Docracy applies crowdsourcing to legal documents and produces a resource that just might help freelancers cut their legal costs.
Freelancers of every type receive legal documents all the time. We’re asked to sign non-disclosure agreements when we take on new clients. We’re given contracts that specify timelines and deliverables. And we’re asked to put our names on agreements that state exactly who owns the rights to the work we’ve created.
Most of those contracts are fine and standard, and few are worth giving to a lawyer before we put pen to paper. That’s especially true for freelancers and new businesses working on shoestring budgets and keen to avoid the giant costs of a lawyer’s legal fees every time they close a small deal. The result is that we often sign contracts with a slightly queasy feeling and a sense that we could be agreeing to something we might not like and taking on an obligation that could cost us a great deal in the future.
It was a worry that concerned entrepreneurs Matt Hall and John Watkinson. As they were building their app start-up Larva Labs, another small company asked the pair to sign an NDA.
“It became obvious that neither of us knew the real source of our NDA,” said Matt. “What we needed was an independently-sourced NDA that we both could trust and execute without major changes.”
The result was Docracy, an open source site to which other freelancers and entrepreneurs can upload the contracts they’ve used in the past. Other users can read them, download them, alter them and use them. They can also comment on them publicly, alerting other users to paragraphs they might want to delete or suggest protections they might want to add. During the beta, which is set to end soon, registered users can even make alterations to the contracts on the site itself, a process that makes the documents private, then digitally sign them before sending them on to the other party for review and agreement.
The site now has about 200 documents which have been downloaded “thousands” of times. The contracts cover aspects of law from real estate and inheritance to intellectual property and equity, and have been supplied by lawyers, associations and individuals. The most popular include a generic NDA, which has been downloaded nearly 500 times, and Docracy’s old terms of service which have been downloaded more than 300 times.
“Our early focus is on freelancers and startups so the documents we have cover many of the situations they face,” says Matt.
The ability to sign digitally and keep the alterations on Docracy’s site isn’t just a useful feature for entrepreneurs and freelancers though. It’s also an essential element of the way that Docracy works.
Can Crowdsourcing Work for the Law?
The site’s design is based on Github, an open source repository of code — and it faces similar challenges. If an NDA supplied by a fellow start-up is questionable because it lacks a clear source, why should an agreement uploaded to a website be any more trustworthy?
The answer should be the contract’s popularity. The best documents, argues Docracy, will rise to the top through use, commentary and contributions from the community. If Docracy’s old terms of service are popular, it’s because they’re clear, concise and accurate enough for other entrepreneurs and freelancers to build on as they’re creating their own sites. Contracts for frequently encountered issues that do less well are likely to have problems in coverage, wording or the ease with which they can be used in different circumstances.
“This is the same trust curve that open source software went through,” explains Matt. “It went from ‘who would use software written by a bunch of unknown people?’ to an integral part of the Internet of arguably better quality than commercial alternatives.”
But there is an important difference between the code supplied on Github and the legal contracts uploaded to Docracy. The people who create the scripts uploaded to Github are the same kinds of people who download them: both are professional programmers. A Github user doesn’t just need to rely on the popularity of a script to trust that it can do the job; he or she can check it themselves, easily making any corrections and changes that they see fit.
Docracy’s users, however, are uploading documents that they might not have written themselves. While they might have used them and found them serviceable, they might not have fully understood them — and the same is true of the people downloading them. If Matt Hall and John Watkinson had been lawyers, they wouldn’t have needed to know the source of the NDA they were signing. They could have written it themselves.
Worse, those second users also won’t be qualified to make changes to the contracts without accidentally creating the kinds of loopholes that can kill the agreement.
Lawyers will still be necessary then, concedes Matt Hall. Freelancers and start-up entrepreneurs will still need to turn to professional advice to understand the trade-offs discussed in the contract, and they’ll still need to educate themselves in order to understand the advice the lawyer supplies.
“[B]ut in the cases where it makes sense to have a standard it will be more valuable to have that standard publicly available and discussed,” says Matt.
Docracy then isn’t a complete answer. It won’t mean that freelancers will never have to ask a lawyer to look over a complex contract. But it might mean that they don’t have to pay a lawyer to draft a standard document such as a non-disclosure agreement or a usage license when they can find one on Docracy, check what other users have said about it, and ask the lawyer to adapt it to their business. As long as lawyers charge by the hour (and in increments of fifteen minutes), anything a freelancer or an entrepreneur can do to reduce that time can only be of help.