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October 22, 2010 5:43 AM   Subscribe

The Birth of Sharing Law and the Rise of Co-ops - "A new sharing economy is emerging — but how does it fit within our legal system? Time for a whole new field of cooperation law." (via wc)
posted by kliuless (30 comments total) 8 users marked this as a favorite

 
Uh-oh. Economic activity is happening and lawyers aren't taking a cut. We'd better fix that!
posted by delmoi at 5:53 AM on October 22, 2010 [6 favorites]


My suggestion is that we write the laws in a special language that you can only decode with a $300,000 decoder ring, or you have to pay someone $100/hr. to do the translating for you.
posted by Civil_Disobedient at 5:58 AM on October 22, 2010 [4 favorites]


Read that as "Sharia Law" and thought "Here we go again!"
posted by briank at 5:58 AM on October 22, 2010 [4 favorites]


...a special language that you can only decode with a $300,000 decoder ring...

Client X, hereafter referred to as THE UNDERSIGNED, will at all times keep in forefront of both short- and long-term memory that the consumption of cocoa/malt/sugar-based milk flavoring product, hereafter referred to as OVALTINE, is to be considered top priority lest THE UNDERSIGNED be necessitated to recompense for the expressed inability to do so.
posted by griphus at 6:11 AM on October 22, 2010 [1 favorite]


What do you call a lawyer who helps people share, cooperate, barter, foster local economies, and build sustainable communities?

Largely unneccessary by design?
posted by Happy Dave at 6:14 AM on October 22, 2010 [2 favorites]


Also, after reading this properly, I think there's a massive unstated assumption running through this. For example:

Now, if only Lynne knew how to report all this to the IRS, and how to explain it to her car insurance company, the Health Department, mortgage lenders, the Secretary of State, the Department of Real Estate, the city planning and building departments, the Department of Agriculture, the Department of Labor, the Securities and Exchange Commission, and all of the other regulatory and bureaucratic entities that have a say over what she can and can’t do.

The assumption is - we need a new layer of law to help these new modes of community and personal interaction fit with our existing state systems.

Surely a better answer is better state systems (or something entirely different) not new middlemen?
posted by Happy Dave at 6:17 AM on October 22, 2010 [4 favorites]


Uh-oh. Economic activity is happening and lawyers aren't taking a cut. We'd better fix that!

Lawyers are going to get involved one way or another. They can get involved at the front end and create well defined legal relationships, or they can get involved at the back end when the inevitable dispute or dissolution happens. The former often makes the latter cheaper or even entirely avoidable. Think wills & trusts versus dying intestate or having a proper business organization rather than a de facto partnership. You get certainty and legal protections that the default rules don't provide.

However, I'm not sure about this breathless description of 'sharing law.' It seems to me a lot of this is pretty well figured out already. Lawyers have already hashed out a myriad of open source and Creative Commons licenses, and there already exist several business organizations that can easily be applied to co-ops and similar groups, which have existed for a long time. A lot of the other issues (insurance, tax, etc) get a lot simpler when you apply it to the group as an organization rather than trying to hash it out on an individual basis.
posted by jedicus at 6:50 AM on October 22, 2010 [6 favorites]


Surely a better answer is better state systems (or something entirely different) not new middlemen?

And who do you think would be involved in devising these new or better systems? And let me tell you, you don't want it to be non-lawyers. Non-lawyers tend to be terrible at drafting laws, which in turn tends to lead to more lawyer involvement than if the law had been written properly in the first place.
posted by jedicus at 6:52 AM on October 22, 2010 [1 favorite]


I love good laywer jokes, but the idea that these topics need some airing out is a good one.

The example of a group approaching a laywer when each party might need his/her own is good one, for example.

I think a lot of the property/equity based points in the article has some treatments in existing covenants, etc. In the US, LLCs seem to grant a group a lot of flexibility in terms of granting, and removing, equity. But it is good to think about these things. Especially when a big corporation gets involved with an existing cooperative project. Software and server based projects are fertile ground for exceptions, GPL flavors, future behavior. I can't imagine that real property and more visible capital would be any easier. Point well taken about insurance too.

For example, I was involved in a project where the 'product' was a free 'service', revenue share TBD. Not a single business entity had a contract in their imagination that combined 'free' with their content. It seems a no brainer until someone else property mixes with one's own efforts.

