Last week I read a great post by Frank Chimero called Your Shit, My Stuff, Goldilocks, and Making the Bed You Sleep In.
The post is about stuff and how we interact with, use and own it... with a particular focus on the:-
"Goldilocks mindset"
From my recollection of the fairy tale that boils down to not too much, not too little, but just right. Or as Frank puts it:-
"Add things until it starts sucking, take away things until it stops getting better."
The post is one of the best things I have read for a while and I'm definitely going to put some of it into practice. However, one point which really struck a chord with me as a lawyer was the concept that "access trumps ownership".
Frank mainly writes about this in the context of the shift from ownership of music, films etc. towards on-demand access via services like NetFlix and Spotify (from a legal point of view maybe the distinction is less black and white as you were never really the "owner" of the artistic work in any event, but in practical terms it works).
However, this operates in all kinds of other areas too. Boats are a good example:- there is a lot to be said for having access to someone else's yacht rather than incurring all the stress, maintenance and expense of owning one yourself.
It is also very relevant for lawyers these days. When I started out 12 years ago most firms pretty much owned and maintained their own precedents and know-how.
The quality and breadth of the materials varied a lot depending on whether you worked at a BigLaw firm with an army of professional support lawyers or a small regional with a few standard contracts used on old deals, but generally the ownership (and the upkeep) lay with the firm.
Most share purchase agreements (to use one example) would cover broadly the same areas and issues, but the drafting style and the structure of the clauses would vary wildly (often depending on where the precedent came from originally - I worked for one partner who insisted on using a huge share sale precedent which came with him from his Magic Circle firm on all transactions of whatever size and value).
Services like PLC have really eaten into this since then, to the point where it seems that the majority of the firms I come across day to day at our "end" of the market have effectively outsourced a large part of their knowledge management and precedent bank to PLC.
This is the access model at work. Firms don't own this content (and if they stop paying their subscription they will no longer have access to it), but at the same time they don't have the cost and hassle of maintaining and updating it. Access certainly seems to be beating ownership hands down in this arena.
PLC aren't the only players here either. Services like DirectLaw from Epoq offer a similar access model. Subscriber firms get access to their precedent bank, but Epoq retain the burden of keeping it up to date.
It almost seems academic to talk about whether this is a good or a bad thing... the reality is that most smaller firms could never afford the professional support or knowledge management staff to maintain precedent and know-how banks of this size across a range of practice areas to the same standard.
What interests me though is that this seems to be affecting legal practice at a more fundamental level. More often than not if I receive a draft share purchase agreement from another firm of solicitors it will be based to some extent on the PLC format.
This doesn't mean there is no need for amendments and negotiation (far from it!), but it does mean that both parties are probably familiar with the drafting style and structure (the "vocabulary" of the contract) and that discussions tend to focus more on the legal and commercial principles.
If both sides know that including an "overprovisions" clause in the tax covenant (for example) means reinstating the relevant wording which was deleted from the PLC precedent when the document was issued, then the discussions tend to centre around why its inclusion is appropriate (or not)... rather than about the detailed drafting.
How far will this de facto standard develop? It is really difficult to say at this point, but I don't find it that hard to envisage a situation where one of the provisions in a set of heads of terms (or the assumptions on which a law firm's fee quote is based) is that the first draft of the transaction documents will be based on the PLC format.
After all, these standards have taken root in other areas of law. The Loan Market Association promulgates standard documents for use in syndicated loan markets, the Law Society has standard contract terms for conveyancing.
In some ways it is surprising that market forces haven't led us in this direction before as it is difficult to see why clients would be prepared to pay lawyers for effectively reinventing the "drafting wheel" on each deal.
The same access -v- ownership debate is very relevant to my recent post on eBooks. Will firms continue to pay for eBooks which need to be updated or re-purchased each year (still the ownership model albeit it without the paper) or demand a move towards a subscription model where continuously updated content is available on a subscription basis?
What are your thoughts about this? Will PLC (or some other service) become a de facto standard for commercial law transactions or is this a step too far towards commoditisation?
Wednesday, April 13, 2011 at 1:46PM 