Liquid Law

The problem: People with ideas are vulnerable when approaching individuals or companies with the ability to implement their ideas. Non-disclosure agreements and the like may be simple but they are also ineffective.

The problem is not simply that enforcing NDA’s is difficult in court (and therefore expensive), but also that a boiler-plate NDA is unable to cover their specific case. The result is either the agreement is something that a third-party is unlikely to agree to, or that is is watered down so much as to be practically meaningless (ie impressive sounding legal hot-air).

In addition the legal language in which the agreement is couched, can be so abstract that it is entirely unclear to a casual onlooker (or indeed the parties themselves), as to what was actually actually agreed on. This confusion makes it much easier for a party to the agreement to deny betraying any trust with regard to the idea disclosed.

The solution: what we need is a low cost, simple technique that inventors can use that provides robust incentives for third parties not to betray the trust and confidentiality of information passed to them. This can be achieved by creating a conditional agreement to publish a record of the agreement reached, based on a simple “depiction release” agreement as used in documentaries.

If we call the two parties to the agreement the “inventor” and the “idea broker”, we can see a clear set of cases in which soft agreements can be made, in which the law is used not to determine the exact nature of the subject of the confidentiality concerned, but simply the right to publish the contents of the agreement in whatever form it may be. For instance the parties may simply discuss the idea, and agree on the scope of the confidentiality, recording this on camera (or with an audio recording).

This recording of the agreement would only be published in the event of a dispute between the parties, in which case the public nature of the dispute would effect the reputation of both parties (as agreed), and not directly any claim with regard to intellectual property or the breaking of any contractual understanding regarding disclosure of confidential material. Instead there is a simple positive right to publish, which puts the onus on the idea broker to defend their reputation in public, and not a cost on the inventor to prosecute their rights in court.

In order to make such an agreement work, it would be advantageous to create an online community, backed by a trusted third party, which would moderate the dispute and how it was published. There would therefore be an agreed dispute resolution process moderated by the community, with a focus on the format of the publishing of the dispute and the reputation of the parties, and not directly on the substance of the dispute.

This arbitration is likely to be easy to achieve (and self financing) in the online space, where there are a number of idea banks, and IP forums that are emerging to enable investors, inventors and strategic partners to come together and develop products or services. In such forums, each parties online reputation is an important factor with regard to their sustainable future in the community (and optionally other communities depending on the scope of the publishing rights agreed). Indeed often such online reputations are directly quantified and attached to the individual or organisations profile.

The suggestion is that conditional shame is cheaper and more robust incentive than conventional NDA’s, in any situation where the reputation the idea broker is important to their long term commercial success.

In the spirit of legal hacking – lets pose a major issue, (that is a basic and clear problem) and then suggest a hack – that is suggest a simple solution – and ask ourselves what’s wrong with it?

The problem: adversaries in a dispute that have massively unequal financial resources degrades the public perception of the fairness of the legal process.

Legal aid is the current ineffectual solution to the problem:  ineffectual because even in the best of times, it is never going to create real equality of legal representation in commercially sensitive disputes, and more pressingly in a climate of global government cuts legal aid is being withdrawn across the board – so the money is simply not there to run an effective system.

Legal aid is important, but is never going to solve the basic inequalities inherent in the current system. It is a bandage on a clearly unfair process, and this visible and widely acknowledged unfairness built into the system demeans us all.

A contingent fee systems (no win no fee), can also address some of these concerns, but introduces it’s own problems (ie incentives to cherry pick cases). The solution proposed below allows any party that believes sufficiently in the merit of their own case to take it to court on equal terms.

The solution:  allow each party to spend as much money as they choose on their own legal counsel, so long as half of the money they spend is contributed to the opposing parties legal costs.

This way each party can choose their own counsel, and spend as much as they wish to ensure they have the best representation possible for their case. It avoids notions of neutral third parties as is the case with any inquisitorial approach, and sits naturally and simply within a common sense notion of fairness. Importantly it does not require state funding, nor does it threaten to reduce the income that law makers derive from such disputes – not that I am suggesting this could possibly be a factor

Pragmatics:  so how would this work in practice? It would seem on the surface of things, to be enforceable, and relatively easy to administer – each party would simply declare their full cash and in-kind legal costs to the court, indeed payment for legal costs could be administered through a simple online clearing house run by the court.

As an example, if Mrs P were to take a major bank to court claiming sexual discrimination in the work place, the bank could choose to defend itself according to the severity of the case and the degree and complexity of the case at hand, knowing however that for each dollar invested in it’s own defence 50 cents would go towards the legal costs of Mrs Jones legal team. Similarly, should Mrs Jones invest $10,000 of her own savings in her case, half of this would go towards the banks legal defence – surprising perhaps, but easy to argue for on the basis of fair and equal representation before the law.

In a similar vein, should Mrs P find a lawyer to give her pro-bono advice, this would be costed at full commercial rates, and offset in the overall accounting, so that the bank would be able to match her teams pro-bono investment with cash investment in their own defence.

In terms of managing the system, these would be both minimal and self financing, as they could be covered by taking a small percentage fee of the transactions. As s a system would have also have a more general utility in awarding legal costs (amongst other uses), the administration could easily be justified within the financing of overall court costs. Yes, a party could try to avoid declaring their costs, by using in-house, or pro-bone advice from “interested” legal professionals, but this would be relatively easy to police given appropriate sanctions.

Lets call this system a system of “Equal Representation”. It would not have to be available for all disputes, but it is a low cost practical solution to a basic and widely recognised flaw in the fairness of the adversarial legal system. As such I would argue that their is no reason why such a system could not be introduced, or at least piloted in a suitable are of legal practice.

So what’s wrong with this simple legal hack – it has not been researched in any detail, so please take it apart – positive comments are also welcome