RL regulation of SL attorneys

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Beathan
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RL regulation of SL attorneys

Post by Beathan »

At the Sc meeting today, I raised a concern that cam up in a conversation I had with my RL bar assn ethics counsel concerning legal practice on SL. I will focus on the SL case handled by SL legfal system aspect of this problem.

First, we have a real exchange and real economy in SL. Land and commercial practices are earning real money for people. This makes SL commercial activity a RL economic concern for RL people. This erodes the traditional barrier between RL and MMOGs. Gynn has observed this when discussing the consideration of SL by virtual world experts, including Castronova and Koster.

This RL economic activity, wich could cost RL people real money, creates a policy concern for RL governments. In the legal context, the possibility of RL citizens who are involved in SL economic activity receiving legal advice in SL is a matter of real concern in at least one Bar Assn I am aware of. The question is -- should the activites of SL attorneys be regulated by RL bar assns? I think the obvious answer, from an SL perspective, is no. However, if real people are given bad legal advice in SL and lose real money, I think a Bar Assn would see things differently, and even believe that it would be irresponsible not to regulate.

The closer our legal system is to a RL legal system. That is, the more complex and professionalized it is, the stronger the case for RL intervention. Our best protection is to make sure that, even when doing SL law, we make sure that it looks, from the outside, like we are playing at being lawyers rathan than looking like we are being lawyers on and through SL. One serious problem with the current judiciary act is that, by looking as it does to RL legal systems, it fails to provide this protection.

This could very easily invite in RL legal regulators, and other governmental actors, who would take a long, hard look at SL activities and, I think, find all kinds of things to regulate. This would be a disaster, not only for the CDS and our fledging legal system, but for the SL community as a whole. Think of how hated the CDS will be if we kill SL by inviting in real governments. Think hard about this people. Is it worth the risk merely to have a judiciary that meets Ashcroft's high standard of competence?

I don't think so.

Beathan

Last edited by Beathan on Tue Dec 05, 2006 11:15 pm, edited 1 time in total.
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Post by Ashcroft Burnham »

So your real agenda, is it, is that you want to extend your arbitration practice online and use our legal system to do it, and not fall foul of your regulators even if you hold yourself out as an "attorney"?

Have you asked your professional conduct people about a [i:1uf90lhd]SecondLife-specific legal system[/i:1uf90lhd] expressly? If not, then no answer will be worthwhile to cover our current situation.

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Post by Beathan »

No -- my real agenda is that I want a good judicial system that will not run afoul of RL governments. Frankly, I have already worked out and documented all my ethical concerns about the use of SL for Rl cases. I have no outstanding problems there.

However, I have not yet worked out how we can safely administer SL justice within SL without attracting RL attention from RL regulators who would have every reason to expand their power and jurisdiction by regulating SL activities. I think that this is a real worry for SL -- and one that threatens the entire SL community.

I came to the CDS for the democracy, not the law. I don't really need any more law after my day job, but I can never get enough democracy. I am rather tired of people assuming I have a bad ulterior motive and then searching for it. I feel singled out in this regard. Ash has admitted that he came to the CDS to develop and test his legal system. I did not. I was backed into the proposal of a countersystem because my criticism of his system was called illegitimate without a counter proposal. Now my act of criticism has been called "unconstitutional." It's a scary preview of what we have to look forward to under rule of lawyers rather than rule of law.

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Pelanor Eldrich
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Opinion of a layman...

Post by Pelanor Eldrich »

Hi Beathan,

Very interesting subject I never considered. My simplistic understanding is as follows:

1- The $L has no legal worth. This could change in a precedent setting RL case.

2- The new LL ToS specifies that LL has no involvment with respect to in world contracts.

3- There are taxes on cashing out, but the US has not declared that it will tax virtual goods kept in world. South Korea has a different take on this.

So it would seem to me that the CDS Judiciary and RL law are fairly separate. In fact, the vacuum caused by a complete lack of SL law outside the LL ToS was a reason for the JA creation and implementation.

