Legal Structure 2016
Notes copied from the Hackpad.
The Legal Structure of the Network
Minutes of discussion – Legal structure for the consortium Wed 16 Nov 2016
- Patrick Andrews, New Forest Advisory (facilitator and note preparer)
- Harry Robbins, Outlandish
- Jason [not sure of surname or coop]
- Kate, Enspiral (for some of the time) ?
(Note: faced with the impossibility of capturing the exact nature of the conversation, I have noted down the main themes, and added some clarifications and thoughts that might help the understanding of anyone who wasn’t there.)
Maybe the French revolutionaries were onto something with their famous principles: “Liberté, egalité, fraternité” (liberty, equality and brotherhood). (Note, I learned of the power of these three principles from the writings of the brilliant economist and thinker Rudolf Steiner). The concept is of a system that satisfies all three principles:
Equality: the individual coop members (who could be individuals or cooperatives) need to be treated as of equal worth, and to have equal opportunities for say in decisions affecting them. This doesn’t necessarily mean one person one vote.
Liberty: every member must retain sovereignty over their own person. This doesn’t mean they can do what they want, but rather that they are free to choose to submit to the constraints that come with membership, that no one remains in the consortium against their will, and they have the right to leave at any time Underlying this is the principle of consent – that every member always has a choice – to consent, to object and ultimately to leave.
Brotherhood: this is the idea that within the consortium, members contract freely with each other, whilst respecting the principles that are mutually agreed (at the consortium level) to apply to all such relationships. By entering into commitments with others, members voluntarily constrain their freedom (for example, they agree that if they breach their commitments, there will be consequences).
Roles within the consortium
In a system that is not conceived of as hierarchical, it is useful to think about roles, rather than “who is in charge?”.
For example, there could be:
- an executive body, responsible for leading the consortium in its day to day activities.
- a type of legislature, making policy and holding the executive to account;
- a service provider delivering, say, accounting, personnel and legal services to members;
- a dispute resolution body, independent of any one consortium member and helping to resolve disputes; and
- an internal communications service, ensuring that impartial information flows freely within the system.
What holds the consortium together is an agreed purpose and set of principles or values.
We discussed in particular the service provider, and whether it would be an independent cooperative of its own, or perhaps a division of a member, or something else (a division of the consortium perhaps, without independent existence). Patrick argued that it was a function of the consortium and should not be treated as simply another cooperative. Harry was concerned that this would mean those working within the service provider wouldn’t be self-directing. [PA note: perhaps this can be resolved by ensuring that those who work for the service provider are also simultaneously members of a member cooperative – for example, they could be seconded for some months or years to the service function, or they could work part-time for the service function and part-time for a member cooperative].
We didn’t explore this question in detail in the session. One possibility would be a company limited by guarantee, with individuals and/or cooperatives as members. Other cooperative legal forms may also serve the purpose.
(PA note: One possibility would be to have the brand owned by a separate company (for example by a company in a low tax country such as the British Virgin Islands or Ireland). This is a common structure used by the likes of Amazon and Facebook. Payment of license fees from members could then be used to minimise tax since payments of license fees, unlike dividends, are tax deductible.) As discussed with Harry, the tax saved can then be used to give to or invest in causes that the members consider worthy.
PA shared his concept of an organisation as a living organism that, in growing, passes through different development stages.
- Childhood: rapid learning and experimentation. Rather chaotic and unformed. Loose, ill-defined structure. Needs close parenting (usually by founders).
- Adolescent: Structure and identity starting to be clarified. For the first time, has access to power of its own. Still needs parenting, but is starting to shake off some of the parental ties, to build other important relationships and to question some of the parental values.
- Adulthood: self-regulating, strong sense of self. Clear structures. Ready to become a parent itself. Leaders of the community.
- Elder: Less active, detached more from the world. Compassionate and wise. Mentor the adults, and keep an eye on the children.
In practice, this suggests keeping options open in terms of legal structure for the consortium at this stage. Start with:
- collaboration amongst consortium members,
- exploring and articulating the purpose and principles (values) of the consortium;
- developing practices of coming together (on-line and off) and making decisions collectively; and
- sharing visions of future developmental direction, without making them too concrete yet.
We also talked of the Chaordic Design Process described by Dee Hock. This is:
- Develop a Statement of Purpose
- Define a Set of Principles
- Identify All Participants
- Create a New Organizational Concept
- Write a Constitution .
- Foster Innovative Practices.
To design a new organisation, you start at 1, go through each step and when you get to 6, start at 1 again until you are happy :-)