Lawyers in the drivers seat article
Here is an article I came across this afternoon — it addresses the very question we were discussing in class today (or, at least, one of the questions): whether the legal profession needs to adapt.
Author Archives: Laura Hollis
“Entrepreneurial law”?
In his paper entitled, “Entrepreneurial Law,” Viktor Mayer-Schönberger makes the following statement:
“Most legal scholars believe that the law should be reactive, slow, and predictable, in order to decrease uncertainty. By contrast, I suggest that the law should be used proactively as a mechanism of entrepreneurial facilitation. Legislators intent to stimulate entrepreneurship should seize potential opportunities to create regulatory tensions that entrepreneurs can exploit to upset existing markets with radical new offerings. … Law can and should be used repeatedly and in an iterative and adaptive way if necessary. In short, policymakers desiring to facilitate entrepreneurial activity should use the law in an entrepreneurial fashion, acting swiftly, risking errors, and adapting fast to changing circumstances.”
I’m going to offer some thoughts, and then I’d like to hear opposing views. My take on this is that it is the same confusion about the difference between “legal risk” and “business uncertainty,” but in reverse. Now, Professor M-S is suggesting that what we need is more legal uncertainty. I fail to see how this helps.
In class yesterday, we discussed the fact that the “rules” entrepreneurs do not feel constrained by are largely the “way things are being done” in the particular area in which they want to do business. There is nothing – except for market demand – that says they have to follow those rules. If they disregard them, or do things differently, it’s a risk – but only a business risk. They might be hugely successful, moderately successful, or they might founder – and for any number of reasons.
The point is that they are free to disregard the business “rules.”
That is NOT true of laws. Entrepreneurs are not free to disregard the law, any more than anyone else is. Having one regulatory structure in which entrepreneurs are trying to operate, and then changing that structure “iteratively,” “adaptively” and “repeatedly” would simply mean that one’s business was (potentially) lawful one day, heavily regulated the next, and illegal the day after that. (And yes, I realize that even the most ambitious legal system does not change that quickly, but you take my meaning.)
In such a system, the only actors who would benefit are those who have influence with lawmakers. This will almost never be entrepreneurs and innovators – particularly disruptive ones, who are seeking to launch a product or a new business model for which the market is unknown, or apparently very small.
An entrepreneur who operates outside of established business parameters is a renegade. An entrepreneur who operates outside the law is a criminal. (And of course, we do have those. Think about it …)
But perhaps I am giving Professor Mayer-Schönberger’s article too “crabbed and literal” a reading. I welcome thoughts from the class. Can you perhaps think of examples where the ability to change the legal structures quickly would be beneficial to existing and aspiring entrepreneurs?
Innovate or die?
This is a unique application of what has come to be a commonly-held viewpoint — that many of the most successful companies fail to innovate despite knowing that they need to.
We’ll read some literature on the subject that explores the issue from the business (and business scholars’) perspective, and see whether that is, in fact, true, and why (if so). But when companies are very large and influential, they often have other means at their disposal to thwart competition — means that invoke the law: intellectual property acquisition, litigation, and lobbying, just to name a few.
Higher education (and education in general) has been slow to innovate. Be thinking about this other industries that seem resistant to change. Why do you think that is? Are changes less likely – or less needed? Does the structure of the industry inhibit change? Are there aspects of some industries that should resist change? Perhaps in order to preserve things that have a more timeless value?
The immigration and entrepreneurship conundrum
Here is a recent article that discusses the push for changes to immigration law, to allow more immigrants with high-tech skills to stay and start companies. But the article alludes to one of the bigger policy challenges: the “high-tech immigrant” issue is being folded in with other issues, such as “amnesty” for the 12M (approximate) immigrants already here without having gone through the legal process, and the related question of what is proper administration of the country’s borders.
Is the “high tech immigrant” issue being “held hostage” by the machinations of D.C.? Should these issues be decided together? Separately? What are the pros and cons of each approach, in your view? What factors do you think lawmakers are considering in this debate? What factors do you think they should be considering?
Is innovation at risk?
Quote
“Will we ever invent something as important as this?”
Here is another really interesting cover story from The Economist. I find their editorial stance to be perplexingly schizophrenic. They routinely support candidates and elected officials whose stance is for more government intervention. And yet whenever it comes to discussing the need for entrepreneurship, economic growth, or innovation, government is the wrench in the works. Here is a quote:
“So there are good reasons for thinking that the 21st century’s innovative juices will flow fast. But there are also reasons to watch out for impediments. The biggest danger is government.
When government was smaller, innovation was easier. Industrialists could introduce new processes or change a product’s design without a man from the ministry claiming some regulation had been broken. It is a good thing that these days pharmaceuticals are stringently tested and factory emissions controlled. But officialdom tends to write far more rules than are necessary for the public good; and thickets of red tape strangle innovation. Even many regulations designed to help innovation are not working well. The West’s intellectual-property system, for instance, is a mess, because it grants too many patents of dubious merit.
The state has also notably failed to open itself up to innovation. Productivity is mostly stagnant in the public sector. Unions have often managed to prevent governments even publishing the performance indicators which, elsewhere, have encouraged managers to innovate. There is vast scope for IT to boost productivity in health care and education, if only those sectors were more open to change.”
So — what do you think? What should the government’s role be in encouraging innovation? How can it best do this without “picking winners” (which government rarely does well; frankly – professional investors don’t do it all that well!)
Here’s the first week’s blog topic
This week. we read David Pozen’s article, We Are All Entrepreneurs Now. What do you think is the public’s impression of “entrepreneurship”? What makes you say so? Is Pozen correct that it has become a trendy “buzzword”? Does it matter? What are your own impressions of entrepreneurship?
Try to find some articles that discuss the popularity – or unpopularity – of entrepreneurship, or ones which discuss the public’s understanding of the term or lack thereof.
Good luck!
Welcome to Law and the Entrepreneur!
Good morning! Welcome to the class blog for Law and the Entrepreneur. The purpose of this blog is to give all of us the opportunity to find and share information that is relevant to the topics we will be studying in the class. Basically, this would include anything related to law or public policy as it affects entrepreneurship, innovation, or technology commercialization.
Feel free to construe this broadly. Nor need you confine yourself to things which are taking place in (or of interest to) the United States. To the contrary, the more information we can find and post that draws from other countries’ experience, the richer the educational experience will be.
I will have a theme for each week’s blog posts. I will be looking forward to your contributions to this online discussion, and its impact on the in-class discussion as well.