There is nothing stopping you from practicing ADR in SL, ADR in CDS or a form of ODR in either milieu. There is also nothing stopping you from forming a CDS Bar Association.

I do fail to see how a RL bar association could possibly come in and affect any aspect of the CDS judiciary without RA approval. I also do not see how RL government can come in and regulate the CDS. I don't see any cases that would have RL gov't add regulation of LL, for example. I believe only one land auction case is before LL in the RL courts.

As a US lawyer, please enlighten and paint us a picture of the doomsday RL regulation scenario. This is not a rhetorical question or a dig at you. I'm genuinely interested. I'm also interested in ways we can accomodate your arbitration practice within the CDS. Thanks. -Pel

Last edited by Pelanor Eldrich on Wed Dec 06, 2006 9:49 am, edited 1 time in total.
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Post by Beathan »

Pel --

Thank you for your well-put and courteous response.

First, it is simply false as an economic matter than $L has no value. It is worth $270/$1 US. This gives it more value than many RL currencies. It is true that the LL TOS asserts that the $L has no value. However, legal scholarship on the subject of these kind of assertions in MMOG TOS has generally concluded that the bare assertions will not refute otherwise clear facts, such as a real value currency exchange, that suggests otherwise. I am confident that courts considering this matter would follow this scholarly position.

LL waiver of involvement protects LL -- not SL. LL's waiver means that no one can sue LL for loss of money in SL to another avatar. However, avatars can still have legal dealings with each other -- even for substantial amounts. I believe that LL might except being named as a part in RL lawsuits, but that does not mean that such lawsuits will not arise from SL. Further, my concern is that even if SL disputes are handled within SL, because those disputes involve real people and real money, it will give RL bar associations reasons to look at SL. If what the bar associations see look less like play-acting and more like real lawsuits, they will regulate the activity to protect their own RL citizens.

The US has not declared a tax on inworld gain. However, tha gain would count as "barter" under current IRS rules. It is taxable in the US without a change in the law. Currently, the IRS does not want to bother with virtual gain. This is a cost benefit analysis. The IRS thinks that the taxation would cost more than it would generate. This was once true, but it is probably not true any more -- and it certainly will not be true in the near future. At that time, the IRS will come looking for us. However, that is a different matter than inviting RL Bar Assns into SL, which is the problem I see atm.

In fact, there is very little separation between SL and the RL economy. I agree that there is nothing preventing me from using the SL technology for RL legal purposes. I intend to. I have satisfied myself that such use is permissible. My concern is that we keep SL a game even though people use it for real life activities. This is a trick -- and I don't know that we can do it. However, we must try -- and we must maintain the play aspect and appearance of all inworld SL activites as much as possible.

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I believe the Game Ship may have sailed...

Post by Pelanor Eldrich »

Thanks Beathan, that clarifies a number of issues for me. Game vs. Platform has been a constant debate in SL. My feeling is that Platform has, or is, winning the day here with the advent of RL corporations coming in world to do marketing and other forms of eBusiness. It is probably impossible to maintain the illusion of SL as a game given the immense amount of RL media exposure (Economist, New York Times Business Front Page, Wall Street Journal, BBC, CNN, Good Morning America, Wired etc. etc. etc.).

I am still at loss, though, about the RL legal mechanism by which a RL bar association would come in and regulate SL (or CDS) legal practice. I imagine CA law would apply (?).

Futhermore, the current JA, while it looks "real" and has aspects of English law, certainly isn't English law. It has Owls and a Dean and Scientific Council and a capital punishment of banishment. All with stylish robes. It hasn't heard a case yet.

This is actually kind of interesting. We are always accused of roleplaying democracy. Now a RL bar association believes we're much too "real". Is it that they want to protect their RL citizens (do their RL citizens come to them and ask that) or do they want a piece of the action? :)

Last edited by Pelanor Eldrich on Wed Dec 06, 2006 10:16 am, edited 3 times in total.
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Post by Beathan »

Pel wrote [quote:78ifi3io]This is actually kind of interesting. We are always accused of roleplaying democracy. Now a RL bar association believes we're much too "real". [/quote:78ifi3io]

I'm about to go into a meeting, so can't respond with proper substance. I will try to come back and edit this post.

