagree with this statement after a recent study.

“Molly Crockett, a psychologist at the University of Oxford in the United Kingdom, combined the classic psychological and economics tools for probing altruism: pain and money,” writes John Bohannan for Science magazine.

The scientist’s task? To find out who many electric shocks would be dolled out—and to whom—when money was at stake.

The pain given via electrode was deemed “mildly painful, but not intolerable.” And the price tags of each shock varied, from $0.15 to $15.

The randomly chosen “decider” in the trial was given a choice of number of shocks for money, and the shocks were either to the decided, themselves, or to another participant—although the decider always got the money.

Although we as society would like to believe that people would be willing to give up some sort of gain, financial or intrinsic, to avoid the distress of hurting somebody else, this idea has yet to be supported by previous scientific research, points out Bohannon.

In fact, the opposite result has been proven time and time again, as far back as the 1960s with Stanley Milgram, whose psychology experiments are some of the best known and widely discussed.

In 1961, Milgram sought to test our obedience to authority figures. He was motivated, in part, by the behavior of Nazi war criminals, many of whom were facing trial at that time, such as the infamous Adolf Eichmann.

Subjects in Milgram’s experiment were instructed to give a series of escalating electric shocks to an unidentified person in another room. The shocks ranged from 15 volts to 450 volts. Although the subjects were separated, they could communicate between the walls. Participants dolling the shocks could hear the (faked) reactions of their counterparts, which included screaming, banging on the wall, and complaints of heart conditions. After a while, the participant would hear nothing on the other side of the wall. Throughout the experiment, the subjects were not threatened or yelled at, rather, they were given stern and consistent instructions not to stop administering the volts.

So did they?

A (no pun intended) shocking 65 percent of the subjects followed orders and administered the final—and seemingly fatal—450-volt electric shock to the person in the next room.

But today, it finally seems possible that altruism—or at least incentivizing it within people—can exist.

In the more recent study, the results show that while participants did not like the pain of receiving a shock (they were willing to make about $0.30 less money per shock on average to receive fewer of them) people were willing to lose twice that amount, $0.60 per shock, to hurt an anonymous other less. The full results can be found online in the Proceedings of the National Academy of Sciences.

Fifty years later, society can sigh in relief that people are more altruistic than they first seemed in Milgram’s portrayal.

For lawyers, however, Pro Bono work is not actually altruistic. On the contrary, it can provide law firms with many profitable opportunities, among them:

• Networking opportunities for lawyers
• A chance to bolster a lawyer or firm’s reputation
• Enhancing a positive firm culture of team-building
• Boosting staff morale
• Fundraising opportunity for a firm working with charities or other endownments
• Enhancing skills and experience of younger lawyers
• Providing leadership opportunities for younger lawyers
• Attracting paying clients through high-profile pro-bono work
• Attracting young talent who value a Pro Bono, idealistic firm culture

And, in the end, Pro Bono work is at tax write-off for law firms.

The Internal Revenue Service (IRS) writes about tax deductions for pro bono legal services:

“Although you cannot deduct the value of your time or services, you can deduct the expenses you incur while donating your services to a qualified organization.” 

Lahle Wolfe, About.com Guide, answers all your questions about similar tax deductions She writes:

“Before listing the types of expenses you may be able to deduct, they need to meet two IRS qualifications:

1. The expense be incurred as a requirement in order to perform the service for the organization; and
2. The services must primarily benefit the charity and not the taxpayer (but both can benefit.)

Examples of expenses you may be able to deduct, or partially deduct, include: cost of supplies needed to provide or perform the service that directly benefited the charity; travel expenses; and other direct expenses.”

Therefore, by serving those in need—including your own self-interests—your firm can get the deductions it needs. With ample online guidance about tax write-offs for pro bono work, there’s no excuse for not offering these services to your community.

It’s the season for giving, so sign-up to give pro bono work this holiday. Do it for both the philanthropy and the profit-seeking it inspires.

-WB

Electric Shock Study Shows We’d Rather Hurt Ourselves Than Others (& How To Apply This Attitude To Pro Bono Work)

Pro Bono. Three words that—in this economy—no lawyer wants to hear.

Or maybe they do?

