Crowdfunding has become an alternative source of funds for many entities trying to raise capital.  The SEC has come out with rules that allow for entities to crowdfund under certain circumstances.  So the question naturally arises what about a new in practice attorney trying to start up their own practice.  There are many expenses that need to be paid prior to any revenue being generated from the attorney’s practice.  In some instances, crowdfunding may be the answer.

In general, a law firm may engage in certain types of crowdfunding but not others.  Any form of fundraising that gives the investor an interest in a law firm or a share of its revenue would be prohibited.  However, in some circumstances a law firm may give the funding source some kind of reward. For example, a law firm may send a funder non-confidential memoranda discussing legal issues (provided the law firm complies with any applicable advertising rules), or may agree that the law firm will provide pro bono legal services to certain charitable organizations, provided that the lawyer complies with regarding competence and the representation does not involve conflicts.

Before embarking on using Crowdfunding a law firm should inquire with their local or state bar and review the SEC regulations for a for profit entity using Crowdfunding. 

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