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September 1, 2010

Practicing Law in a Sharing Economy

This article was originally published on Shareable.net, in slightly abridged form.

What do you call a lawyer who helps people share, cooperate, barter, foster local economies, and build sustainable communities? That sounds like the beginning of a lawyer joke, but actually, it's the beginning of new field of law practice. Very soon, every community will need a specialist in this yet-to-be-named area: Community transactional law? Sustainable economies law? Cooperation law? Personally, I tend to call it sharing law.

 

The Evolving Nature of Our Transactions

Contrary to what we see on lawyer TV shows, around half of lawyers primarily work as transactional lawyers, not courtroom litigators. Transactional lawyers advise on, negotiate, and structure the contracts that govern business deals, real estate transfers, loans, mergers, securities, insurance, and so on.

The evolving nature of our transactions has created the need for a new area of law practice. We are entering an age of innovative transactions, collaborative transactions, crowd transactions, micro-transactions, sharing transactions - transactions that the legal field hasn't caught up with, like:

  • Bartering
  • Sharing
  • Cooperatives
  • Buying clubs
  • Community currencies
  • Time banks
  • Microlending
  • Crowdsourcing
  • Crowdfunding
  • Open source
  • Community supported agriculture
  • Fair trade
  • Cohousing
  • Coworking
  • Consensus decision-making
  • Intentional Communities
  • Community Gardens
  • Copyleft

  • Transactions that Put the Lively back into Livelihood

    What will the world look like as these kinds of transactions become more and more common, and what are the legal implications? Let's look at one person's life as an example: 

    Lynne lives in an urban cohousing community and shares ownership of a car with two neighbors. Every day, she fluidly shares, borrows, and lends (rather than owns) many household goods, tools, electronics, and other items. She is a member of a cooperative grocery, through which she receives significant discounts in exchange for putting in a few monthly work hours. She grows vegetables on an empty lot and sometimes sells the veggies to neighbors. She has a successful rooftop landscaping business, which she launched using 20 microloans and investments from friends and family. She often barters, doing odd jobs in exchange for goods and services. She also owns a 5% share of a hot springs retreat center outside of town, which she acquired through sweat equity.

    You might say that Lynne has put the "lively" back in livelihood. With the help of sharing, cooperation, and collaboration, she has managed to craft an affordable, comfortable lifestyle, put her skills to use, do varied and self-directed work, and live/work in a supportive community. She has "financed" property ownership and launched a thriving business off of the traditional financial and banking grid.[i]

    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.

    And if only Lynne could feel fully assured that her rights to partial ownership in the cohousing community, retreat center, car, shared goods, and consumer cooperative would be honored by her co-sharers, or, in the event of an unresolveable dispute, honored by a court of law. If only she could find affordable ways to manage the risk of her activities, since her activities don't fit into traditional insurance application check-boxes. If only there weren't so many legal headaches involved in living well and creating more localized, sustainable economies....

     

    Lawyers Are Going to Have a Ball With This

    Trying to unravel the legal issues that arise from Lynne's lifestyle would be like trying to unravel a gigantic, messy, tangled up ball of string. Fortunately, thousands of people go to law school every year because they enjoy solving tangled messes. The emerging generation of lawyers is going to have a ball with this.

    At present, there is not much literature explaining the legal implications of these kinds of transactions. To those of us who have made this our area of practice, many of the legal questions in this new field sit unanswered on our giant to-do lists. One-by-one, client-by-client, we are making headway. As the ground swells with people adopting more sharing and cooperative work and lifestyles, we can look forward to a growing body of law and literature on the subject.

    At the same time, the answers will never be clear cut, and lines we have grown accustomed to will be increasingly blurred. Until we evolve a new set of legal definitions, we'll dance uncertainly around the lines between "income" and "gifts," between "own" and "rent," between "employees" and "volunteers," between "work" and "hobby," between "nonprofit" and "for-profit," between "invest" and "donate," and so on. Our clients may have outside-the-box livelihoods and organizations, but it'll still be the job of lawyers to help them fit into boxes that are traditional enough to comply with the law.

     

    A Collaborative World Calls for Collaborative Lawyers

    The growth of "community transactional law" or "sharing law" has implications not just for what lawyers practice, but how they practice - how they interact with clients, deliver services, determine fees, work with conflicts of interest, and so on. Working in this field will require not only the skills of legal analysis, but also the skills of open-mindedness, clear communication, collaboration, and an understanding of the role that human needs and emotions play in collaborative transactions.

