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In 1999 a young D.C.-area entrepreneur named Sean Milliken came up with a great idea. He figured out how to solve a problem that had been bedeviling charities for years — the problem of in-kind donations. Instead of donating cash, people often donate items such as used books, antiques, baseball cards, and old cars. Many charities simply don’t need those in-kind donations or can’t make use of them. So Milliken founded a small Internet startup that would conduct online auctions on behalf of charities, turning unwanted in-kind donations into cash. Today his brainchild, MissionFish, has become a huge success, raising millions of dollars each year. But to reach this point, the company had to get through some tough times and face many daunting legal problems, which it overcame with the help of the pro bono efforts of Cooley Godward. Milliken’s company, MissionFish.com Inc., was initially designed as a for-profit entity, taking a small service fee each time an auction was successful. But unlike most for-profit businesses, MissionFish aimed only to cover its costs and provide modest returns, remaining at heart a charitable organization. Like every Internet startup, the company needed seed funding, but because of its charitable orientation, it had trouble raising money from the usual venture capitalists. So MissionFish sought socially conscious investors who were looking to do some good, and in late 1999 it received a big chunk of the funding it needed from a number of local business leaders, including Mark Warner, then a candidate for Virginia governor. Also like every Internet startup, the company needed legal counsel familiar with the issues facing newly formed, venture-backed companies as well as expertise in legal issues specific to online businesses. Having been managing director of Columbia Capital, Warner knew Cooley Godward well, due to its roots in technology law and venture finance. Warner introduced Milliken and MissionFish to Cooley, and soon thereafter Cooley became the company’s outside counsel. SINKING MISSIONFISH The MissionFish site officially launched in October 2000 — just in time to be battered by the collapse of the tech bubble. It ran out of funds before it could build a large user base, and it didn’t have resources for advertising or additional technology development. As if those problems weren’t enough, MissionFish ran headfirst into a monstrous Internet competitor, the auction Goliath eBay. The company could not make ends meet. In 2001 MissionFish failed, like so many startups of its generation. The company sold its assets to the Points of Light Foundation, a nonprofit that facilitated volunteerism and had relationships with nonprofits all across the country. Milliken became an employee of Points of Light. His dot-com was dead. The idea of charitable Internet auctions, however, lived on. After the terrorist attacks of 9/11, eBay launched its own charity auction. Its “ Auction for America” was a huge success, raising more than $10 million. Spurred by this triumph and the interest of its sellers, eBay decided to build a permanent, ongoing program to encourage charitable auctions. But eBay didn’t have existing relationships with enough charities to create a program as large as it wanted, and it had never built a software platform just for this purpose. In conferring with other charitable foundations about how to start the program, eBay learned about MissionFish and the Points of Light Foundation. The Internet-auction giant proposed an exclusive relationship with the Points of Light Foundation based on the foundation’s connections with nonprofits everywhere and the already-developed platform of the foundation’s MissionFish nonprofit service. The idea was simple: Every time a seller listed an item for auction on eBay, he would be given the opportunity to designate a charity to receive part of the sale price. The company knew that many sellers would happily donate a portion of their auction proceeds to charity, and many bidders would be more eager to buy if they knew that some of the sale price would go to charity. To let buyers know which items were being auctioned partially for charity, eBay would place a special blue-and-yellow-ribbon icon next to the listings for these items. MissionFish’s job would be to manage the relationships with nonprofits, recruit additional nonprofits, and collect and distribute the donations. MissionFish had its work cut out for it. On the business side, it needed to address logistics issues and re-establish online operations. Primarily, the company had to undertake the development of enhanced software to handle the large volumes of user traffic from eBay. Fortunately, MissionFish found lots of help: AOL offered hosting services on favorable terms; Oracle, BEA, and IBM came forward with software and hardware; and eBay committed funds for the additional software development needed for platform integration. The legal arrangements for the eBay-MissionFish program, dubbed “ eBay GivingWorks,” also required a significant amount of work. The company anticipated numerous regulatory and tax issues as well as a number of transactional concerns, such as online-contracting formalities, intellectual property licensing, and matters related to technology integration between eBay and MissionFish. With MissionFish reborn, Milliken again approached Cooley, expecting to be a paying client once more. Given the charitable nature of the project, however, Cooley offered its services free of charge. In November 2003, eBay launched GivingWorks, offering its users access to more than 1,500 U.S. charities. By the middle of 2006, the program had raised $28.8 million. The program has grown markedly over the past several years, raising a variety of new legal issues. For instance, several enormous charities wanted to join the program. So Cooley helped MissionFish negotiate deals with the American Red Cross, WorldVision, and United Way, among others. MissionFish’s relationship with eBay expanded to include broader integration between the companies’ online platforms, requiring negotiated expansions to the initial agreement. In partnership with eBay’s U.K. affiliate, MissionFish recently launched an analogous program in the United Kingdom. Cooley helped negotiate these deals. CHARITY SELLS At last count, nearly 600,000 charitable auctions had been held on eBay, and successful auctions resulted in average donations of $80 each. Both eBay’s and MissionFish’s predictions have been proven correct — charitable listings are more likely to sell, and they sell for higher prices. At present more than 8,400 U.S. charities, plus an additional 1,000 in the United Kingdom, benefit from the program. Rollouts in additional countries are in the works. Cooley is preparing to assist those projects, too. But the MissionFish story isn’t about only charitable contributions and a nonprofit’s success. The story also is about the value of matching a firm’s particular strengths to pro bono opportunities that can best use those strengths. Pro bono legal work most often involves litigation or advocacy of some sort. Although Cooley has a large, active litigation practice — including pro bono litigation — it also has transactional specialists of many sorts, such as specialists in the corporate matters faced by biotech companies and other specialists in licensing information technology. Cooley recognized that the expertise of these attorneys may not be of much use in litigation matters, so if these lawyers want to take on pro bono work, they must learn a new discipline before they can even begin helping anyone. Given this added commitment, many attorneys — even those actively seeking pro bono work — may be unable or unwilling to step outside their familiar practice areas. To tap into the goodwill of its many transactional attorneys, Cooley developed a strategy of identifying transactions requiring pro bono counsel within the particular expertise of its attorneys. Missionfish is a successful case in point. With this strategy, Cooley has been able to identify pro bono opportunities where its counsel can be the most effective and do the most good, and thus the firm has increased the participation of its attorneys in pro bono efforts. The strategy has paid dividends to Cooley’s lawyers, who build connections to their communities while doing good, as well as its pro bono clients, who get legal counsel that is efficient and expert. “The pro bono services of Cooley have been absolutely critical to our ability to offer this service to nonprofits,” says Milliken. “It is simply inconceivable that we would be able to navigate the enormous complexities inherent to our work without their commitment and expertise.”
Todd Harris is an associate in the Reston, Va., office of Cooley Godward.

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