The Power of Common Law

Jose Leal (00:08):

Welcome to rHatcheryLive. This is Jose Leal, and I'm here with my partner Matt Perez. And today's guest is Scott Phillips from Vaunted Ventures. Welcome, Scott.

Scott Phillips (00:19):

Good day. Hey, again, how ya going?

Jose Leal (00:22):

Goodday. I love that. Well, where are you at?

Scott Phillips (00:26):

Well, I'm Australian. So you know, Goodday is a traditional welcome.

Jose Leal (00:31):

I know, I know. So that's my reason for asking. So, Scott, we're going to sort of explore some ideas today. Can you tell us a little bit about yourself first? Just who you are, where you're at, and what brings you here?

Scott Phillips (00:48):

Oh, certainly. So, my background is in law. So, I'm trained as a lawyer, but I built my career as a technologist. So, I have been very interested in visual and spatial computing. I'm kind of an old cyberpunk from way back, a bit, bit of a Gibson night. For those who know William Gibson a fantastic science fiction author. And I really, really enjoyed his work. Certainly, when I was younger. And so yeah, built, built a career in visual and spatial computing, mostly, like sort of CAD modeling and virtual reality and 3D printing, that sort of thing. And in more recent years I've become very interested in decentralized finance Bitcoin blockchain but now also in another way of looking at the world of Web three. And starting to also bring the, bring the law back into that as well.

Jose Leal (01:56):

Interesting little intersection for us because we didn't get a chance to talk about this, but my background was in early cad computer data drafting in the architectural space, 3D modeling, and all that. So yeah, you can tell we think alike.

Scott Phillips (02:14):

Yeah. Yeah. And the really interesting difference between vector modeling and parametric modeling was something I really like to emphasize. Parametric is super powerful. Super

Jose Leal (02:27):

Interesting. So, you said that you're, you're now moving into the sort of the legal thinking around web three and everything else that you're doing. Tell us a little bit more about that intersection between the stuff in web three and legal. Where do those things start to cross for you?

Scott Phillips (02:49):

Well, I regard, I, I define Web three fairly specifically. Well, specifically and in general, if I can get away with that as the financialization of the internet at the protocol level, right? So that's kind of what Bitcoin started. And it's what Ethereum and all the other blockchains, so really point do is to fix the internet and, and bring it money, right? Bring it money, bring it rights management, and bring in these legal concepts. And ultimately bring in the common law, right? Because that's really kind of wholly missing on the internet wasn't born fully formed. It was you know, quite a, quite a skeleton initially with some relatively simple protocols and didn't come with a protocol for secure digital identity, for example. And so, then we've, we've seen various projects, some from Google and Facebook and, and some from open-source projects to, to build some sort of identity framework so that you don't have to log in with a username and password into every single website that you ever visit, right? So, that's still a little bit piecemeal. And there are still questions around the security of, of that especially when we start to talk about what's coming down the pike in terms of quantum computing and sort of, you know, usually in this story somehow I get onto the topic of quantum computing because that is a, a massive sleep issue that, that people aren't very understanding of. And it's going to make Y2K look like a kindergarten picnic, quite honestly. It's really, I call it the quantum apocalypse because it's going to basically rise up sometime within the next decade, almost certainly. And it's going to turn our security frameworks into digital confetti, right? Because basically, once you can calculate a private key, given a public key and that's, you know, it's a big but relatively straightforward mathematical problem. Then all computer security pretty much in existence just goes away. And we're talking no secure messaging banking systems, blockchains digital signatures, all this stuff. Boom. It just doesn't work anymore.

Jose Leal (05:54):

Well, I would certainly agree with you on that. If that comes about as you project but maybe we leave that for another conversation. I'd like to really focus on what you said about common law because I think that that as a topic sound like what we want to hit.

Scott Phillips (06:13):

Yeah, absolutely.