    Collaboration between lawyer, client, and community is key. A lawyer brings legal knowledge, while a client brings practical knowledge, and the community provides the forum for the transactions. To the extent information is shared in all directions, thoughtful and innovative transactions will emerge. Lawyers typically don't freely share sample documents because charging for documents is a primary way that lawyers make money. Lawyers in this new field will need to develop new revenue models that encourage sharing of information. The free flow of information will ensure better informed clients, better quality documents, and communities that are empowered with an understanding of what is possible.

    Lawyers can also use sharing to make legal services more affordable, and therefore accessible, to clients. A lawyer sharing office space can keep overhead and fees far lower than a law firm built to look like the Emerald City. A lawyer open to receiving payment in time dollars or working in exchange for a bag of organic artichokes will make legal services accessible to a broader range of clients.

     

    Documents That Are Alive [And Even Make Sense]

    A large component of lawyers' work is drafting documents, like contracts and agreements about how organizations will function. In a world where people form babysitting co-ops, community gardens, open source creative projects, and other decentralized, participatory, fluid, and adaptable group projects, documents clearly describing these arrangements will be indispensible. That is, if people can understand them. In a typical lawyer-client transaction, the lawyer might prepare a document that the client looks at, often reluctantly and quickly. The document is then put into a file cabinet, never to be seen again (unless someone sues someone, in which case everyone hires more lawyers to interpret the appallingly long and confusing paragraphs).

    Documents should be living tools for a sharing organization. A readable governing document will: 1) help the group come to a well-thought-out plan, 2) serve as a handy reference for participants and encourage consistency in operations, 3) enable new people to join and get up to speed with the program, 4) promote group harmony by ensuring that everyone is on the same page, and 5) support other, similar programs, by making it easy for others to model a new program using the first one's governing document.

     

    Lawyers Become Facilitators

    In a more sharing world, attorneys might more frequently represent groups of people, rather than just individuals and business entities. In these situations, an attorney might simultaneously play a role as a lawyer and a facilitator.

    This deviates, to some extent, from traditional models of practice. For example, if three unrelated people decide to purchase a house together, and approach an attorney to draft their shared ownership agreement, the attorney might insist that each party will need his or her own attorney. Simultaneously representing multiple parties to the same transaction can put an attorney at risk of violating ethical rules, because the parties' interests could come into conflict with each other. Furthermore, joint representation means that each individual client will not have his or her own zealous advocate. (In case you wondered, "zealous," is a word right out of lawyers' rules of professional conduct.)

    Zeal, however, may not be the most important thing clients are looking for in a sharing lawyer. Perhaps they want one attorney who can learn about everyone's needs, help explain the benefits and risks for each person, mediate any conflicts that do arise, explain the legal framework, and then guide the group in developing a plan that works for everyone. Often, facilitating the growth of an open and trusting relationship among parties will be far more important than lobbying for favorable contract terms for a single party.

    At the same time, when the stakes are high, giving attention to individual interests will be essential. To this end, sharing law has much to learn from "Collaborative Law," which has been applied primarily to divorce cases, and sometimes to the preparation of prenuptial agreements. In the collaborative model, each party is represented by an attorney, and thus has an advocate helping to assert that party's interests. Typically, however, the attorneys are also trained mediators, and the parties come to the negotiating table in an open and cooperative spirit. In the same way that the collaborative approach has been used in negotiating prenuptial agreements, it could be applied also to co-ownership agreements, partnership agreements, and other situations where parties must balance concern for their own interests with the desire to come together and collaborate.

     

    Lawyers Can Also Create More Square Holes

    Trying to legally categorize cutting edge transactions will sometimes be like trying to fit a square peg in a round hole. As such, lawyers working in this field will be in a good position to call for more square holes in our legal system. In other words, innovation and policy reform will also play a key role in the work of community transactional lawyers.

    In the course of their work, sharing lawyers will recognize how a state law or local zoning ordinance could be improved to encourage sharing, to incentivize urban agriculture, or to enable new forms of co-ownership. Lawyers can also be proactive architects of new kinds of organizations, new legal structures for sharing, and mechanisms for protecting the commons. In this same vein, for example, Creative Commons has already created a new licensing structure for the sharing of ideas and creative works.

     

    Greasing the Wheels of a More Sharing World

    In small pockets around the country, lawyers are beginning this work. Recently, Oakland-based attorney Jenny Kassan and I co-founded the Sustainable Economies Law Center, an organization that creates a space for this new field to develop, generates tools and resources for the public, and provides learning opportunities for law students.

    With any luck, law schools will start offering classes and clinics focused on these cutting-edge transactions. Soon, a new generation of "sharing lawyers" or "community transactional lawyers" will be able to enjoy rewarding work, interesting clients, and a field of practice that deviates, refreshingly, from the usual big-firm and government career paths.

