The Perils & Parables of Permits

By Tim Keller

Permit me to say that permits have lately taken precedence at the Institute for Justice Clinic on Entrepreneurship at the University of Chicago.

Students learn many profound lessons by providing the legal services to our lower-income entrepreneurial clients at the IJ Clinic—including structuring business organizations, drafting contracts and advising on business strategy—but the system of licenses and permits is without a doubt one of our biggest growth areas.

Perhaps our preoccupation with permits stems from our efforts to help a conscientious and experienced client start his own moving company. In Illinois, to be authorized as an in-state mover, our client must prove that it is “convenient and necessary” for him to join the marketplace. He must pay a $900 fee and assemble a raft of information, including budget projections and a safety plan, in addition to proof of insurance. Most bizarrely, he must find several people to testify under oath to the fact that his moving company will be unique in the marketplace, that they “need” his services, and that they cannot find equivalent services elsewhere. Of course, this is curious testimony, given that our client has not been allowed to prove himself by providing any moving services without the license. It is no wonder that so many unlicensed moving companies operate, and that it can be hard to distinguish the shady dealers from the trustworthy. One student working his way through the licensing quagmire exclaimed, “This is ridiculous! I swear, this Clinic is the best thing the libertarians could have going, because I’m simply fed up.”

Permits also come into play for our clients who are skilled and knowledgeable artisans with a desire to make their own way in the construction business. We represent a trio of friends who hope to kick-start a business by rehabbing a house one of them owns, but they might have to jettison their business plan after learning how many fees they will have to pay for building permits.

Another client, who is a skilled woodworker, anticipates that he might expand his business into general contracting someday. We recently sat down for a long session and explained the process involved in getting general contractor’s licenses from both the county and the municipality, that the licenses require annual fees, that he might need additional licenses if he works in the suburbs, and that he will still need to keep up his other business licenses. He sighed and said, “There’s just not enough time in the day. When I’m wearing so many hats, there is no time to do this stuff, and it’s important stuff. When the big project comes, I won’t be ready with the paperwork.”

By helping clients identify and obtain the necessary licenses and permits, our law students are learning to navigate complex regulations and explain them clearly. They are advancing admirably in the fine art of counseling clients about facing uncertainty and risk, while encouraging them to continue pursuing their dreams. These skills are fundamental to what lawyers do all the time. But students in the IJ Clinic are also learning how many snares are set for the enterprising and talented individuals they represent. They see our clients’ faces fall when the fees are calculated, and they learn to explain how the governments are using occupational licensing as a source of revenue. They see that, without legal assistance, clients like ours might not make it. And they resolve to offer that assistance far into the future.

Beth Milnikel is the Institute for Justice Clinic Director.