@delmoi, I immediately thought of the Richard Stark character in a Parker novel who summed her definition of a laywer, as 'someone who sees money changing hands, and goes there.'
posted by drowsy at 7:05 AM on October 22, 2010


or you have to pay someone $100/hr. to do the translating for you

$100 an hour?
posted by seventyfour at 7:13 AM on October 22, 2010


$100 an hour?

That's cheap for legal services. Most firms start at around $150, and the big ones can charge north of $500. The corporate M&A and securities firms that serve Manhattan financial companies regularly charge in excess of $800 an hour, the top few even breaking $1000.

When there's a billion dollars on the line, you're willing to pay whatever it takes to make sure there aren't any surprises. But most law firms that serve individuals and bill by the hour charge somewhere in the $100-150 range.
posted by valkyryn at 7:40 AM on October 22, 2010


And I'm with jedicus I see absolutely no reason why lawyers would be needed any less in whatever sort of system is envisioned in the links above compared to the current system.

Transactional law is significantly about defining and clarifying expectations. Most contract disputes which go to trial have to do with circumstances not considered by the parties beforehand. A good lawyer does his best to make sure that there aren't any such circumstances, which is why legal documents tend to be so long and so detailed. They're intended to make sure that regardless of what happens, everyone knows what they're supposed to do and how that's going to go down. The vast majority of contractual terms are never implicated, but having them and not needing them is way better than needing them and not having them.
posted by valkyryn at 7:43 AM on October 22, 2010 [2 favorites]


Yes, it is cheap, I thought if you were going for outrage, you'd start at maybe $350.

$100-$150 seems low to me. Depends on where you are, I guess. Here in Austin, the lower end seems to be $175/hour or so. I don't see lower rates -- for-profit law firms that serve lower income individuals charge flat fee or contingency, and I think of Austin's rates as being on the low side for Texas cities.
posted by seventyfour at 7:44 AM on October 22, 2010


In Indiana, things are a bit cheaper, but yeah, most of these things would probably be flat fees.
posted by valkyryn at 7:48 AM on October 22, 2010


Like two income households and home equity shopping sprees, this is yet another resource with which to disguise negative earnings growth of the middle class.
posted by Fupped Duck at 7:52 AM on October 22, 2010 [4 favorites]


This is awesome! Thanks.
posted by lunit at 8:18 AM on October 22, 2010


That's a great point, Fupped Duck. Here's a recent article in the Economist discussing sharing as an economic strategy:

The business of sharing: What do you do when you are green, broke and connected? You share
posted by seventyfour at 8:23 AM on October 22, 2010 [1 favorite]


I'm currently hanging out with a tool-share in Fort Collins that's under a lot of pressure from the city. Part of the 'problem' is that they're in a 'commercial limited' zone, and, in the almost comprehensive list of business types allowed in 'commercial limited' there's no mention of tool-shares, free-stores, free-schools, gardens, or infoshops. None of these functions are recognized by the city as valid things for people to be doing with a warehouse space...
posted by kaibutsu at 8:32 AM on October 22, 2010 [1 favorite]


What about tool or equipment rental companies? A tool share is just a tool rental company where you buy a subscription instead of paying per item. Unless you do pay per item in which case the company is no different from, say, renting a log splitter at a hardware store.

Free store? Surely you have Goodwill, Salvation Army, or some other kind of thrift store in Fort Collins. A free store is just another kind of thrift store.

Free school? The city has adult education services. Not sure why this would be treated differently.

Gardens? Might be easiest to work with the city to have it be declared a park.

Now, whether any of those things are allowed or should be allowed in that zone is another matter, but attorneys are hired to smooth things over with zoning boards all the time. So, hire a competent attorney in your jurisdiction, but I'm not sure there's a need for a special 'sharing law' attorney to address these issues.
posted by jedicus at 9:11 AM on October 22, 2010


@kaibutsu
That's a very good example (and a sad situation). Is the problem that there is no central owner of the tools? What if it was called a rental shop but to members only? This is a very good illustration of a place I'd want a lawyer to help me put the square peg in a big enough round hole, if the matter ever comes before a zoning board, etc.
posted by drowsy at 9:11 AM on October 22, 2010


I wish I had previewed twice there. I'm with jedicus in that there is probably a good way to make the tool-share fit some existing definition where everyone knows where responsibility lies without new law. But is it the sharing itself that is being governed, or the corporate entity definition? Those laws and lists probably exist to exclude any businesses that city doesn't want to see there, maybe strip clubs or whathaveyou.