    Years ago, I read a cynical article complaining that lawyers do nothing more than "grease the wheels of big business." It's unfortunate to the extent that it has been true, but I liked the phrase and I think we should simply roll it in a new direction. Now, our work is to grease the wheels of a more sharing, cooperative, and sustainable society.

     

    This article was written with input from attorneys Jenny Kassan and Emily Doskow.



    [i] Thank you to Morgan Gerard for using - and possibly coining - the phrase "living off the traditional financial services grid."

    September 1, 2010

    Money Soup! Part 1 of 3 of Janelle's legal guide to barter and gift economies

    Read it on Shareable.net: How to Barter Give and Get Stuff: Attorney Janelle Orsi Explains the Legal Nuts and Bolts of a Sharing Economy 

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    August 16, 2010

    The Sustainable Economies Law Center Wants to Help You Share

    The Sustainable Economies Law Center was recently featured in the East Bay Express, including an interview by Bernice Yeung with Janelle Orsi.

    The Sustainable Economies Law Center (SELC) facilitates the growth of sustainable, localized, and just economies, through legal research, professional training, resource development, and education about practices such as:

    · Cooperatives
    · Community-supported enterprises
    · Barter
    · Sharing
    · Local currencies
    · Intentional communities, ecovillages, cohousing
    · Affordable housing and limited equity housing
    · Urban agriculture
    · Community-based renewable energy
    · Community land trusts
    · Social enterprise
    · Microlending
    · Local investing
    · Co-op banks/credit unions

    In addition to creating and making available resources to the public, SELC provides training to legal professionals, student interns, and others, empowering them with tools to bring about more sustainable, localized, and just economies.  SELC also convenes special working groups, bringing together experts and practitioners from various fields, for the purpose of investigating, collecting resources for, and developing resources in specialized areas.

    Based in Oakland, California, SELC is a fiscally sponsored project of Community Ventures, a California 501(c)3 nonprofit organization. All SELC projects are currently managed by volunteer attorneys.

    September 27, 2009

    Sharing the Task of Nurturing Our Local Economies

    Yesterday, I moderated a panel discussion and had many great conversations at the Festival for Grassroots Economies, where brilliant ideas seemed to be generated, on average, every 2 seconds. My mind is still spinning from it all, but I thought I'd stop and try to capture at least a tidbit.

    A memorable moment was when attorney Jenny Kassan boldly suggested that we need a local stock exchange to serve as a source of finance for small local businesses and to keep our investments in the community (as opposed to putting our savings into mutual funds and financing who-knows-what kind of companies). It's really a genius idea - it could create a simple way for each of us to share in owning and nurturing the businesses that serve us. We would choose to finance the businesses we feel could successfully enhance the character of our neighborhoods, provide a needed local service or product, create local jobs, and be accountable to the community. Most folks trading on the New York Stock Exchange don't take any of this into consideration.

    Jenny Kassan cited Michael Shuman, author of The Small-Mart Revolution. Shuman recently blogged about the concept of local stock exchanges. A major reason we don't have local stock exchanges now, Shuman points out, is that securities laws have made it prohibitively expensive for small businesses to make a public offering. Shuman writes:

    "The regulations prohibit the average American from investing in any small business, unless the firm is willing to spend $50,000 to $100,000 on lawyers to prepare private placement memorandum or public offering--thick documents with microscopic, ALL CAPS PRINT that no human being has ever been observed actually reading."

    But Shuman suggests some simple changes to the securities laws, that could make it a lot easier for small businesses to seek investors. For example, he suggests that we could exempt from securities regulation any small businesses that issues $250,000 or less in total stock, offers the stock only to people living in the state, and allow each investor to purchase no more than $100 worth of stock.

    In the same way that many of us have made micro-loans through organizations such as Kiva, we could make investments of a comparable size in businesses locally. We'll see the returns in many ways - not only in the growth of our investment money, but in the growth of flourishing businesses all around us.

    May 25, 2009

    Coming Together at the Seams (or "A Stitch in Time Saves Nine or More People from Having to Buy Sewing Machines")

    sewing.jpgA friend of mine who is a landscaper recently told me about his plans to spend an afternoon at a local sewing center, patching up his denim work pants and mending various articles of clothing. His line of work subjects his clothes to a lot of wear and tear, but without his own sewing machine, he has a hard time giving them the durable repairs they need. He was on his way to Waterside Workshops, a nonprofit in Berkeley, CA, that has a Sewing Program open to the public. During their drop-in hours, anyone can come and use an array of sewing machines or other equipment, get sewing advice, and chat with others about sewing for $5 per hour.

    It would be wonderful for every community to have a public sewing workshop. It would encourage people to repair damaged clothing rather than throw it away. It would also help us all develop our skills, give us a space to socialize with others, and save many resources -- both personally and for the planet.

