Update!

[Nathan]

Hey ya'll quick update; 

After some research, my previous efforts made sense to merge with encode.org. Encode has built a legal and financial stack for for-Purpose Enterprises. What is a for-Purpose Organization as defined in encode's bylaws?;

Encode is currently seeking to transition a few hundred organizations operating with Holacracy into these new legal forms, based upon its legal and financial template. The pain point occurs for the owners of these organization because in most instances they operate with traditional notions of employment and ownership which do not match the management realities of their distributed authority and control system. Because these organizations are international and exit across many municipalities the legal burden is hefty on encode clients. Can Legalese support encode and these organizations? How could that happen? 

Another opportunity I identified for legalese is for one of my clients right now with over a hundred freelancers. After some research the client asked if I could help them incorporate Legalese into a new management system for these freelancers. Is that a possibility? 

Thanks for your consideration! 

Nathan

[Meng Weng Wong]

yes, i don't see why not – do you have some example use cases, with documents, that you can share?

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[Nathan]

Hi Meng, so here is my current use case. 

I'm building a small studio that grows startups. One of the entrepreneurs/partners has an existing entity that he'd like to convert to our legal constructs -- one of the requirements of participating with my studio. Each of these legal constructs bakes a constitution into its operating agreements. I am helping the entrepreneur get to a starting structure for his organization design next week. He wishes to grow the organization using a distributed management and control system named holacracy. The first step after the initial roles have been designed (starting structure) is to legally ground the new organization within the distributed management and control system so the organization can iterate itself. 

Attached is a sample operating agreement which is 80% similar to the one my studio uses. The reason I am providing this to you is to test whether and to what degree Legalese is able to grapple with translating the distributed management and control system built into this operating agreement. 

If this was a one time affair I don't see a need for Legalese but since the new company is predicated on this distributed management and control system and is looking to acquire new talent rapidly, the operating agreement will need to be replicated 30 times in the next 90 days as the company acquires talent. Since each new member of the organization is an owner not an employee the document will have to be changed each time a new partner joins.

In the next 90 days my studio will be building no less than 5 new companies that all operate off a similar model described in this use case. Also, each of these new 5 companies will also be acquiring talent under the owner status describe directly above. 

The actual legal documents that my studio uses are built of similar concepts as expressed in this operating agreement but also include a similar model to slicing pie. If Legalese can translate this operating agreement I see no reason why it will not be able to do so for my studio's actual legal documents in the future. 

Can Legalese facilitate the processes this startup uses to create new instances of its operating agreement for incoming owner/members?

What other information do I need to provide Legalese to accomplish this task? 

Thank you for considering and I look forward to engaging!

Nathan

On Thursday, November 10, 2016 at 2:13:08 PM UTC-5, Meng Weng Wong wrote:

yes, i don't see why not – do you have some example use cases, with documents, that you can share?

On Wed, Nov 9, 2016 at 5:16 PM, Nathan <nat...@encode.org> wrote:

Hey ya'll quick update; 

After some research, my previous efforts made sense to merge with encode.org. Encode has built a legal and financial stack for for-Purpose Enterprises. What is a for-Purpose Organization as defined in encode's bylaws?;

Encode is currently seeking to transition a few hundred organizations operating with Holacracy into these new legal forms, based upon its legal and financial template. The pain point occurs for the owners of these organization because in most instances they operate with traditional notions of employment and ownership which do not match the management realities of their distributed authority and control system. Because these organizations are international and exit across many municipalities the legal burden is hefty on encode clients. Can Legalese support encode and these organizations? How could that happen? 

Another opportunity I identified for legalese is for one of my clients right now with over a hundred freelancers. After some research the client asked if I could help them incorporate Legalese into a new management system for these freelancers. Is that a possibility? 

Thanks for your consideration! 

Nathan

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[Michael Wharton]

Dear All,

We are looking at smart contract based legals for our clients in U.K. We have a number of blockhain startups & VC firms we advise like Everledger.io

I would be very interested in connecting with anyone who is interested in exploring a smart contract test/use case on a whole transaction (or just a single contract) for one of our UK clients.

