IJ Clinic Entrepreneur Succeeds Despite Government Interference

By Erika Pfleger

Politicians promise to create jobs, but instead they keep piling on burdensome regulations. IJ Clinic client Kentech Consulting could show them a thing or two about how jobs are really created.

Kenneth Coats founded Kentech in 2007 in response to a problem he observed in his community: People—especially young adults—were struggling to find employment because of misleading or extraneous information in their records. As an entrepreneur, Ken didn’t just see the problem—he resolved to do something about it by creating a low-cost, web-based record expungement service that gave customers correct information at a lower cost than hiring an attorney. But the Illinois Attorney General accused Kentech of the unauthorized practice of law and shut the service down.

“I was devastated,” says Ken, who had left his job to start this business because he wanted to make a living by serving his community. Although his spirit was bruised, Ken refused to quit. He reinvented Kentech as a background screening business with a twist—Ken uses his tech savvy and business experience to provide customers with accurate information about potential tenants or employees in streamlined, paperless reports.

The reinvented business has still had to struggle against restrictive laws. “The type of work we do—you can’t sneeze without it involving a law,” says Ken.

That is where the IJ Clinic on Entrepreneurship comes in. IJ Clinic students at the University of Chicago Law School have advised Kentech on laws governing private detective licenses, credit reporting, fingerprint processing licenses and more to make sure that his agreements are sound and his business can flourish. Ken said the IJ Clinic’s legal counsel helped him navigate these obstacles and was indispensible during Kentech’s transition process and beyond.

In turn, the law students have had an eye-opening experience. They have seen first-hand how destructive anticompetitive regulations can be, suppressing creativity and depriving customers of options. But they have also been inspired by Ken’s entrepreneurial creativity and perseverance.

After years of slowly rebuilding, Ken’s business was stable by early 2011. He was the sole full-time employee, with several contractors and steady customers. Then, according to Ken, “Christmas came early!” in mid-December: Kentech secured a large, five-year contract. After a flurry of activity to boost staff, Kentech closed the year with nine employees and a team of more than 20 contractors. His risk-taking and innovation paid off.

To add to his holiday joy, Ken was selected to join the highly competitive Goldman Sachs 10,000 Small Businesses program, which recognizes the critical role that small businesses play in job creation. The program identifies and mentors entrepreneurs who are well-positioned to create substantial new private sector jobs.

Ken has not given up on his initial vision for a record expungement service. Long-term, he hopes to use some of Kentech’s profits to fund a legal clinic—like the IJ Clinic—and use his software program to help low-income individuals clear their records so they, too, can get to work.

For now, he’s focused on investing in Kentech.

“I look at all the people who work here now,” Ken said, “and it feels really good to create these jobs for others.”

His resolution for 2012: keep growing. The IJ Clinic’s resolution for all of our clients is equally clear: keep helping.

Erika Pfleger is assistant director of the IJ Clinic on Entrepreneurship.