Pro bono is essentially providing legal services to poor, marginalized, or at-risk individuals, groups, and communities without pay; usually it’s done in order to serve a higher purpose—the provision of justice.

Some say pro bono work is altruistic and therefore difficult to incentivize among attorneys. Economists at Princeton University, however, may disagree with this statement after a recent study.

“Molly Crockett, a psychologist at the University of Oxford in the United Kingdom, combined the classic psychological and economics tools for probing altruism: pain and money,” writes John Bohannan for Science magazine

The scientist’s task? To find out who many electric shocks would be dolled out—and to whom—when money was at stake.

The pain given via electrode was deemed “mildly painful, but not intolerable.” And the price tags of each shock varied, from $0.15 to $15.

The randomly chosen “decider” in the trial was given a choice of number of shocks for money, and the shocks were either to the decider, themselves, or to another participant—although the decider always got the money.

Although society would like to believe that people would be willing to give up some sort of gain, financial or intrinsic, to avoid the distress of hurting somebody else, this idea has yet to be supported by previous scientific research, points out Bohannon.

In fact, the opposite result–that people are not altruistic–has been proven time and time again, as far back as the 1960s with Stanley Milgram, whose psychology experiments are some of the best known and widely discussed.

In 1961, Milgram sought to test our obedience to authority figures. He was motivated, in part, by the behavior of Nazi war criminals, many of whom were facing trial at that time, such as the infamous Adolf Eichmann.

Subjects in Milgram’s experiment were instructed to give a series of escalating electric shocks to an unidentified person in another room. The shocks ranged from 15 volts to 450 volts. Although the subjects were separated, they could communicate between the walls. Participants dolling the shocks could hear the (faked) reactions of their counterparts, which included screaming, banging on the wall, and complaints of heart conditions. After a while, the participant would hear nothing on the other side of the wall. Throughout the experiment, the subjects were not threatened or yelled at, rather, they were given stern and consistent instructions not to stop administering the volts.

So did they?

A (no pun intended) shocking 65 percent of the subjects followed orders and administered the final—and seemingly fatal—450-volt electric shock to the person in the next room.

But today, it finally seems possible that altruism—or at least incentivizing it within people—can exist.

In the more recent study, the results show that while participants did not like the pain of receiving a shock (they were willing to make about $0.30 less money per shock on average to receive fewer of them) people were willing to lose twice that amount, $0.60 per shock, to hurt an anonymous other less. The full results can be found online in the Proceedings of the National Academy of Sciences.

Fifty years later, society can finally sigh in relief knowing that people are more caring and altruistic than they first seemed in Milgram’s portrayal.

For lawyers, however, pro bono work is not actually altruistic. On the contrary, it can provide law firms with many profitable opportunities, among them:

• Networking opportunities for lawyers
• Boosting a lawyer’s or firm’s reputation
• Enhancing team-building among lawyers
• Boosting staff morale
• Creating a positive and altruistic corporate culture
• Fundraising opportunity for a firm working with charities or other endownments
• Enhancing skills and experience of younger lawyers
• Providing leadership opportunities for younger lawyers
• Attracting paying clients through high-profile pro-bono work
• Attracting young talent to the firm who value an idealistic corporate culture

So, sign up for pro bono work today. Do it for the philanthropy–as the electric shock study shows, we’d rather help others than ourselves. And, of course, do it for the profit-seeking aspects, too. It can’t hurt.

-WB

Lawyers Who Love Food & Drink: Successful Entreprelawyers & Motivating Employees

This video (click here) about non-profiteer turned entrepreneur turned lawyer turned foodie is heartwarming. At first, it seems like an unusual look into a lawyer’s unusual life. But, at second glance, law firm professionals can glean much, much more.

Way beyond carrots or sticks, creative incentive systems have been proven to motivate employees.

Take, for example, a recent experiment that offered participants the choice between two rewards for a task measuring productivity: a water bottle gift item or seven dollars cash.

Unsurprisingly, 80 percent of participants chose the cash. However, when different groups weren’t given the choice, the results in productivity were less intuitive.

“The cash bonus didn’t have any effect on the speed or accuracy with which the students did their jobs,” reports the Harvard Business Review blog.

“However, those receiving the free bottle reciprocated by upping their data entry rate by 25%, a productivity increase that more than offset the cost of the bottle itself.”

