Feature Image

Onward to Victory

 

The nexus of legal and entrepreneurial considerations is an increasing institutional focus but one that has always been present in the function of society. Dean G. Marcus Cole, the incoming eleventh Dean of Notre Dame Law School, has underscored this concept when describing the origin of his motivation to practice law. As a lawyer, he hoped to assist local entrepreneurs in launching small businesses to further the development of the low-income community in which he was raised. Dean Cole aims for the law school not to rely on antiquated practice but to instill law students with entrepreneurial ingenuity and responsiveness to an evolving legal landscape.

Notre Dame prides itself on cultivating a different kind of lawyer but this philosophy could be construed as an implicit statement about the impression many have with respect to the current practice of law. Perception is largely based on personal experience and countless individuals have had negative interactions with legal counsel in the early stages of formation. However, there are those who have persisted to succeed. Stephen M. Griesemer is a Notre Dame Law School graduate who left his practice at a leading global law firm to help run his family’s business in Missouri. After returning to legal practice, he then left again to form a thriving private equity firm in Chicago. He maintains a close relationship with the university and continues to guide students to think beyond the functional aspects of the challenges they are presented with in corporate representation. Understanding the value of this perspective has the potential to create significant opportunities.

The fortitude required in executing a venture often derives from more than knowledge but a passion to see a vision realized. Michael L. Cioffi, a Notre Dame alum and partner at an international law firm, has specifically cited this desire as the driving force behind the creation of Monteverdi in the Val d’Orcia. More than a boutique hotel and potential revenue stream, he sought to restore a place that would honor the purpose and heritage of the region. It took years to develop but Monteverdi now flourishes with an Artists and Scholars in Residence program and the shining village on a hill he envisioned has come to fruition.

 

Does the Law Do Enough to Protect Innovators?

In this era of innovation, most of us are used to seeing disruptive businesses entering the market. What’s interesting to follow is how quickly after a new model shows some success, a competitor quickly launches a similar model and tries to dominate the space. As a recent example, the latest IPO news coming from Uber and Lyft remind us of how these disruptive companies are often reaching their milestones at a similar pace.

There are two companies with similar business models that are currently in court trying to defend the uniqueness of their brand. Regus and WeWork are two industry innovators that have created alternatives to traditional office space. Regus is the earlier version, and it offers office space that looks more like a typical office. WeWork has developed a collaborative workplace with features not found in conventional offices. Both services provide flexible payment options not available in standard office leases. Clients can choose a package of office essentials based on their individual needs for things like conference rooms, secretarial services, and printing. The companies share the same disruptive model, with WeWork adding a new layer.

Recently, WeWork created a new model of its product geared to midsized companies and called it HQ by WeWork. Regus owned a subsidiary called HQ Global Workplaces and sued WeWork for trademark violations.

The case is primarily a trademark case, but I believe the underlying factor is that WeWork has borrowed Regus’ business model. Regus has no way to stop them from using their idea. They can only interfere if WeWork violates an IP right as they claim happened here. This example might not bother us much considering the trendy WeWork model looks very different than the corporate Regus model, but it got me thinking about whether we offer protection for entrepreneurs who create new business models.

A different example that I came across recently is in eyewear products. Warby Parker was a disruptive idea in an industry which was ripe for innovation. Warby Parker offers customers the option to try on a selection of sample frames before ordering a pair from their site. To do this, they figured out what materials ship well, what type of packaging works and what kind of selection works well with for their system. I discovered recently two sites, Jonas Paul and Pair Eyewear, that sell children’s glasses and have each been described as the “Warby Parker” of kids’ glasses. They are both run by entrepreneurs with interesting and compelling backstories and products. Both are held up as models of entrepreneurialism. They also, both borrow heavily from Warby Parkers model of shipping out sample frames. Pair Eyewear even hired a former Warber Parker exec to help them get their business going. Warby Parker has no legal claim as far as I know, but should they?

