Thursday, May 24, 2007

Smith on Lawless on Law of Entrepreneurship

Posted by Jeff Lipshaw

Gordon Smith at Conglomerate posted a follow up by Bob Lawless (Illinois, right) from the Law ofRlawless Entrepreneurship conference at Wisconsin.  I just posted a comment over there that I am going to repeat here, because I think it invokes a meta-issue about law and society, or here, simply law and business, or lawyers and business people.

After reading Gordon's essay on whether courts mattered to entrepreneurship, I put together a little essay that started with the law of the horse issue (see Frank Easterbrook on whether there is a law of the horse). I don't doubt that entrepreneurship is a distinctive field of study; my skepticism is whether the law of entrepreneurship is a distinct discipline. (If so, perhaps Gordon has already pre-empted most of the area in which it does seem to be a distinct area - the down-round - in his analysis of the Benchmark case.) And my initial reaction in the essay (clearly an early-stage thought piece) was that I needed to dig deeper than what seemed to be mere categorization. That is, my intuition is that lawyers and entrepreneurs, by and large, are ships passing in the night, for very fundamental reasons about the way they see the world, and what is important to them in terms of risk, finitude and open-endedness, and the allocation of property versus the allocation of liability. That early stage "auto-brainstorming" morphed into something that I brown-bagged at Tulane called "ABOUTNESS, THINGNESS, VISCOSITY, AND THE ONTOLOGY OF FORMAL SYSTEMS IN LAW." (Faculty members are still scratching their heads, I'm sure.) But as I read recently on somebody's blog somewhere, just when I think I have it, it slips away from me again. Pardon the self-promotion, but I think the topic is fascinating (obviously) and the thought piece is still sitting out there: "Why the Law of Entrepreneurship Barely Matters".

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paul graham (i know, i know) made an argument a while back that one advantage of basing a tech startup in the U.S. as opposed to say, Germany, is the relative lack of red tape. that is, it's possible to just hit the ground running and then patch up screwups later.

of course, if you were to try to do any sort of ex post facto tricks like that in a large company, it'd be a big no-no (options backdating, e.g.) -- it's questionable where to draw the lines between "fixing" things, i.e. bringing them in line with where they were supposed to be, and impermissibly bending the rules.

i think that speaks to the validity of the distinction -- there's clearly a different set of optimal rules for startups as opposed to established companies.

Posted by: adam | May 24, 2007 1:15:35 PM

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