Employees like to feel appreciated, so a mug given “in thanks” can often farther, when personalized, than cash. And, it reaps in-kind profits. So, find out what motivates your employees most—what products they like, what kind of non-cash incentives are desired—and then redefine your bonus structure.

One of the most effective creative incentives is employee engagement.

“Employee engagement is the emotional commitment the employee has to the organization and its goals,” writes Kevin Kruse, entrepreneur and NY Times bestselling author and his latest book is Employee Engagement 2.0, for Forbes.

Many factors increase employee satisfaction and happiness: free meals, higher salary, or larger offices. However, only certain factors increase productivity and profits for your firm. One of these is pro-bono work or participation in charitable foundations.

Employees are more productive when they feel more attached to the work at hand—when they feel like they’re working for a higher purpose. What happens when lawyers love their jobs? They perform them better, faster.

So back to the video, Peter Kim, lawyer turned, discussed his life after graduation. In no small way, Kim demonstrates how passion can drive career choices. After graduating from Brown, he started by distributing food stamps in the U.S. Then, Kim joined the Peace Corps where he started his own non-profit organization. In the end, he went to law school, eventually joining an elite law firm in New York City.

Kim is like many lawyers. As a young person, or young associate, he wants to develop his skills in law, but in a meaningful way. The decision to become a lawyer was largely motivated, for Kim, by an aspiration to do good, improve legal systems, and generally develop public health and education across all nations—both in the U.S. and abroad.

Young associates, like Kim, are often motivated by the deeper societal, philosophical, and normative questions involved in practicing law.

As a law firm manager, find a way to tap into these lofty goals of young employees and conduct round-table debates or lunch-roulette surrounding philosophical themes. Or, ask young associates to tackle your pro-bono cases.

In addition to showing you how advocating creative incentives, like non-profit or pro-bono work, can work to engage your employees, this video also shows law firm managers what happens when you don’t properly motivate them: Kim now works as executive director of the Museum of Food and Drink (MOFAD). Go figure.

-WB

How To Write-Off Pro Bono Services At Tax Season & (More Importantly) Why You Should Offer Them

Faced with a demand for budget cuts amid excessive government spending and deficit, the Republican Study Committee proposed the elimination of the Legal Services Corporation for its most recent 2013 budget plan.

On March 28, 2012, the ABA announced its opposition to the proposal.

The ABA believes the budget plan eliminating the Legal Services Corporation (LSC) ignores the overwhelming needs of struggling families for free legal advice.

In light of these needs, the Republican Study Committee proposal seems remarkably shortsighted. LSC-funded aid providers close nearly 1 million cases each year, including child custody matters, foreclosures, and veterans claims, among other worthy American causes and cases.

The ABA wrote in its statement, “Eliminating LSC will not erase the needs of working-class families, veterans or the elderly who have no choice but to go to court.“

“Slashing support for local legal aid groups will not help victims of natural disasters who need LSC funding to rebuild their lives.”

With the impending Presidential elections, federal funding has be facing even more public scrutiny. However—as the ABA points out—instead of relieving the government of costly legal burdens, the Republic Study Committee proposal will just shift them to State courts.

“Defunding LSC will place unprecedented burdens on our state courts to guide a flood of pro se litigants through complex legal channels,” writes the ABA.

“That will mean higher demand for already beleaguered court services, greater cost for local taxpayers and massive delay in courtrooms.”

Now, more than ever, the public is relying on easy and affordable access legal services. And, for law firms, tax season provides additional reasons for law firms to provide pro bono work (you know, outside the simple pursuit of justice).

The Internal Revenue Service (IRS) writes about tax deductions for pro bono legal services:

“Although you cannot deduct the value of your time or services, you can deduct the expenses you incur while donating your services to a qualified organization.”

 Lahle Wolfe, About.com Guide, answers all your questions about similar tax deductions She writes:

“Before listing the types of expenses you may be able to deduct, they need to meet two IRS qualifications:

•  The expense be incurred as a requirement in order to perform the service for the organization; and
• The services must primarily benefit the charity and not the taxpayer (but both can benefit.)

Examples of expenses you may be able to deduct, or partially deduct, include: cost of supplies needed to provide or perform the service that directly benefited the charity; travel expenses; and other direct expenses.”