However, to clarify, I do not know that any RL bar assn has come to any conclusions about SL -- or that any RL bar assn even has wind of the CDS Judiciary Act. However, I know of at least one RL Bar Assn that is looking at SL, although I don't know how seriously or with what object in view.

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Post by Gxeremio Dimsum »

This whole discussion is really fascinating to me, because I've seen at least 3 ways to look at it:

1. Don't worry - no real-world bar association is interested in this and probably wouldn't be in the near future.

2. Real-world bar associations might become interested so we should avoid making this a system of only lawyers and thus inviting their involvement. Presumably this is because those bar associations might restrict or regulate the activities of members who take part in the CDS judiciary.

3. Real-world bar associations might become interested, so we should make sure we ONLY have real lawyers giving legal advice in the CDS. Presumably this is because those bar associations might punish or sanction members taking part in an illegitimate judicial system.

It raises so many important questions about how real the government of the CDS is and which real-life organizations have a stake in it. I'm not sure we can know what might happen until some real-world group makes a move one way or the other.

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Post by Ashcroft Burnham »

[quote="Beathan":jeolxwjs]However, to clarify, I do not know that any RL bar assn has come to any conclusions about SL -- or that any RL bar assn even has wind of the CDS Judiciary Act. However, I know of at least one RL Bar Assn that is looking at SL, although I don't know how seriously or with what object in view.[/quote:jeolxwjs]

So, you accept that this is all speculation on your part?

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Post by Beathan »

Ash asked me [quote:32cbw30s]So, you accept that this is all speculation on your part?[/quote:32cbw30s]

Wow, Ash, things are always either/or, black/white with you, aren't they.

Here's what I said.

1. I know that at least one Bar Assn ethics department is investigating SL legal activity.

2. I do not know the details od that investigation including:

a. What they are looking for.
b. Who they have doing the looking.
c. Whether the CDS is on their radar.

That said, if I analogize a SL justice system to a RL state justice system, I know that:

1. The mere fact that attorneys are regulated or self-regulated in SL will not protect attorneys "practicing law" in SL from a charge (a criminal charge) of practicing law without a license in RL states if

a. the RL person represented, or opposed, by the SL attorney is a RL resident of the state (especially if both are residents)
b. RL economic interest (including $L which has a US money cash value) are involved, and (possibly)
c. part of that representation concerns whether or not state law applies (although I don't think this last part of the analysis is necessary for a decision to regulate -- the state could well step in on a and b alone.)

2. We can probably avoid this problem if what we are doing in SL looks like "roleplaying" and not like "practicing." However, this will be harder to do than, say, moot courts in school because RL economic interests are involved and in jeopardy in SL legal practice.

Do you understand me now?

Beathan

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Post by Diderot Mirabeau »

I'm sorry but I can in no way conceive of there being a threat from your RL bar association of sanctioning / disciplining anyone over one's conduct with respect to how one practices law in the CDS.

Surely, the remit of the bar association is limited to regulate matters pertaining to one's actions in relation to the jurisdiction to which the bar association relates. If say at the same time you were a practicing barrister in Washington state and the (fictious) small Carribean island state of Ougladougla and while representing a case under the later jurisdiction you were guilty of conduct that would have been disciplined in the former context I don't see how it would be a matter for the US-based bar association unless you for example made refernce to the fact that you had been admitted to the bar under the US jurisdiction as part of your marketing.

Similarly I am having a hard time seeing why any bar association would be entitled to claim to have competence in regard to what takes place here when one considers that the code according to which people practice - despite having an uncanny resemblance in many parts to the British system - is wholly devised here and that the people operating under it come from all parts of the world. The bar association does not claim to have competence to sanction people, who offer advice on the best way to win a million in some gameshow - unless those individuals claim to be or emphasise the fact that they are admitted to the bar of the association in question - so why should they have any remit whatsoever to look into the counsel offered here in relation to 'going after the million L$'?

