Since I really liked Pedro’s phrase – “If we think that as lawyers we deserve to get paid, why shouldn’t creative professionals deserve the profits of their work?”, I try to advocate the view of Professor Merges distinguishing creative professionals and amateurs by taking law firms as an example.
Law firms make money by selling legal services – something intangible. Intuitively, don’t you feel we need some sort of protection for our products? But I have never seen a law firm claiming its copyright of a documentation, or business model patent over a securitization scheme, and major law firms are still surviving (it is a pity that I cannot say they are making a killing). So how does it work?
In my limited experience as a corporate lawyer in Japan, whenever an innovative deal structures or financial schemes were invented, the inventors were always big firms (especially in M&As and securitizations). As the time went by, and a number of similar deals done, the mid-sized or boutique firms would come into that area, and start their practices, for somewhat lower fees. This is what I understand how a deal gets “commoditized”.
An innovative deal tends to contain legal issues that have never been addressed before, and require precise understanding of, and comparison to, the conventional deals. It is a risky job and sometimes difficult for smaller firms to handle, since the deal experience and good sense of direction (and maybe some human resources to do sufficient reserch) is often far more important than a single genius. To do a really creative work, we need some “accumulation” beforehand. Such accumulation will bear new invention, and the profit from the new invention will be eventually shared by people other than the inventor (the expanded practice area for smaller firms, and cheaper fees for the clients).
In the transactional legal market, this is possible without the help of IP rights, because there is a well functioning reputation system that rewards the innovator in place of IP rights. The market is small, and the clients are repeat players. All the players know which law firm has what sort of expertise, knowledge and experience (track records), and how much legal fees it charges. On the other hand, it is not possible without IP rights, in a larger market, especially in a digital world.
As Angus says, even without IP rights, “copies of famous paintings do not sell, only originals” sells. True, as long as users can identify what is the original. In reverse engineering, what they do is appropriate others’ invention, and sell it as if it were their original product. The fact that some American companies adopt “give an inch to get a mile” strategy does not necessarily prove that IP rights are unnecessary.
In my view, the right to be identified as the creator/inventor is the minimum and crucial element that can, through reputation system, reward, and create incentive for, the creator/inventor. Therefore, I see a rationale for protecting the moral rights strongly. As Christian suggests, we need another justification to design it non-transferrable. However, as the human trafficking is prohibited, certain transactions should not be allowed even if it increases efficiency (I am not saying that there is a free will sale of one’s life that will make the society efficient, just in case). IP rights, especially moral rights, have something to do with human dignity, the urge to create. No logic, I am just romantic.
The law firm consolidation trend continued this week, with Womble Carlyle absorbing a three-lawyer South Carolina shop and Baker Donelson executing its third merger in less than four months by picking up a seven-lawyer Houston firm. And the urge to merge is not exclusive to the United States.
Posted by: lawyers | February 02, 2012 at 05:04 AM