Jose Leal (06:14):

So, the power of common law, tells us about that as it relates. So, you've brought it…

Scott Phillips (06:20):

I'll just flag that quantum piece because it's highly relevant to this because you, when you bring, those common law concepts into the digital world, you just want to make sure that they're not going to get steamrolled by what's coming down the pike, right?

Jose Leal (06:37):

Right. Absolutely.

Scott Phillips (06:38):

So that's kind of foundational. And it's foundational for all that stuff that I just spoke about. It all has to move across to some sort of quantum resistance system because it's, otherwise it's just not going to survive the next 10 years.

Matt Perez (06:53):

Can you give us an example of this quantum I'm sorry, common law? An example of a common law concept and.

Scott Phillips (07:07):

Sure, well one of the things would be digital signatures, right? So, a digital signature today, DocuSign, Adobe Sign, hello sign, and the long tail of other businesses that deal in digital signatures. They all use a certification authority digital certificate behind the scenes. That's what that is really, that that digital certificate is PKI Public key infrastructure as a public private key pair at the heart of it. And your details if it's your certificate, right? To, as a sort of a, band-aid measure for not having a digital identity protocol on the internet. So that has an exposed public key. I mean, public keys are called public keys because generally they are exposed, right? But it's a problem when you're talking about quantum computing, right? Because if, if those can get broken, if those keys can get discovered through the public exposure of the public key then they're not going to survive.

Matt Perez (08:19):

How is that an example of common law?

Scott Phillips (08:22):

Well, so because a, a digital signature, like a, a signature on a, on a contract is a fundamental element of common law contracts, right? And a seal on a deed is, the execution aspect of a common law deed, right? So, and there's a, there's an adage, I don't even know how exactly true it is, but there's an adage that all law is a contract. I mean, there are also specialties at des, right? But so, if you think about even legislation, right? Legislation is kind of a contract because it's, well, there's, the constitution is sort of a contract and, you know, all the mechanisms of parliament is all made of laws. And, and, and if you think about it long enough, you discover that, well, it's sort of all contracts. It's just people agreeing. That's what law is.

Matt Perez (09:19):

And for forced being the common ground of those. You're right.

Scott Phillips (09:23):

Yeah. so, did you say force just then?

Jose Leal (09:30):

He did, yeah.

Scott Phillips (09:31):

Well, I think you're right. And, and, and so we agree that in certain circumstances, the force of the state can and should be applied to certain circumstances when people are really breaking the law then you need to stop them from doing that. And, and that, that kicks in. There's a political philosopher, John Rawls, who talks about the overlapping consensus. And that's, that's really the foundation of that's an agreement to use State Force in certain circumstances.

Matt Perez (10:05):

So, in this case, the example of common law is the overriding consensus, or whatever you called it.

Scott Phillips (10:14):

Well, the common law, sort of reflects that overlapping consensus. That's, that's how it's become manifest in our institutions, in our societies. So, it's kind of the codification of that collective ethic, our collective values. When we say, well, because we, we believe all these things, then we'll write these laws to just make sure that we all agree and it's written down and we are using our language, our written language and, and, and spoken language to express the way that we feel about all these, all these things. You know, probably going back to the 10 commandments in, you know, Abrahamic traditions, right? That's, so that's sort of how, how I see it, you know, from a pretty philosophical point of view, right? Becoming manifest. We've got that in legislation, and it's reflected in the case law. And what I'm talking about is how do we then bring all of that, that that framework, that technology that's been developed over centuries and millennia, how do we bring that into the internet, into the digital environment, and not just as a pdf, but as a protocol, as something that can be programmed if necessary. But something that can be seen and understood. And that's, that's really where the idea of cryptographic forensics comes in.

