Rent-seeking: Difference between revisions

===[[Legal eagle]]s as [[rent seeker]]s===

Rent seeking is at the heart of the [[agency problem]]. An [[agent]] wants to advance her [[principal]]’s interests but, above all, she wants to ''remain'' and agent, so she can be ''paid''. If her principal’s best interests are served by ''doing away with her agency altogether'', you can be sure this proposition will struggle to find voice in the advice she offers her client.

For example, take the [[contract negotiation]] process: there are a bunch of [[Stakeholder|stakeholders]] in the contracting process who ''like'' being involved in it, who want to ''stay'' involved in it, even though, by the lights of the new model, they don’t add any value.  ''Their primary purpose is to extract rent''. They have structured themselves into the architecture of their organisations and the market. They don’t ''want'' any “solution” which prevents them continuing to extract rent. It is the agency problem, ''par excellence''.

This is what is so interesting about [[OneNDA]]. It may be small and seemingly insignificant in its subject matter, but it strikes the [[rent extraction]] problem at its root. Rather than changing the mode of “service delivery” (for which, read, “''mode of rent extraction''”) or automating, accelerating ''or otherwise making more efficient'' the process of extracting rent, [[OneNDA]] banishes rent altogether. Business owners can fill out a form, and sign it, by themselves.

There has been much [[thought leader]]ship on the subject of reforming contracting processes, but all of it takes it as read that some rent extraction must take place. The OneNDA is different. The forces of rent extraction are deep, and persistent, and powerful, and do not expect them to lay down in front of a shepherd-boy with a sling the way Goliath did.

We talk about this elsewhere, but herein is the fundamental ''problem'' with legaltech. It is predicated on the tech provider earning not just a profit, ''but an annuity''. [[Legaltech]] addresses inefficiencies which manifest themselves as negative annuities: ongoing costs and resource drains for quotidian tasks with minimal value.

 

Legaltech thinking: if customers have an ongoing cost of ''ten'', they will be prepared to pay an ongoing cost of one to remove it. But the work required to remove that ten is done, there is no-longer an ongoing cost of ten. My question is now: what on earth am I paying this one for? If the [[legaltech]] solution continues to require costs and resources equating to one then ''this is not legaltech'': it is deft process-reengineering coupled with [[outsourcing]] — and outsourcing has its own drawbacks.

 

If the legaltech solution does not consume ongoing resources and costs, then once I have paid for its implementation, why should I pay an ongoing marginal cost per unit? The machine is solving my problem for nothing: the ongoing cost its vendor seeks is pure rent extraction.