Regulation can be a double-edged sword for technology companies. Even as laws provide safeguards for consumers, some legal experts argue they can also hinder innovation.
Consider the case of Uber. While the popular ride-sharing app provides a useful service, the startup has been accused by its drivers of flouting employment laws.
From the view of some tech companies, it is a problem that often stems from regulation based on outdated business models.
“Brick-and-mortar regulation can dampen innovation,” said Charles T. Whitehead, director of the new Master of Laws (LLM) program in Law, Technology and Entrepreneurship at Cornell Tech in New York City. “That’s when lawyers need to balance the business case against existing laws and the policies behind those laws in order to find a medium that works.”
It is a departure from the norm for most lawyers, who are accustomed to applying legal frameworks rather than defining new ones, but the tech industry has given rise to a new job description. Here are three reasons tech companies need a different kind of lawyer:
1. Tech Companies Employ Unique Business Models
In a 2011 op-ed for The Wall Street Journal, noted entrepreneur and venture capitalist Marc Andreesen predicted that software will eat the world. In many ways, his prediction is coming to pass. From finding love through dating apps to monitoring our health with our smartphones, our lives are becoming increasingly digitized.
This lifestyle brings its own set of problems, as privacy issues become more pertinent to consumers.
Consider moves made recently by Google. In October, the company transformed itself into Alphabet Inc., publicly branching out into the automobile, biosciences and Internet of Things industries, among others.
Google’s expansion into the Internet of Things space, particularly its acquisition of the connected home devices maker Nest, has generated privacy-related concerns among users worried the company is too closely monitoring their actions and storing it as data.
“Tech industry clients tend to break the mold around existing businesses and recreate them,” Whitehead said. “As a result for tech clients, business as usual, walking clients through their paces, normally does not work.”
Instead, tech companies need a lawyer conversant in their problems.
“These clients face a new set of legal issues — or, at least, a very different take on old ones — and need counsel who have mastery over such issues,” explained Bill Marino, a lawyer and former data science fellow at Mashable, who is pursuing a master’s in computer science at Cornell Tech.
An example of these new issues: bestowing company stock on employees as compensation, a startup practice that has since become an industry norm. Lawyers played a major role in helping companies navigate the legal challenges presented by this change.
Whitehead noted tech company lawyers need to be forward-looking and willing to define new rules.
“They should be able to adjust with changes to business models and adept at understanding the nature of disruption,” he said.
2. Tech Companies Have a Different Culture
The innovative culture found at tech companies is often unanticipated by incoming lawyers.
“It’s open; it’s fluid, and problem-solving and communication are king,” Marino said.
This translates to a simultaneously challenging and exciting adjustment.
“As a lawyer, you might get Slacked [a communication platform] about an IP issue at 3 a.m., then pulled into a Google Hangout where everyone’s in their Ewok jammies,” explained Marino.
Such cross-functional interaction can enrich a lawyer’s perspective and help them cultivate relationships across roles and industries.
“Your relationships — your ability to introduce clients to investors or to recommend a good iOS developer — are a major source of value,” he said.
3. They Pivot When Necessary
The slow-grinding wheels of the justice system can seem static for tech companies wanting to move at breakneck speed to reinvent industries and society. To find the perfect market or better serve customers, many tech companies have to change direction.
In practical terms, this means that some companies are more focused on delighting the customer than evaluating a product’s legality.
“A traditional company bringing a new product to market might, at the outset, take months and spend tens of thousands of dollars to check a product’s regulatory and legal feasibility,” explained Marino.
On the other hand, tech companies are inclined to build products first and worry about legal issues later.
“It’s a completely different and sometimes problematic approach, and we need more lawyers who understand it and thus can serve as able stewards,” Marino said.