Legalese 2.0 is what happens when software eats law – starting with contracts – starting with term sheets.
What I'd like to see is legal contracts written up in a kind of code similar to computer code; something that can be checked for validity, evaluated, perhaps even unit tested. We could perhaps generate natural language descriptions of the code in varying complexity (maybe even generate legalese, which could be useful if you're using the code to create custom contracts), or it could be accurately visualized in some way. My fear is that in writing such code to deal with real-world issues, you'd also need a model of the real world, and that would be incredibly hard to define.
– email from Michael Wayne Goodman goodmami@u.washington.edu 20140815
Go to doc
Legalese 2.0
The closest things to free, standardized legals – actually adopted by the startup community – might be the standard docs offered by Y Combinator, TechStars, Series Seed, and other parties.
http://avc.com/2010/03/standardized-venture-funding-docs/
"The nice thing about standards is that you have so many to choose from."
It would be cool if our project could easily output each one of those flavours, just by making a single configuration change; think of how you can Save As a PDF, a Word Doc, as HTML, as RTF, as Pages. Of course there are semantic differences but the idea is to factor out the commonalities.
What would encourage the "installed base", the legacy users, to adopt Legalese 2.0? Some kind of openness, allowing users to contribute, edit, fork, etc, their preferred "distribution" of documents. We can do this without opensourcing the entire project.
legal.cf.sg
Helena Haapio, Next Generation Contracts
The increasing capital efficiency of software startups and the democratization of early stage investing through crowdfunding and angelist have brought a new wave of first-time angels and first-time entrepreneurs to the startup landscape. Being inexperienced they need help constructing agreements. Being poor they don't want to use lawyers. So they turn to free online resources like Brad Feld's blog on term sheets; they plagiarise existing work off LawDepot and Docracy, and they download the model contracts made available by Y Combinator, TechStars, Series Seed, and others. They use wizards such as those offered by WSGR, Orrick, and Cooley (which are themselves often based on business-integrity.com's document automation tools).
However, none of these solutions combine convenience, power, accessibility, and agility.
Computer science isn't really about computers. It's about information. Software is eating the world. And law is next.
Startups like Lex Machina attempt to analyze case law to assist litigators. Startups like Docracy and Clerky smooth the incorporation and investment workflows by providing standard document templates.
Those approaches are valuable. In contrast, we are more aligned with movements around design, visualization, and computational law. We bring computational thinking to the legal field: formal methods to prove correctness, domain specific languages to express essentials concisely, coverage testing, revision control, online collaboration for negotiation, data visualization.
Zooming out from investment term sheets: what else can software eat?
Contracts generally. Contracts tend to fall into genres, and within each genre of contract it is possible to start with a standard form and customize it as necessary.
Business generally. The first wave of computational business happened decades ago: EDI. The next wave brings even more automation: automatic document assembly for directors' and shareholders' resolutions. Smart contracts.
Legalese 2.0 will obsolete lawyers, or at least put them back in their place – in court doing dispute resolution, not in front of Microsoft Word charging $500/hour to copy and paste boilerplate.
After that, we'll obsolete corporate secretaries. Bookkeepers. Accountants. Corporate Secretaries. Tax specialists. The entire back office. With enough smarts, they can be automated.
Term sheet generator wizards create an intermediate representation that captures all the input submitted by the end-user. That representation is used to compile the long-form agreement. But the intermediate representation is not exposed to the end-user. Often, it is implicit in the implementation and never treated as a first-class object in its own right. Power users would prefer to access that representation, and edit it directly, because don't want to click through a wizard each time. Power users from the Unix tradition would prefer to see that representation in a plain-text format.
If the investment for the purpose of the Series B Funding is valued at not more than S$32.5 Million, then the investors in the Note shall be entitled to convert the Note into Shares at a fixed valuation of S$27.5 million.
If the investment for the purpose of the Series B Funding is valued at less than S$ 40 million but not below S$32.5 million, investors in the Convertible Note will be entitled to convert the Note into Shares at a 15% discount over the valuation of the Series B Funding (for instance, if the series B Funding is at a valuation of S$35 million, then the investors in the Note shall be entitled to convert at a valuation of 35M less 15% discount);
If the investment for the purpose of the Series B Funding is valued at not less than S$ 40 million but less than S$47.06 million, investors in the Convertible Note will be entitled to convert the Note into Shares at a 15% discount over the valuation of the Series B Funding (for instance, if the series B Funding is at a valuation of S$47.06 million, then the investors in the Note shall be entitled to convert at a pre-money valuation of 40M i.e. S$47.06 million less 15% discount);
If the investment for the purpose of the Series B Funding is valued at not less than S$ 47.06 million but less than S$80 million, investors in the Convertible Note will be entitled to convert the Note into Shares at a fixed pre-money valuation of S$40 million;
If the investment for the purpose of the Series B Funding is valued at not less than S$80 million but less than S$100 million, investors in the Convertible Note will be entitled to convert the Note into Shares at a fixed pre-money valuation of S$45 million; and
If the investment for the purpose of the Series B Funding is valued at not less than S$100 million, investors in the Convertible Note will be entitled to convert the Note into Shares at a fixed pre-money valuation of S$50 million.
if (seriesB < 32.5) { conversion = 27.5 } else if (seriesB < 40) { conversion = seriesB * 0.85 } else if (seriesB < 47.06) { conversion = seriesB * 0.85 } else if (seriesB < 80) { conversion = 40 } else if (seriesB < 100) { conversion = 45 } else { conversion = 50 }
If you have just wandered across this, you should know that the project contains a few other resources:
-
Evernote's CFSG Legal Shared Notebook
-
Google Hangouts team chat
-
Email correspondence dating around July / August 2014