Do We Need a New Synthesis of Law and STEM?
Law and STEM collaboration in entrepreneurship
Law and STEM play important and complementary roles in bringing a business to market. Generally speaking, entrepreneurship involves new products or services or new ways of organizing businesses. A key feature of these entrepreneurial opportunities is their novelty. In the STEM context, entrepreneurial opportunities focus on high growth business opportunities that are technologically driven. What makes law and STEM collaboration unique in the area of entrepreneurship is that there is novel business activity that carries substantial sustained risk from the transition from firm founding to ultimate liquidity event, often in the form of IPO or acquisition by a larger company.
Understanding law is relevant for STEM professionals because law shapes business opportunities. Focusing on law as it relates to entrepreneurship can mean various things, but the basic idea of how law and entrepreneurship can shape STEM is to find either (1) a unique set of legal rules or legal practices in the entrepreneurial context (such as VC contracting in which the valuation of the start-up may be highly dependent on the technology and the IP rights), or (2) the unique interaction of more generally applicable legal rules in an entrepreneurial context (such as non-compete agreements or contracting).
STEM professionals who are entrepreneurs have special skills in the areas of opportunity, discovery, and creation—the process of innovation. Law can be used to promote entrepreneurial activity and STEM professionals should use law to their competitive advantage. This may include legislation to provide for direct or indirect preferences in taxation or regulation for entrepreneurial activity, zoning that allows for clustering of entrepreneurial activity, well-defined property rights for intellectual property, a well-functioning judicial system, reductions in the cost of setting up a business, legal transparency, and reduction of the prevalence of corruption in the legal and regulatory systems.
Lawyers can do a better job of teaching legal awareness to STEM-based entrepreneurs as a way to better identify legal risk and shape entrepreneurial opportunities. STEM professionals can likewise do a better job in explaining the technology and business to the lawyers to help craft appropriate legal strategies and regulatory policies.
Rewards and Burdens in Law and STEM in Academia
Incentives matter in academia. Fifty years ago, power at research universities often resided in law schools. Law schools made significant money and university-sponsored entrepreneurship mattered less to the bottom line of a university. Often, university presidents and many members of university boards of regents were trained as lawyers. This is no longer quite as true at major research universities.
Law schools also suffer in terms of university revenue generation. Law schools, with a small cohort of students, do not bring in significant tuition revenue. Their small class size combined with highly paid faculty and nearly no research grants make law schools underperformers from a financial perspective in many universities where the drivers of research dollars and the commercialization of university technology fall largely within STEM fields. As in any complex organization, there is competition for resources at universities. In the context of research universities, law schools jeopardize their relative standing at such universities unless they adapt to show that they add “value”.
Law schools can make an impact by redefining the market of students that they serve. They should expand their education to non-lawyers and in particular to STEM undergraduate and graduate students. This approach can be summarized simply as teaching classes outside of the law school (or law school classes geared toward non-law school students).
If we set expanding the number of consumers of law school as the goal, we need to understand that law schools must sell a differentiated product to non-law school students. This requires an investment of time and resources. For law school administrators looking to create such a program, it requires not only new classes but a reconceptualization of existing class topics. This includes creating classes where law matters without a focus on teaching traditional cases. The traditional model of law versus business versus STEM is as follows: engineering schools teach how to get from point A to point B to point C. Business school teaches how to monetize point C, while law schools discuss the precedent dealing with point C. Law school courses for non-lawyers need to encompass all three elements, but teaching with the traditional case method is not always the best way to integrate all of these issues.
How to teach is only one limitation for a traditional law school that wants to engage effectively with a much larger student population than law school students. There is at present an insufficient cohort of law professors who can teach such courses. STEM students and professionals need to understand how law regulates technology and how law shapes business opportunities. This is very difficult for law faculties to grasp because teaching to such students takes power away from the traditional core of law faculty hires—public law, and in particular constitutional law, broadly defined. Hiring for “best player available” almost never means a business or science/technology scholars involved in medical technology or technology issues within intellectual property. Instead, law schools hire medical ethics professors or IP scholars focused on constitutional issues. Even in administrative law, the number of tenure-track professors who research the Federal Trade Commission, covering issues such as big data, antitrust/IP and antitrust/innovation; the Federal Communications Commission, including networks and data protection; or the Federal Drug Administration and medical technology, are in short supply in law schools. Yet for both law firms and for non-lawyer STEM students, demand is high. On the business law side, the number of scholars who regularly study issues of technology start-ups is small—as are people who teach or write on contracts, with an emphasis on venture capital and corporate governance for start-ups. There is even less research in the areas of dispute resolution, joint ventures, and supply chain management of tech-related start-ups.
Beyond teaching, increased research collaboration is necessary to bring in significant research dollars to law schools. Because law schools provide faculty sufficient funds for legal research, there are not strong incentives to spend time on research grants—course relief is expensive due to law school salaries, there is no infrastructure for grant writing, and paying for graduate student assistance is not quite as feasible. The research grant model also requires faculty to have greater research incentives for joint peer-reviewed publications with non-law faculty, using different metrics and giving credit for a wider range of publication venues outside of law journals. Currently, such publications are not on legal databases and hurt faculty productivity ratings based on citations in law journals.
D. Daniel Sokol is the University of Florida Research Foundation Professor of Law at the University of Florida Levin College of Law and Senior Of Counsel at Wilson Sonsini Goodrich & Rosati. His writing focuses on competition and increasingly on technology related competition issues from start-ups to large online platforms.
- Ronald J. Gilson, The Legal Infrastructure of High Technology Industrial Districts: Silicon Valley, Route 128, and Covenants Not to Compete, 74 N.Y.U. L. Rev. 575 (1999). ↑
- Steven N. Kaplan & Per Strömberg, Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts, 70 Rev. Econ. Stud. 281 (2003); Jesse M. Fried & Mira Ganor, Agency Costs of Venture Capitalist Control in Startups, 81 N.Y.U. L. Rev. 967 (2006); D. Daniel Sokol, Biotech Strategic Alliances in Law and Entrepreneurship, in The Handbook of Law and Entrepreneurship in the United States (D. Gordon Smith & Christine Hurt, eds. forthcoming 2018). ↑
- At numerous conferences that in any way touch upon business law issues, professors across schools complain that colleagues are often openly hostile to candidates who take business seriously. This needs to change, particularly as applicants to law school increasingly think about return on investment for their increasing tuition payments. ↑
- This is not to suggest that traditional public law hires are not valuable. Rather it is to suggest that a law school would add to its research and teaching richness by hiring more people focused on pressing questions in the intersection of law/regulation, business and technology. ↑