Interesting though. It might be fun and worth it to force the city to see organized sharing of tools as commerce, or it might be better to just call yourself a self-storage facility... I hope you have good luck either way.
posted by drowsy at 9:21 AM on October 22, 2010


I'm currently hanging out with a tool-share in Fort Collins that's under a lot of pressure from the city. Part of the 'problem' is that they're in a 'commercial limited' zone,

If the city is looking into its zoning ordinance, it strikes me as almost guaranteed that they're more concerned about either 1) property taxes, 2) possible public nuisances, or 3) grinding axes than they are about the legal analysis of a tool-share outfit. I could come up with a way to make that technically fit an ordinance in about fifteen minutes, but if a municipality is trying to nail you with a zoning ordinance they'll usually figure out a way to do it.
posted by valkyryn at 10:22 AM on October 22, 2010


I'm a little confused by the article. Is there no law enabling co-ops in the USA? I've lived all my life in a couple fairly co-op dense jurisdictions (British Columbia and Quebec) and been a member or client of many co-ops and I haven't seen a great deal of need for more lawyers.

In a way, the co-op model is a bit anti-lawyer, especially at small scales. Co-ops are about getting people to work together for a common purpose, not about everyone trying to get the best of everyone else. Co-ops are about people meeting their own needs, not relying on professionals. Sure, there are needs for lawyers sometimes, but the idea that co-ops need more lawyers seems a little self-serving (I'm sure no one is surprised that the author of the article is a lawyer).

What I'd like to see is better tools to help small co-ops and non-profits manage their legal affairs, especially for risk management. Small organizations just can't afford big legal expenses, but we don't have a great system to let boards manage legal issues on their own.
posted by ssg at 11:47 AM on October 22, 2010


Lawyers are going to get involved one way or another. They can get involved at the front end and create well defined legal relationships, or they can get involved at the back end when the inevitable dispute or dissolution happens

You can take a couple different perspectives on this though: one is that this is just common sense and we need lawyers to protect ourselves from ourselves, the other is that this is a bit of a racket. Maybe what we need is not more lawyering, but better dispute resolution methods for smaller co-ops and non-profits. Maybe we need a small-claims court equivalent that handles these sorts of issues for small organizations. On the other hand, the democratic nature of co-ops and the board model tends to work pretty well to resolve issues before they become legal issues. People can work things out between themselves pretty well in most cases.
posted by ssg at 12:04 PM on October 22, 2010 [1 favorite]


Maybe what we need is not more lawyering, but better dispute resolution methods for smaller co-ops and non-profits. Maybe we need a small-claims court equivalent that handles these sorts of issues for small organizations.

Alternative dispute resolution is a whole giant thing, and it's mostly run by lawyers. Mediation, arbitration, you name it. The parties are generally represented by lawyers and the arbitrators are mostly lawyers or retired judges, who were mostly lawyers before that.

Anyway, there's nothing stopping co-ops and similar groups from having members sign arbitration or mediation agreements, requiring that disputes be resolved in that manner. Again, I don't really see a need for new law or legal structures, just existing law applied intelligently.

Co-ops are about getting people to work together for a common purpose, not about everyone trying to get the best of everyone else. Co-ops are about people meeting their own needs, not relying on professionals.

And that works really well, until someone does try to get the better of everyone else, or until a professional is needed. Look at it this way:

"Families are about getting people to work together for a common purpose, not about everyone trying to get the best of everyone else. Families are about people meeting their own needs, not relying on professionals."

Yet divorce lawyers, divorce courts, mediation, pre-nuptial agreements, etc are all useful things and should be thought about by anyone thinking of getting married because a) disputes happen and b) there are often significant assets, rights, and liabilities involved, including assets, rights, and liabilities that may not be present at the outset of the venture, which means planning ahead is important.
posted by jedicus at 12:20 PM on October 22, 2010 [2 favorites]


ADR is not really what I am talking about. If multiple lawyers are being hired, then this is simply too expensive for small co-ops or non-profits.

I am not at all convinced that the current state of divorce / family law is even close to optimal. Why would you consider that to be a good example for co-ops to follow? I think this is a cautionary example that we should seek to avoid, not something we should emulate.

You seem to be focused on solutions that involve lots of work for lawyers here, which is kind of missing the point of my comments.
posted by ssg at 3:06 PM on October 22, 2010


I am not at all convinced that the current state of divorce / family law is even close to optimal. Why would you consider that to be a good example for co-ops to follow? I think this is a cautionary example that we should seek to avoid, not something we should emulate.