Kind rgds, Mike Wharton

@whoneedslaw www.whoneedslaw.com

Legal Advice for Growing Companies | Who Needs Law www.whoneedslaw.com Who Needs Law launched in 2013 to provide legal support to the emerging #fintech sector. This forward looking approach has been very successful and today we support ...

mob: + 44 7502 314826

<HolacracyOne-Operating-Agreement-v16-redacted (1).pdf>

[Meng Wong]

Hey Nathan,

Thanks for kicking this off. I've had a look through the Operating Agreement you sent and it looks like a good fit for Legalese.

Why is it a good fit for Legalese/

First let me talk through an assumption: if you did not use Legalese, I'm guessing you would manage this process more or less this way:

- maintain a Microsoft Word document, serving as the template, which you would occasionally copy and fill in by hand.

- if you got tired of filling it in by hand, or were sensitive to human error, you might set it up so you could mail merge.

- the data for the mail merge would be parked in an Excel spreadsheet or Google Spreadsheett

- you would need a spreadsheet anyway to maintain the "cap table" shown in Exhibit A

- you might aspire to some kind of Glassfrog integration, using their API, to autogenerate Exhibit B

Under Legalese, the text of the Operating Agreement would move into an XML template. Your company would record its essential deets (name, address, etc) in a Legalese spreadsheet, under the Entities tab.

You suggested you might have something like 30 people join the company. As each person joins the company, the spreadsheet would record their deets as well under Entities.

With each company your studio launches, there would be a new Legalese spreadsheet.

Conveniently, Legalese offers a "controller" mode for studio-level organizations to manage multiple companies, and multiple agreements under each company, under a single interface.

A Legalese spreadsheet contains a special table called "Cap Table". That's where the issue of Class C, D, and P units would be recorded.

Each time you add talent to the company, Legalese would ask for their name and address (today, in v1, that's done via an autogenerated Google Form.) Legalese would automatically add a column to the cap table and a tab to the list of sheets, recording all the details of the agreement between the new talent and the company. In this case the agreement doesn't seem to require a lot of special configuration (compared to a startup investment agreement) so the config would be as simple as "bang out an operating agreement for the new hire, updated with the lead link and etc info pulled from Glassfrog".

So, what work would be involved in importing this template into Legalese? I can give a confident guess based on the dozens of other templates we have previously imported into Legalese, like the YC Safe, 500 Kiss, Series Seed, etc etc.

Converting the PDF/DOC to XML would take about a week of human labour. This includes formalizing the schema and constructing a Legalese spreadsheet to match.

Glassfrog API integration would require writing an extension to the Legalese App, which feels like also about a week's work.

Who could do this work? Possibly a third-party developer or one of Legalese's in-house professional services staff.

Do you have a budget for covering two weeks of work? If not we might assign it to one of our junior staff, in which case it would take more time because they would have to come up to speed, but it would be a good learning exercise for them to come up to speed anyway, kind of like getting your hair cut by a trainee at a beauty salon school.

[drlawrencelau]

> I've had a look through the Operating Agreement you sent and it looks like a good fit for Legalese.

Hmmm ... I respectfully differ with Meng wrt to the long-term picture if not in the specifics ... after actually doing the paperwork for an early-stage but currently in the valley of funding death, I'd observe that "smart" contracts work best with clearly defined "events" of which financial, or routine administrative activities can be automated to some degree. Thus creating legal obligations (eg majority voting) can be converted to algorithmic-engines, but when it comes to human-social relations (like powers of positions) it is more subjective interpretation because there is a LOT of tacit knowledge which simply cannot be reduced to writing. To give example, the typical corporate hierarchy might seem obvious on paper but the reality of the firm is that there are non-obvious decision-making roles (technical gate-keepers, initiative sponsors, product champions) which actually are fluid or dynamic. Creating a rigid structure works great for connected chains of events ... (eg if missing investor KYC then issue foreign variant of consent + joinder otherwise simplified form using say citizen ID) but I question its algorithmic ability for judging whether someone is say the beneficial owner of a share (which is a legal assessment based on combination of caselaw and country specific rules). So some portions can be easily imported into in legalese whereas others would still need human touch/judgerment. But this is in fact the fascinating aspect of software as law because exploring the boundary and systemising currently "difficult" legal connundrums (eg cross-border compliance) is where new applications reveal themselves. 

Lawrence

http://www.linkedin.com/in/drllau