Entrepreneurs have been described in the readings as people who continuously tinker with an idea to make it work best.  What should happen when that idea is a product of another entrepreneur’s creative business model? Should the law offer the first entrepreneur ownership of their innovative solution, or should it be free and open for all to use?

Intellectual Property Rights: The Good, The Bad, and China

Safeguarding a company’s intellectual property (IP) can be crucial to developing and maintaining a successful business. In a New York Times Magazine article “Z-Burger Case Shows Value of Trademark Protection,” Payam Tabibian, the original owner and creator of the successful Z-Burger fast-food chain, was able to protect his creation precisely because he had registered his trademarks at the outset of creating his business. IP rights not only help preserve an entrepreneur’s business, however, they are also crucial for encouraging innovation, protecting small businesses, and helping to establish brand trust and awareness. Additionally, IP rights can assist in securing secondary revenue streams and can also be used as leverage if an entrepreneur is in possession of a valuable patent they want to use as collateral when financing their startup.

Although the United States has relatively strong IP rights, the legal landscape may not protect all IP equally. As Forbes article In Today’s Market, Do Patents Even Matter? points out, a patent does not protect your IP rights from being infringed upon; it simply provides the patent holder a means of legal recourse in the event they are infringed. Even if an entrepreneur decides to sue, most litigation lasts between three to five years and costs millions. Novice entrepreneurs and small startups are not financially equipped to fight in the IP battles that routinely occur between heavy-hitters such as Apple and Samsung. Another issue is larger firms using the IP laws to register patents and then never actually use them, consequently stifling innovation.To make matters worse, around 97% of all patents never even recoup the costs of filing, making them an unnecessary expense in many circumstances.

Regardless of the argument whether IP rights are essential for new businesses and entrepreneurs, the facts illustrate that they nevertheless play a vital role in America’s economy. An article in The Economist, America Can’t Control the Global Flow of Ideas, underscores how the desire among businesses for strong IP laws is high because so much is at stake, with American businesses deriving 80% of their market value from intangible assets and own half of the world’s IP. These same businesses rely on selling their products across borders where IP protection is not nearly as a secure, specifically in China. The White House itself published a report accusing China of IP violations, which included accusations of “outright theft and forced transfer of IP to joint-venture partners in China.” As cited in a Forbes article, Feeding the Fire of Genius: Intellectual Property And America’s High-Tech Future, the United States Trade Representative stated that “Chinese theft of American IP currently costs between $225 billion and $600 billion annually.” With China being listed as “the world’s principal IP infringer,” startups and large firms alike are advocating for the Trump administration to tighten its grip over China’s unfair trade practices regarding IP. Whether the current administration will be able to successfully curtail such trade violations is still up for debate, with entrepreneurs waiting on the sidelines hoping that the legal system will prevail in protecting their IP rights.

Question to Consider:

  1. Are the benefits of strong IP protections outweighed by their drawbacks?
  2. Does the legal system help facilitate the benefits of IP protections or enhance its potential issues?
  3. Would the business landscape look different if U.S. Patent and Trademark Office employed some degree of active use to patents in order for them to remain enforceable?
  4. If most small businesses and startups do not have the time or financial resources to defend their IP, is it worth getting a patent? Is the potential value of the IP rights worth the initial costs and potentially drawn-out legal battles?
  5. Is there anything substantial the United States can do to thwart China’s outright theft of IP?

The “Value-Added” of Adding Values

Image result for wework

In a New York Times Magazine article, “The Rise of the WeWorking Class,” Gideon Lewis-Kraus extols the virtues of the relatively young company WeWork, arguing that it is the company’s culture that has driven its success. WeWork (as far as I understand it) functions as a commercial subleaser, providing office-share space for –– you guessed it –– entrepreneurs, as well as small startups and (at least some) traditional companies looking to save costs on renting office space.