    Along the same lines, it would also be great if every community had:
    • A public woodworking shop
    • A welding center where anyone can go to repair broken metal items
    • A bike repair station where we can use specialized tools to repair our own bikes, like the Missing Link in Berkeley, where I once replaced my brakes
    • A place where we can go learn about and change our own car oil, transmission fluid, and so on
    • A tool lending library
    • Large commercial-scale kitchens that people could use for the day if they are helping to cater a one-time event or do a fundraising bake sale. Shared kitchens, such as Kitchen Chicago are also great for small-scale food enterprises.
    There are probably plenty of other great ideas along these same lines. If you have any ideas or would like to tell us about a cool community program of this sort, please email us at sharing (at) janelleorsi (dot) com. Thanks!
    May 15, 2009

    Sharing Nourishes Local Living Economies

    It's no fun to focus on bad news, so I won't for more than just a second. One piece of news literally drove home for me the importance of building local economies. I used to live near and work in Wilmington, OH, where the shipping company DHL has recently proceeded with the layoff of over 7,000 employees. The town itself barely has 12,000 people, which makes the number 7,000 sound unfathomable. It's scary that small towns all over the U.S. are so dependent on an economic system that's way bigger than us, and that's seemingly out of our control. We've all heard the encouragement to "buy local," "eat local," become "locavores," and so on. But creating vital local economies is not just a nice-sounding idea, it's crucial to preventing devastation of our communities, and current events are making action feel increasingly urgent.

    But now for some positive thoughts -- here are just a few of the ways that sharing can help strengthen our local economies:

    • Carsharing and ridesharing encourage people to reduce driving and shop locally.
    • Sharing facilitates a barter economy, especially when shared services and goods become a type of currency, exchangeable for other shared services and goods.
    • Sharing ownership and purchase of goods reduces costs and makes it possible to purchase quality goods from local producers and artisans.
    • Creation of consumer-owned or employee-owned businesses provides local economic opportunity.
    • Sharing can help small business owners -- allowing entrepreneurs to share office or retail space, equipment, trucks, and so on.
    • Sharing the purchase of services makes it more affordable to hire house cleaners, gardeners, home care workers, child care workers, and so on, thereby providing work to people locally.
    • Community-supported agriculture (CSA) programs create a direct link between consumers and local farmers, and provide security for the farms that grow our food.

    For more resources and information about creating sustainable local economies, visit the website for BALLE -- the Business Alliance for Local Living Economies. Their vision is to create "living economies" which "ensure that economic power resides locally to the greatest extent possible, sustaining vibrant, livable communities and healthy ecosystems in the process." There, I'm ending on a positive note.

    April 16, 2009

    Some Benefits of Sharing

    The benefits of sharing are many, and I'm always discovering new ones. Sharing can benefit us personally and financially, and it can make the world a much better place. Here is a listing of some of the benefits:

    Social and Personal Benefits.
    These are some of the ways that your life, and society as a whole, will be better because of sharing. For example, sharing can help everyone:
    • get to know our neighbors and make neighborhoods safer
    • make friends
    • find resources and referrals more easily
    • find new ways to relate to friends, relatives, coworkers, and neighbors
    • lighten our load of responsibilities
    • create more free time
    • meet the needs of seniors and people with disabilities
    • increase resources and opportunities for low-income households
    • support small businesses and buy locally
    • access better nutrition, and
    • access higher-quality goods.
    Environmental Benefits. Sharing is kind to the planet, because it:
    • uses space, energy, and resources more efficiently
    • reduces consumption
    • reduces waste
    • reduces energy use
    • helps us invest in green products, alternative energy, and durable goods
    • shrinks your carbon footprint
    • sets a green example for others, and
    • helps take cars off the road.
    Financial Benefits. The financial benefits of sharing really add up. Through sharing, you can:
    • spread the cost of owning high-quality and durable goods
    • reduce the cost of caring for a child or other family member
    • reduce the cost of food, fuel, and supplies
    • accomplish home repairs without paying for labor
    • spread the risk of loss, damage, and depreciation
    • share homeownership and build equity
    • save money through collective buying, and
    • get access to luxury items you couldn't afford alone.
    April 13, 2009

    Sharing in Every Realm of Life

    There are ways to incorporate sharing into almost every realm of life. Here's a sampling of ways to share:

    CAR:
    • Find a friend or a neighbor who would like to share a car and make a schedule to take turns.
    • Join an established car-sharing program, such as City CarShare or ZipCar.
    RIDES:
    FOOD:
    HOME:
    • Buy a home with a friend.
    • Consider living in cohousing.
    • Retrofit a large house to accommodate two households.
    • Live cooperatively in a group house.
    • Share a vacation home.

    Continue reading "Sharing in Every Realm of Life" »