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Post by Beathan »

Diderot --

As a matter of US legal discipline, "sympathetic punishment" -- in which one jurisdiction penalizes an attorney for conduct in another jurisdiction when that other jurisdiction imposes punishment -- is routine. Further, some Bar Assns, notably Oregon, discipline lawyers licensed in OR for violations that occur in other jurisdictions even when the other jurisdiction refuses to impose penalties or decides that no violation of conduct rules occurred.

(It is an aside, but my analysis involves discipline for action performed in one state imposed by the Bar Assn of another state. On Diderot's hypothetical, there would be some complications and qualifications concerning whether the foreign action is sufficiently proper, by U.S. standards of Due Process, to be worthy of "comity." However, assuming that it is, I think at least two of the Bar Assns I belong to would impose "sympathetic punishment" -- and the other three would follow because the first two had imposed punishment.)

Perhaps this kind of regulation of attorneys is unknown in Europe. If so, perhaps European attorneys have a real advantage over their American counterparts. They may have the ability to bring real law to the the virtual world in ways American attorneys can't. If so, this would be good reason to privilege European (including English) law over American law in regulation of the SL community. If this is the case, I would be easily persuaded to look to English or European law for guidance in the CDS (although I would still want that law to be suited to our virtual world). This is a point about which I do not know -- I invite people who know more than I do about the regulation of legal practice in Europe to ring in. (On this note, I have heard that Canadian Attorney are better positioned to engage in an international practice than are American attorneys. I had thought that this was a matter of Commonwealth association. However, it might be a matter of regulation of the legal profession as well. I do not know.)

However, discipline aside, the issue I see that that RL citizens of Washington are investing money in SL enterprises. Some are investing substantial amounts. I can easily see WA govt interest itself in SL to protect these investments of WA citizens. One place of interest would certainly be the legal advice these WA citizens are getting from SL "attorneys". I could see a case in which the WA Bar rules that giving legal advice to a WA resident about virtual investment, which by being virtual does not involve any other RL jurisdiction, is a matter of Washington law and requires a WA bar license. In fact, I'm not sure that, from the WA Bar's perspective, the alternative is anything but irresponsible.

Our best defense, as I see it, is to make the "its only a game" argument. However, if we want to claim that what we are doing is a game, it had better look like a game.

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Post by Ashcroft Burnham »

[quote="Beathan":2chj9y58]1. I know that at least one Bar Assn ethics department is investigating SL legal activity.

2. I do not know the details od that investigation including:

a. What they are looking for.
b. Who they have doing the looking.
c. Whether the CDS is on their radar.[/quote:2chj9y58]

Do you honestly think that the latter is a reasonably realistic possibility?

[quote:2chj9y58]That said, if I analogize a SL justice system to a RL state justice system, I know that:

1. The mere fact that attorneys are regulated or self-regulated in SL will not protect attorneys "practicing law" in SL from a charge (a criminal charge) of practicing law without a license in RL states if

a. the RL person represented, or opposed, by the SL attorney is a RL resident of the state (especially if both are residents)
b. RL economic interest (including $L which has a US money cash value) are involved, and (possibly)
c. part of that representation concerns whether or not state law applies (although I don't think this last part of the analysis is necessary for a decision to regulate -- the state could well step in on a and b alone.)[/quote:2chj9y58]

What do you mean "the state could step in"? Do you mean that you are worried that your [i:2chj9y58]real-life[/i:2chj9y58] state legislature will pass a real-life law specifically to require people to be regulated when practising the law of our virtual nation?