Most recently, corporations such Liberty Mutual, IBM, and Sprint have even begun to take up shop within WeWork-owned space. As Lewis-Kraus paints a picture of what a work-day in the life is like for those who make one of WeWork’s 425 locations their office home, it’s not hard to see why. Perks such as top-shelf coffee, modern furnishings, and kombucha are part of the appeal but these amenities are not WeWork’s true value-added. That particular distinction belongs to its ability to (literally) bring people together.

WeWork designs its spaces to force more human interaction. Not only are there multiple common spaces and centralized water coolers, but even the hallways are constructed to generate conversation through their sheer narrowness. Together with WeWork’s intentional weekly social activities (Taco Tuesdays, yoga classes, happy hours, etc.), there is a cultivated sense of belonging among a group of individual workers that would otherwise be isolated. Sole practitioner CPAs mingle with novelists and wedding planners in WeWork’s shared space, and as consequence their work takes on new meaning.

Miguel McKelvey, WeWork’s founder, explains to his team, “You’re not building work space. You’re here building a new infrastructure to rebuild social fabric and rebuild up the potential for human connection.” In a world where isolating work continues to drive job dissatisfaction perhaps WeWork provides a solution.

Questions to Consider:

  1. WeWork can be understood both as the work of entrepreneurship (a disrupter to the modern commercial leasing market) as well as a facilitator of new entrepreneurs. Can it really provide “Values” (as Christensen would understand them) to a company if that is what is supposed to be the most ingrained?
  2. Duhigg’s article on job dissatisfaction suggests that taking a stable job may lead to misery because the individual doesn’t get an opportunity to learn from many setbacks. Does this fit logically within one’s own idea of what one should look for in the job market? Should we seek hardship that we might garner “meaningful work” along the way?
  3. Taken together, the two articles suggests that finding meaning in one’s work may be facilitated (perhaps most) by working with people that one enjoys and respects. If this is true, has WeWork just gotten lucky or is there something about a group of individual entrepreneurs working in the same place that inevitably leads to higher rates of social positivity?

Links to Articles and Images:

“The Rise of the WeWorking Class,” by Gideon Lewis-Kraus. Published by The New York Times Magazine.

“America’s Professional Elite: Wealthy, Successful and Miserable,” by Charles Duhigg. Published by The New York Times Magazine.

https://www.wework.com

The Advent of Technology in the Law and the Legal Field’s Response

In the 90’s the advent of technology, in particular the internet and MP3 services, would disrupt the music industry, leading to, not only new formats to enjoy music in, but to decreased album sales. Innovations in technology and the development of the internet has worried lawyers and the legal field. Lawyers, like everyone else, continue to question whether robots will replace their jobs. Thus, The Barhas been stagnant in its response and use of technology. However, slowly, automation is  doing the job.

Two articles stuck out to me in my research—a 2013 article called, “The Laws of (Legal) Robotics: Automatons, Apis, and the Aba,” by Tim Hwang & a 2017 New York Times article, “A.I. Is Doing Legal Work. But It Won’t Replace Lawyers, Yet” by Steve Lohr. Hwang’s article discussed the developing legal technology and the resulting economic and the legal implications. In particular, although automation and technology can displace the need for a lawyer, it can be used to supplant tedious and rudimentary job requirements, such as document reviewing. This is software which, for example, “replaces the cumbersome manual filling in of repetitive documents with template-based systems where the user answers software-driven interview questions” (i.e. E-discovery and Axiom). However, automated document assembly technology has led to big business, with some of this supplanting the lawyer altogether, not just aspects of crafting the work product (LegalZoom). This is what lawyers were concerned with. Only lawyers can participate in the practice of lawand lawyers remain resistant to automation and artificial intelligence in part, because of this requirement, however  automation has already taken advantage of its ambiguities. The practice of law as it defined by the law has been challenged by these technologies and the difficultly of cleanly delineating which tasks are permissible for automation will only increase as more technology develops.