Therefore, this April 15, by serving those in need, your firm can get the deductions it needs. With ample online guidance about tax write-offs for pro bono work, there’s no excuse for not offering these services to your community.

And, next fiscal year, aim to mirror the ABA’s mission “to serve equally our members, our profession, and the public by defending liberty and delivering justice as the … representative of the legal profession.”

The ABA counter-proposes to the Republicans, “Rather than eliminating LSC, Congress should increase its investment in access to justice by appropriating $402 million for FY 2013.”

 But, whatever your belief about the budget, it’s time—at least—to get involved with charitable billing at your firm.

The ABA is correct to assert, “We cannot afford to make our courts even less accessible to the public.”

 -WB

For a reminder about the benefits of offering pro bono services at your firm read C4CM’s article, “Occupy Wall Street Reminds Lawyers To Find A Cause, Make A Difference With Pro Bono Work.”

Occupy Wall Street Reminds Lawyers To Find A Cause, Make A Difference With Pro Bono Work

­­­­When was the last time you offered free legal advice or voluntary legal aid without pressure or obligation from your law firm?

Surely, lawyers are among the best at offering service gratis. Unfortunately, it’s almost impossible to gage the true number of helping hands in America. Statistics vary when it comes to calculating the percentage of lawyers who perform pro bono work each year.

For example, the American Bar Association (ABA) conducted a study that showed 73 percent of lawyers did pro bono work in 2008. Yet, states like Pennsylvania and Nevada report that only about 10 to 40 percent of their lawyers, respectively, perform periodic pro bono work.

“There is great unmet need in the community for pro bono service,” Allen Snyder, retired litigator, said to The National Law Journal.

Snyder uses his retirement to offer his pro bono legal services in Washington, D.C. And, he’s not alone.

James Springer also uses his retirement for good after leaving Dickstein Shapiro in 2004. One of the firm’s top antitrust lawyers, Springer now works part time as an attorney with the D.C. Legal Aid Society.

“Social Security law is as complicated as any subject matter I’ve dealt with,” Springer said to The National Law Journal.

“What I didn’t expect is how frustrating it is and how long it takes to get things done. We are dealing with bureaucrats who have impossible workloads.”

These days, federal regulations are only becoming more and more complicated. In a recession, some people find it hard to catch up or hang on. Springer helps clients keep their heads above bureaucratically-suffocating water.

“I deal with real people,” Springer said to The National Law Journal.

“I’ve never been hugged by a client until I came to work for Legal Aid. I do this for myself as much as I do this for other people.”

Even lawyers need a hug once in awhile. So where are they?

Nothing is worse than a destitute and desperate civilian going into a court case on a pro se basis. There is a lot to lose considering today’s economy.

Some causes attract more attention than others. The National Lawyers Guild has a table in Zuccotti Park to help demonstrators in the Occupy Wall Street Movement with legal advice. Wearing bright green ball caps, the legal aids are visible amid the crowd.

The aim is to decrease police violence and demonstrator transgressions.

On Friday, volunteers offered a “Know Your Rights” training session. Advice that’s easy to assemble for an expert but difficult to know as a pedestrian.

So what can your law firm do to benefit the community? How can you—the individual—serve before retirement?

The benefit to law firms that conduct pro bono services is increased visibility in dark economic times, in addition to well-deserved praise and attention from a myriad of potential new clients.

Pro bono work is frequently tout as win-win. It’s true.

Back in Zuccotti Park, N.L.G. volunteer Moira Meltzer-Cohen, a law student at the City University of New York School of Law, tells the Downtown Express. “Whatever happens [in the protest], there’s a neutral witness.”

Day and night, green hats are taking names and numbers of people in trouble.

“We document it, but we don’t get involved.”

Although, in the case of pro bono work, involvement is just what the nation is looking for.

Find your cause, make a difference.

-WB

Pro Bono Arm of BigLaw Needs an Injection (But Law’s Still Tops among Other Industries!)

Last year, AmLaw100 Firms enjoyed overall growth, but their free legal aid, provided to the poor by many corporate law firms, did not fare so well.  BigLaw attorneys were apparently extremely busy with the renewed influx of paying clientele. The American Lawyer came to this conclusion in its current (July 1, 2011) issue, devoted to pro bono efforts.