If the third criterion is required to prohibit activity in SL that is otherwise permitted unless there is a change of state law, then, since advice and representation regarding our legal system is not advice and representation concerning whether state law applies, then there is no need for anybody to worry unless and until a manifestly improbable eventuality (your real-life legislature passing a law specificlally about a virtual nation of fewer than seventy people from all over the world), and should certainly not shape our entire judicial system. It is conceivable, of course, that a lawyer advising a client on our law might also stray into advising that client about real-life law, but that is precisely the sort of thing that [i:2chj9y58]should[/i:2chj9y58] be regulated: if one is getting advice about CDS law, then CDS only regulations do and should apply; if one is getting advice about first-life law, then first-life regulations should and do apply.

[quote:2chj9y58]2. We can probably avoid this problem if what we are doing in SL looks like "roleplaying" and not like "practicing." [/quote:2chj9y58]

Why do you think that making our legal system like a real-life arbitration will make this less, rather than more, likely? If the regulators see your arbitrtion-like legal system, they may very well think, "there are some people doing arbitration online, we need to regulate them". They will probably not even [i:2chj9y58]notice[/i:2chj9y58] our entire democratic government: if it looks like first-life arbitration, and works like first-life arbitration, then the regulators are very likely to conclude that it probably is first-life arbitration, conducted through some newfangled online medium.

Consider the alternative, however: an entire courtroom, with witness box, jury box, robed judges, benches, coats of arms, detailed codes of procedure, powers to issue SecondLife-specific punishments: that will be likely to be so completely off the scale of things that they expect that they will quite probably (wrongly) dismiss it as some imaginative online roleplay until we are sophisticated enough to have our own legal system regulaiton in place, in which case there will be a strong argument not to duplicate what is already working well.

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Post by Beathan »

Ash whether I thought that the CDS could realistically be on a RL government radar. Yes, I do. With the press we have received lately, I would not be at all surprised if multiple RL governments had heard of us and had people looking at us.

And I am worried about regulation by legislative action of RL governments. I am even more worried that RL adminstrative agencies will use their current authority to step into this space. I see a very real possbility of Bar Assns doing just that.

Maybe I am paranoid. Maybe I'm not. Time will tell. However, if I am right and we do nothing, we die. If I am wrong and we do something, we all have fun with the game we create. I think the game way is better, more fun, and safer.

With regard to the issue on RL arbitration, in most states, arbitrations require special licensing. A mediator can be, and often is, not an attorney -- but many US arbitration acts specify who can act as an arbitrator, and such acts frequently limit the role to licensed attorneys. They do so for the same competence concerns that inform Ash's qualification requirement under the Judiciary Act. Thus, even if regulators conclude that what we are doing is RL arbitration, they are likely to intervene (rather than stay out) based on that conclusion.

That said, I am not proposing to make our process look like RL arbitration. I am suggesting using some processes from RL arbitration to make our process simpler. My concerns about work/play are different. However, I think that if our process is simple, it is more likely to be considered "play" and therefore "safe".

I think that the showiness of out trials will not save us. Rather, it is the nature of our activity that will be scrutinized -- not the ornamentation. If our actions look too much like attorneys at work and not enough like avatars at play, we are in trouble.

Beathan

Last edited by Beathan on Wed Dec 06, 2006 2:57 pm, edited 1 time in total.
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A few defenses come to mind.

Post by Pelanor Eldrich »

Hi Beathan,

A most fascinating conversation and I do appreciate your insight.
I think RL gov't encroachment (er... regulation) may be inevitable at some point. Surely I have no idea when or how.

A few workarounds come to mind...

1) As an attourney, do not disclose your RL identity
2) As an attourney, do not disclose your bar affiliation
3) As a client, do not divulge your RL identity
4) As a client, do not divulge your state (jurisdiction(s)) of residence.

Won't any of #1-#4 stop the bar assn? Convincing any legal body taking a hard look at SL that it's only a game will be very difficult. Two words for you: Anshe Chung ($1M USD in SL Virtual Assets).

It'll be hard enough to keep the taxman's paws off. It's well nigh impossible to convince a gov't body that this is just a game at this point.

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