Lohr’s article details the development of automation, declaring that the adoption of artificial technology in law firms will be a “slow, task-by-task process.” What this process may look like istechnology automating pieces of the work, streamlining the rest of the work. Currently, portions ofbasic document review have already been outsourced or automated at large law firms. Thus, under this view, technology and automation assisting human work rather than replacing it. The work that consumes most lawyer’s time still involves “strategy, creativity, judgment and empathy” — and those efforts cannot yet be automated. However, lawyers need to remain cognizant that technology and the accompanying innovations are unpredictable.

Now back to my music industry analogy – Today, as streaming services dominant the field, money is being transferred from the industry execs to independent labels and artist. Thus, as a very intelligent professor (Professor Hollis) once stated, either you adapt to this need and changes, and benefit from technology, or other/new players will come along and supply this and force you out of the picture altogether. As Daniel Domingo stated in his blog, The Big Four Accounting firms are already planning to insource and automate some legal work. Ultimately, disruptive change will happen, and although there are human qualities necessary to the field of law that preserve the demand for lawyers, technology is beginning to tread in this domain. One thing Hwang’s article indicated was that “if the technology is not sufficiently capable to replace at least some of the tasks done by lawyers, there will be no adoption.” Thus, ultimately, the technology that will challenge the lawyer’s job will be of optimal quality, and thus as the Innovator’s Dilemma reveals, in the end efficiency and competence in the legal field will be furthered.

 

Questions:

  1. What legal services and jobs are at risk with the development of automation and artificial technology in the legal field?
  2. Are there any new legal services and jobs that can development with the advent of technology and automation?

 

More on Changing Legal Education

Many have recognized that law schools must implement changes in order to adapt to the continuously evolving legal landscape.  (One example of such commentary can be found here.) These changes to the legal profession include automation, changing client demands, and legal technology development.  While law schools continue to emphasize doctrinal law, changes in the legal industry mandate experiential learning and learning about the business of law, among other things.

Some law schools and state bar associations have attempted to keep up with the changing legal profession by effecting changes to their curriculum, emphasizing tech-savvy, forward thinking and taking legal education outside of the typical classroom.  Such innovative courses include those that require the creation of a legal aid app, those that focus on e-discovery, and those that target business professionals.  Other law schools have attempted to expand access to a legal education by accepting both the LSAT and the GRE.

Other changes have been suggested, such as shortening law school to two years in order to lower the cost of tuition and allow for a year of experiential learning.  The idea has been voiced for many years, as this example from a 2013 speech given by former President Barack Obama at the University of Chicago illustrates.  Additionally, some have suggested that the ability to get a law degree through online courses would expand accessibility to a legal education.  For example, in Fall 2019, The University of Dayton’s law school plans to offer a curriculum in which some of its courses may be taken online.

It will be interesting to see whether these implemented changes prove successful and become more widespread, and what new changes will emerge as the legal landscape continues to evolve.

PwC, Attorneys at Law?

Historically, lawyers have enjoyed a unprecedented monopoly on the practice of law. Couched as a measure to protect recipients of legal services, this phenomenon seems reasonable and remains justifiable. However, is this a tenable justification? In professions ranging from medicine to architecture, traditional practitioners (e.g., doctors) have relinquished their exclusive abilities to practice. This begs the question: is the legal profession next? Should it be next?

To be fair, this usurpation of legal work by non-lawyers has been taking place for a number of years (e.g., LegalZoom and CPAs’ authorization to practice before the United State Tax Court). Similar underlying pressures that precipitated the foregoing gerrymandering of legal professional boundaries, including the classical economic theory of the benefits of competition, are now pushing to expand the field’s boundaries to allow others to “practice”. For example, Big Four accounting firms are planning to practice legal work where authorized. Internationally, accounting firms have been doing legal work for years (e.g., Deloitte Legal).

Questions to consider:

  • Do you feel threatened as a future lawyer?
  • Will competition in the legal space serve (e.g., lower prices) or hurt (i.e., PR issues) client interests?
  • How should state bars respond?
  • How does this shift align with the general trend of technological and professional changes in the legal profession?