AmLaw’s A-list issue is known for tallying up the firms that rank highest in the nation in “feel-good” factors like pro bono involvement and how happy associates claim to be.  When AmLaw looked at the 100 highest-grossing firms, there was a 10.8% decline in the number of hours donated to charity by top law firms.  (By contrast, during the last ten years, there had been a steady increase in pro bono activity.)

It seems that associates–they do most of the pro bono work–having survived the recent recession, are suddenly finding themselves up to their eyeballs in (paid) projects.  This has apparently left no room for any other sort of work.  “The fact is that associates do the heavy pro bono lifting at big firms, and those [associates] who survived the recession layoffs found themselves loaded up with paid work in last year’s turnaround,” said AmLaw editor Robin Sparkman.

Despite the drop-off, it’s important to note, says the WSJ Law Blog, that law is still the number-one industry when it comes to performing such full-fledged volunteer or charity work for the community.   The fact remains that, if only during seasons when they are actually able to overextend themselves a bit, BigLaw’s heart is in the right place.  Unlike other professions, lawyers have adopted the Latin  phrase which means “for the good of [the people]” as their own, in their selfless and self-starting efforts to be of service.

Very admirable, and worth going back to, as soon as there is a  bit of a lull in their schedules.  Meanwhile, here are the firms that, according to AmLaw’s statistics, made the list of pro bono heavy hitters:   Hughes Hubbard; Munger, Tolles; Paul, Hastings; Gibson, Dunn; Debevoise; Latham & Watkins; Milbank, Tweed; Skadden, Arps; Davis Polk and Paul, Weiss.

-EM

The Challenge of Re-inspiration: How Lawyers Today Can Rise To the Occasion

In the face of the current economic duress, Maryland-based Academic and lawyer Michelle Harner (pictured here) conspires with those in the legal profession to bring out their better nature. Last month, Harrell posted a thought-provoking invitation on Concurring Opinion, inviting fellow attorneys to use what the industry has learned from the recession to improve itself.  As she puts it, not only should the economic pressure push lawyers to advance in the fields of pro bono, internship and self-improvement, but, if she had her druthers, firms would “reposition themselves in the marketplace”. 

Harner’s blog touches on automation, too. ”Lawyers  need to continue to explore ways to better use technology,” she says. However, “I personally do not think that technology can or should act as a substitute for human analytical skills and counselling.”  Harner stresses that the old-school manner of spending time with clients; of taking time for some one-on-one counselling, is of the utmost importance. “A core part of a good client-lawyer relationship is a lawyer who listens to the client’s story, takes time to understand the client’s objectives and invokes her skill set to consider nuances….”  

Since the economic meltdown of two years ago, law has been especially hard hit.  Firms have had to lay off legions of lawyers.  In light of this, it’s only natural that the industry take a step back, inhale deeply, and come forward again with some sort of new paradigm. For many, like Harner, this is actually a harbinger of good news as the shift was, in some instances, perceived as long overdue.  In a related work for the Social Science Research Network entitled “Thinking Like a Lawyer,” the same author suggests that there are many ways to go about restructuring…while still retaining the thought process of an attorney.    (Harner’s comprehensive research paper juxtaposes two other well-circulated papers whose own theses delved into the future of lawyers: Larry Ribstein’s “The Death of Big Law” and Richard Susskind’s “The End of Lawyers?”)

Harner is quick to remind lawyers of their intricate worth. She opens her paper with a quote from Oliver Wendell Holmes, Jr., which tells attorneys that, “Your business is to see your fact [against the] frame of the universe.”  Via another carefully selected quote, she admonishes all those who have undergone the rigors of a law school education to be of good cheer, as it were, for, even if lawyers were never to work a day in their lives, their value as leaders and skilled problem solvers would be immense.  “…[Y]ou [would] be equipped with a galaxy of positions in both the private and public sectors.”

In the end, Harner casts a light on the value of keeping open to new ideas and of continuing to maintain high standards of efficiency and client service, and of always striving to put a human face on innovation.   For more, go here

http://www.concurringopinions.com/archives/2011/02/parting-thoughts-on-the-profession.html  and here http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1754525    

  -EM