My point was not that family law as it exists is optimal, but that just because an organizational structure (e.g. the family) is designed around cooperation does not mean that it actually works out that way, or even works out that way most of the time. Thus, some effective dispute resolution mechanism is needed, and so far that has meant lawyers.

As presently implemented, divorce court, prenups, and all the rest may not be optimal, but the ideas and goals behind them are important and useful.

ADR is not really what I am talking about. If multiple lawyers are being hired, then this is simply too expensive for small co-ops or non-profits.

If you can come up with an effective (i.e., fast, efficient, inexpensive, consistent, predictable) dispute resolution system that doesn't involve lawyers, then you'll make a small fortune / earn the praise of the world. Everyone from business to government to individuals would beat a path to your door.

Anyway, not all forms of ADR involve multiple lawyers. Mediation often doesn't, for example.
posted by jedicus at 3:28 PM on October 22, 2010


social impact bonds:
Social entrepreneurs or community groups are loaned money by private investors to try out solutions to social problems. If the solution works, the government pays whoever invested in the solution a share of whatever spending is saved. In other words, as one writer put it, "It’s a way of transferring public sector savings to private investors who are willing to put money into preventative initiatives early on."

...

This first use of the technique is to cut recidivism of those doing short-term prison sentences at Peterborough Prison, about two hours north of London. Right now about 60 percent of prisoners in that category re-offend, costing the state lots of money in policing, court costs, and prison operations. Simply put: If that recidivism figure drops, the government saves significantly.

To address this, investors pooled $8 million to fund three local charity groups, which will offer mentoring and drug counseling, among other things. If they meet their target of a 10 percent reduction in recidivism, investors will get their money back at between 7.5 and 13.5 percent.
(via)
posted by kliuless at 3:54 PM on October 22, 2010


If you can come up with an effective (i.e., fast, efficient, inexpensive, consistent, predictable) dispute resolution system that doesn't involve lawyers, then you'll make a small fortune / earn the praise of the world.

Again, I think that we need to look to the small claims court model here. I also think we need to give co-op members and boards easy to use tools to craft appropriate structures and rules for their organizations that avoid disputes in the first place and allow dispute resolution within the organization. Then, we need an official channel for quick, efficient dispute resolution without lawyers for small co-ops and non-profits. Get the parties before a judge or equivalent, get the facts out as quickly as possible, and resolve the issue.

We need to make it easy for people to share with others, not make the transaction costs of sharing prohibitive by inserting lawyers into the process. Legal complexity and costs need to be in line with the scale of the enterprise.
posted by ssg at 4:37 PM on October 22, 2010 [1 favorite]


Again, I think that we need to look to the small claims court model here.

Then you don't really understand how small claims works, nor why it is distinct from full-on trial courts.

I also think we need to give co-op members and boards easy to use tools to craft appropriate structures and rules for their organizations that avoid disputes in the first place and allow dispute resolution within the organization.

Those tools already exist. They're called "lawyers." And they're just as good at creating systems--usually called "contracts" but sometimes also "bylaws"--which enable organizations to resolve disputes internally as they are at resolving those disputes which cannot be handled internally. They mostly do this by eliminating ambiguity from relationships using systems specifically designed for that purpose.

Which is why so many people find legal documents and procedures inscrutable: they aren't any good at thinking unambiguously or spotting ambiguities in their own or others' thinking. They may even like ambiguity because it means they don't have to think about difficult situations. But not thinking about them doesn't make them go away.

Life is messy, and the law is designed to deal with that messiness. That's why it's difficult. And all of the pesky little requirements and clauses lawyers like to go on about are there because someone actually tried whatever stunt said clauses are intended to preclude. You may laugh or think that unreasonable, but people will go to unreasonable lengths to avoid paying money they don't want to pay. The best way of dealing with that is ruling it out from the start.

If the world was full of people who were consistently virtuous regardless of the cost to themselves, lawyers would be unnecessary. But those people are the exception, not the rule, and lawyers are this an essential part of the infrastructure for a society functional above the hunter-gatherer level.

Legal complexity and costs need to be in line with the scale of the enterprise.

They do. A small-potatoes non-profit can hire a small-potatoes lawyer who does non-profit law. They're out there. And the one-time $300-500 they'll spend coming up with a thorough and well-drafted set of bylaws and form contracts they can use forever would be completely and totally eclipsed by the controversy that is likely to happen if they don't spend that money.
posted by valkyryn at 11:16 AM on October 23, 2010 [2 favorites]


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