Ontology for Lawyers 101: Computer Programs, Contracts, and Reality

Posted by Jeff Lipshaw

Bear with me here for a few minutes, because I'm thinking this through in real-time.  (Also, for those of you who've complained in the past about my use of big words, you can free free to skip over this post.  I may use a couple because they just happen to be the best ones I know to describe what I mean.) 

I wrote an article, to which I've referred ad nauseum in this blog, about the family resemblances (linguistically speaking) between models and games, and how these resemblances can pose challenges to lawyers and ethicists.  The last line of the abstract said something like "lawyers need to be pragmatic ontologists."  Since ontology is the branch of philosophy that explores what is real or what exists, that was a fancy way of saying (now that I'm an academic) that lawyers often need to be thinking about whether what they are or their clients are doing is real or is merely a representation of reality.  The best example of which I'm aware is the preparation of financial statements, which are real, in the sense that they exist, but their purpose is to model or represent the reality of the business.  My contention was that elevating the accounting system to a game - giving it more ontological respect, as it were - and not treating like a model was problematic. 

I confess therefore to a heightened sensitivity to situations in which the model/game/reality issues appear.  For some reason not clear to me, we get New York magazine.  I will spare you the details why I happened to be reading it, but, if you get past the listing of movies and plays and the neighborhood news, there's a pretty neat little essay in the March 29, 2009 issue by Michael Osinski, the computer geek who wrote the programs used to create collateralized mortgage obligations, and to slice and dice them into tranches, and so on.  (This is something of a guilty cri de coeur, as he's now harvesting oysters off of Long Island, and wondering how his benign creation turned into Frankenstein's monster.)  Here's a key paragraph:

The aim of software is, in a sense, to create an alternative reality. After all, when you use your cell phone, you simply want to push the fewest buttons possible and call, text, purchase, listen, download, e-mail, or browse.... Over time, the users of any software are inured to the intricate nature of what they are doing. Also, as the software does more of the "thinking," the user does less.

"My software was a delicate, intricate web of logic," he says.  "Perhaps it was too complicated.  But we live in a world largely of our own device.  How to adjust and control these complexities, without stifling innovation is the problem."  The thing that is so interesting about his observations is the co-optation by which we come to believe that the devices we create to control the future are the future. Osinski's way of describing the co-optation is this:  "[i]t's the complexity masked by thousands of unseen whirring widgets that beguiles people into a sense of power, a feeling of dominion over the future."

That's where I was going to make the point that lawyers are to contracts as computer programmers are to software.  It's hard to think of a first-year contracts example of a simple contract to buy 100 bushels of wheat in thirty days as an alternative reality, but the more complex the agreement gets, the more it beguiles both the lawyer and her client into a sense of power, a feeling of dominion over the future.  I decided it would be nice if I linked above to something like the Stanford Encyclopedia of Philosophy on ontology.  So just after typing my name, I did a Google search and discovered, courtesy of Tom Gruber, something I never knew.  Among programmers creating artificial intelligence, the word "ontology" has its own meaning, not wholly unrelated to the philosophical meaning, and it has to do, as I understand it, with the consistent concepts and relationships that the code writers commonly understand when they are modeling a domain.  Pardon me if I fixate a bit (or go Freudian) on the use of words.  There's something profound going on when the creators of a programmer use the word "ontology" - i.e., the inquiry into existence or reality - to describe something that is a model!  At this point, I need only say "Second Life."

When I was in practice, doing or supervising M&A work, I'd be thinking about this ontological question (not in these terms, of course) when a lawyer on the other side (or my own lawyer, for that matter) seemed to be intent on winning the "reps and warranties" game (e.g., if I'm the seller's lawyer, I get points for how many times I can insert the word "material" in the reps, and then get bonus awards if I can double dip it in the indemnity section).  What's the model and what's the reality?  In the academy, I think about this when I read some of the rational actor expositions on why things happen in the real world (see Gilson's Value Creation essay or Schwartz and Scott on contract formalism).  What's the model and what's the reality?

In most circumstances, the contract is a linguistic model of the deal.  It's not the deal.