Matt Perez (12:07):

Let me ask you because I'm trying to understand, I'm still a little bit confused. So, I got the thing about bringing the law into the internet protocols. I get that what does it have to do with common law? I mean, the, the, the legislation is going to certain establish certain laws, is going to enforce 'em, and the protocols are going to have to follow those laws, etcetera, etcetera. Is that what you're talking about or…

Scott Phillips (12:46):

Yeah, I think I see what you're, what you're getting at here, Matt. And so, the common law is, I, I'd like to just propose that it's somewhat separate to legislated law. I mean, common law is really, the way that that legislation has been interpreted by the courts in the main Okay. And, but it's sort of its own thing in itself as well because you've got, oh, well, I mean, in in, certainly in, in, in Australia we have a fused jurisdiction, right? So common-law courts from the UK and the Court of Equity have been fused. So, you can get an equitable remedy in a common law court effectively. But this is sort of its own body of law somewhat separate from legislation. I mean, often that gets codified in legislation, so it's not a dichotomy, it's quite a continuum.

Jose Leal (13:50):

Scott, I'm, I was just going to jump in there for a sec. Some of our colleagues here in the state’s legal colleagues refer to it as private law in individual contracts between individuals or groups that aren't tied necessarily to the state law, obviously bound by, but not directly dealing with. And so our ability to, to some degree, isolate what we're doing from the normal rigors of, of state law.

Scott Phillips (14:21):

Yeah, absolutely. Absolutely. And I think I mean, a, a concept that I've found very potent is, is the concept of a, a unilateral contract. And I think this is quite an underutilized area of law because a unilateral contract is basically a contract that you offer not just to one other party, but to the whole world, right? So, you could do things like treaties, for example, this way. You could have a business that just says, you know, and, and many businesses do, this is not, not that rare, really, but to, to, to make an offer to the whole world. You, you, you pay this money, and you get this result whether it's a product service, or what it is. And so yeah, I think that's, that's really super powerful. And really what the framework that my company is bringing to market is about, is about being able to do this in the digital world. We have a new data type called a vaulted object. And, and that enables digital content to be encapsulated in an encrypt encrypted data structure. And then common law deeds sealed, executed common law deeds to, and, and contracts to be applied to that. So, so you can do things like attesting to its truth and there's really a bunch of things you can do when you put these simple yeah, sort of simple building blocks together element, I'd say. And so, so then, then it's, there's up to anybody to decide what they want to do with those concepts and, and, and how that they will allow then those concepts of common law to then be applied to things in the digital space and, and externally. Because if you've got a, a digital deed can still affect your rights in regard to physical objects, right? No problem there.

Jose Leal (16:45):

Yeah. So, here's a real-world example that, that here within Radical, we are dealing with the, the way that we envision radical companies is, is organizations that are co-managed, right? And part of that process is assigning, sorry, not assigning, negotiating the right to own for all members of the organization and the right to share and profits and the right to collectively manage your organization without having someone dictate what, what can and cannot be done, right? And all of those are collected currently being done in informal agreements that we call collaborative agreements which are a takeoff from conscious contracts. I don't know if you're familiar with that domain, the conscious contract. Little bit. Our colleagues Kim Wright and Linda Alvarez created that concept, and it works for us in the sense that what we're doing is the contract is more, the agreement is more about the process of discussion and engagement in the discovery of one another's purpose and intention, and so forth. And then codifying that after that effort has been done, so the human effort first and codifying it. Second is something that could then become digital in the way that you've described. Is that a use case possibly?

Scott Phillips (18:35):

Well, absolutely. And I suppose one of the things that become interesting about a forensic provenance system that can contain media is that I mean, you could, you could negotiate all over a Zoom conference and then vault the actual recording of the video conference. So, you could then kind of attest to the conversation and, and, that entire conversation could be effectively part of the legal instrument at that point. So, so then if anyone's really got a beef with what's going on, then we can, we can all pull out the certified and provenance version of the conversation we had five years ago and say, well, do you have a problem with what was discussed five years ago? Because of this, we think this is in alignment with that. And we think it was all agreed to five years ago.

Jose Leal (19:38):

One of the That's really cool. And one of the things that we recognize is that it really isn't about the fact that it was set in stone five years ago, but that it was started five years ago. And we've hopefully been adjusting and adapting and reconfiguring it throughout time as reality has set in and new contexts have emerged. Is that something that you think you're describing would allow for the constant updating and aggregation of multiple pieces of legal content, if you will?

