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The Care and Feeding of Your Sharing Economy Lawyer

Words by Alison Monahan

TriplePundit Sponsored Series

The Rise Of The Sharing Economy

If you're starting (or thinking of starting) a sharing economy company, there's a very good chance you'll wonder at some point: "Is this actually legal?"

In many cases, the answer -- technically speaking -- will be no. In other cases, the answer will be, "Yes, it's legal, but it's still crazy risky."

What do you, the excited upstart entrepreneur, do at this point?

  1. Give up and go home.

  2. Whine a lot about how your lawyer is a killjoy then do whatever you want.

  3. Listen to this person who has your best interests at heart, and try to work productively together.

If you picked one or two, good luck! You're on your own. Hope things work out for you.

If you went with three, read on.

Tips for working with a lawyer in the Sharing Economy

With the caveat that none of this is legal advice (trust me, I don't even practice law at the moment so you definitely don't want to listen to anything I say about "the law"), here are a few tips for understanding your new sharing economy lawyer and working well together.

1) The answer probably isn't clear

The first thing to understand is that your lawyer probably isn't trying to be difficult when she tells you something isn't allowed, or -- more commonly -- that she's not sure what's okay.

In a common law system like the United States, you can't just go to a book and look up "the rules." (Sure, there are statutes, but those statutes have often been interpreted by courts in such wacky ways that you can't tell what they mean by reading them.) Instead, we're bound by "precedent," which is basically all the old cases for the last 200+ years. Your novel idea might be governed by a dusty opinion from 1824. Fun!

Given that the law doesn't keep up with technological and social change (how could it, when cases drag on for years and you can start the next big thing in a few months), your lawyer is stuck analogizing to past precedents to figure out what you can safely/legally do.

Is Lyft a taxi service? A limo service? A technology platform? How you answer those questions determines whether you think it's legal (and, even then, the answer might vary by location).

So, when you get "I don't know" or "I need more information" as an answer, chances are good your lawyer isn't trying to run up the bill. She probably needs some very specific factual information to understand whether your proposal falls into the "okay" or "not okay" bucket. The more quickly you provide that information, the faster everyone can move on with their lives.

2) Don't assume your lawyer understands what you're saying

I'll probably get yelled at for saying this, but (shhh....) most lawyers aren't that technologically savvy.

Now, of course there are exceptions (and I'd encourage you to seek out those exceptions), but there aren't too many people who are equally comfortable talking about law and discussing programming or UI design. These are all very specialized languages, and it's hard to be fully fluent in more than one.

It's also a rare lawyer who's fully conversant in the sharing economy, just because things are developing so rapidly.

So, what can you do to help your lawyer get up to speed?

  • Slow down. It's worth investing a decent amount of time in the beginning explaining exactly what you plan to do. Here, the details matter. Are you planning to use volunteer labor to harvest your new community garden? Not so fast! That's probably a violation of current labor laws. (See, e.g., the Refugee Farmer Project from the Sustainable Economies Law Center.) Do you plan to raise money from your neighbors to purchase scooters to share? Better get up to speed on securities law! You're going to have to be careful about how you do it.

  • Educate yourself. The more you know about the relevant law, the better you'll be at anticipating what your lawyer really needs to know. If you're at an impasse with your attorney, where it seems like he's just not getting what you're saying, ask him to explain exactly what concerns he has about your proposed course of action. Make sure you understand the legal implications of different categorizations of reality (lawyers love to categorize things). "So what you're saying is that if we're considered a taxi service, we'll be subject to regulation X. But if we're a limo service, we'll be subject to regulation Y. Do I understand you correctly?" If you can get to that level of detail, you'll at least be in a position to make a decision about what to do (even if it's not one your lawyer recommends heartily).

3) Ultimately, it's your call

A good lawyer is -- by nature and training -- risk-averse. A good entrepreneur is anything but.

Put these two personalities together and there are bound to be some disagreements.

As we discussed above, your lawyer probably isn't trying to be difficult when he points out every possible legal risk of your new idea. That's his job.

But, your job is to weigh the risks and decide when it's worth the risk to move forward. Did AirBnB attempt to comply with lodging laws in every city they operate in before launching? No, of course not. It would have been totally impractical and the business never would have gotten off the ground.

When you're pushing the envelope on what society is used to, and fundamentally rethinking long-standing ideas about property ownership, it's inevitable that there will be turbulence. Be smart about the risks you take, of course, but you'll often be in uncharted waters.

It's okay to listen to your lawyer, understand the issues, and decide you disagree with the advice you're getting.

Just make sure you're doing so with your eyes open. Best of luck!

If you're interested in emerging legal issues in the sharing economy, check out the conference I'm throwing on April 13th in San Francisco. We'll be talking about all of this stuff! Join us.

Image by juliaf.