A SIB is not a single defined legal structure you can pick up and use, it is a set of concepts and relationships. It therefore takes bespoke and often unique legal work to set up.
At a minimum, you will need legal support to produce the key legal documents:
- Contracts with commissioner, SPV (if using), intermediary (if using), investor(s) and delivery partners
- Term sheet outlining obligations to investor(s)
- Shareholders’ agreement
Most legal firms do some pro bono – or low bono – work, and if your main requirement is creating the above documents, this should be enough. If your partner is getting a good law firm and strong legal support, you most likely don’t need additional support.
However, if you need advice on structuring the deal, you’ll probably want to work with a lawyer who has seen a variety of these types of transactions to guide you through the options, and you may need to budget for more comprehensive support.
Making legal support work for you
Actions to ensure you set yourself up for an effective relationship with your legal partners may include:
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Writing a very clear Request for Proposal and scope of work
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Speaking with two to three different providers to understand the time they are able to dedicate and their expertise, including experience with SIBs
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Agreeing on a detailed timetable
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Understanding whether there is a cap on pro bono assistance; some may need you to transfer to an hourly rate if the transaction becomes more complex
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Agreeing on a comprehensive fee as well as arrangement for any ongoing work
Further resources
- Directory of SIB Service Providers, Big Lottery Fund: a list of law firms which have offered legal support to SIBs
- Template SIB Contract and accompanying guidance, Centre For Social Impact Bonds
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