Entrepreneurs are famous for loving risk, and lawyers are famous for hating risk. As entrepreneurial lawyers, where do we fit in?
I once explained to DC-area venture advisor Glen Hellman that we try to spot risks like a lawyer and deal with them like an entrepreneur. The best lawyers don’t just go around saying “no, no, no.” An excellent lawyer spots problems and then follows through by solving them.
“That sounds great,” Glen said, “but what would you advise Travis Kalanick of Uber?” Travis had mentioned onstage at Startup Mixology that he might be dragged off to jail shortly. Uber, a wildly popular private car service, has been operating without taxi permits in San Francisco and New York. Each violation could theoretically get Travis up to 60 days, and given Uber’s wild success, Travis is on his way to racking up a few centuries of jail time. What can a lawyer say to Travis, other than “stop breaking the law”?
Well, let’s break this problem down. If a business needs a particular license – whether for taxis, trademarks, software, or anything – and that license is hard to get, my first thought is to see if we can get a sublicense from any licenseholder. Bonus points if we can structure the payments so that our client doesn’t have to pay much up front. In this case, there are probably individual taxi drivers who wouldn’t mind some passive income, but this is probably the option that Uber has already looked at and priced out. Let’s move on.
Another workaround is to redefine what you’re doing. I’ve seen all sorts of businesses operating as “private clubs” where you join for free right when you walk in the door. Until a few years ago, this used to be a popular option in England, where the official cut-off time for serving alcohol was 11pm in “bars” but responsible adults could imbibe with less restraint in “private clubs.” Unfortunately for Uber, New York’s taxi officials are one step ahead on that one, so let’s keep brainstorming.
What if we completely redefined Uber not as a private car club, but as a car-pooling mechanism that involves cash exchanges only part of the time? For example, Zaarly (whose co-founder happens to be an attorney) creates location-based peer-to-peer markets. If you’re about to board a plane and really want a window seat, you open up Zaarly and offer a price. Anyone nearby on Zaarly can see that offer on that phone. In a total disruption scenario, Uber could create a Zaarly-like platform so that any member of the public could offer a ride, but only some drivers had Uber badges guaranteeing a certain level of quality. Would the city of San Francisco really tell its residents that they can’t offer a ride to another resident? If this type of ride is illegal, so are all carpools where gas money changes hands. This would be a fresh and interesting question of law, and by the time a policy solution is worked out (many years), Uber would have moved on to another business venture or been so successful at this one that it can buy all the taxi medallions it needs.
Alternatively, since mathematical modeling is their strong suit, Uber could look into dominating the dispatch side of the taxi business. There are plenty of moneymaking options other than a head-on brawl with the law. In a head-on collision, The Clash gave good legal advice when they sang, “I fought the law, and the law won.” (Al Capone –> imprisoned for income tax violations. Remember?)
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