Scott Phillips (20:19):

Well, yeah, because like, I mean, it ultimately comes down to the intention of the parties. And you know, like once, once you've had those conversations, and this is really the stuff of law, this is what, what lawyers, good lawyers do, right? They have conversations and, and, and stimulate conversations around all the different things that end up being clauses and contracts, right? And they surface all of these issues, right? So, if, if you end up, into a situation where some of these issues haven't been considered, because you know, who even knew five years ago then of course you can you know, add those in later on. You don't have to, it doesn't have to come out fully formed, and rarely does. So, yeah, absolutely. I mean, you could do the same thing and, just in a technical manner, you could create another vaulted object or probably extend to an existing one.

Jose Leal (21:24):

So, if we trusted ourselves as, as members of the same organization, and we've written this up when we put it on our Google Docs and Google Docs has a sense of what got edited and what didn't get edited, and, and we have a Google Docs document that, that we trust for the most part. What would the difference be? What would the difference be between that agreement that has added histories and, and things of that nature? And, you know, we could add a video to that and include it and, you know, we know when it would add it was added and by whom and so forth. How, how would that be different?

Scott Phillips (22:06):

Well, I it's different in, well, certainly the technical architecture, but that's sort of trivial. It's really different in the sense of the strength of the provenance because that document once it's been agreed to, then can be attested to by all the different parties through our framework and that, and that provides a cryptographic binding to the digital identity of each of the people applying seals to that. And so, you are not, nobody then has to trust that no Google engineer has got in and, and fiddled with it and change something important because that's just not possible.

Jose Leal (22:58):

So, the, the aspect of the, the, the technicalities of being able to make sure that it's a hundred percent locked down is really what, what you're bringing to the table. I'm, and I appreciate that. I think there's value in that, and I think that that's what crypto brings us is, is the ability to do that in, in many ways. But I wonder if the idea of agreements between individuals as a mainstay of how we create organizations, for example, rather than an organization having a voice and dictating who gets to be in the organization and how that organization is structured and all of that, where rather than building a corporate entity that has as many or more rights than the individuals that are working with it, the idea that we don't create a third party, but we create a collaborative amongst ourselves and, and do so with common law between ourselves not going into corporate law and other legal structures that go beyond who we are.

Scott Phillips (24:23):

Yeah. So, you've sort of got a continuum between companies and then into associations and then into bilateral and multilateral agreements between people. And this framework will support all of that. And so, it's, it's then really up to individuals as, as to how they want to deal with their own governance, right? Governance of whatever the project is, right? Whatever the common endeavor is. So yeah, I mean, you can, you can do that now with pieces of paper as well, right?

Jose Leal (25:04):

Right, right.

Scott Phillips (25:05):

So, it's all, it's all, it's all very possible. And yeah, so the, the infrastructure that, that we bring to market, it has some certain other functions that are quite actually unique to the digital world. So, as we bring this whole common law framework in there are things that we can do once we get into the digital space that are quite interesting. So, one of those is what I call fractional seals. So let's just talk about this in the sense of a, of a corporation, because it sort of makes most sense there, but it could apply to any, any level along that continuum, which is that, let's say the board of a company that makes a resolution about something specific that needs to be authorized, then they can create, rather than having just their company seal applied to that, they can create a fractional seal that can be used by anyone in the organization to authorize for that specific purpose according to that board resold minted board resolution, right? And so, they have this little digital thing that they can then put on a contract to do that, whatever it is. And then the, the receiver can look at that and go, ah, right, okay, the board did authorize this because he's the seal specifically for it. But that doesn't exist in any other form so far as, no. But it's a, functional part of, of our framework.

Jose Leal (26:40):

And so fractional in what way? Because it's only being used for the instance of the board rather than the whole of the organization or fractional that's being used for that document.

Scott Phillips (26:52):

Cause it's for that specific resolution of the board.

Jose Leal (26:54):

For that specific resolution.

Scott Phillips (26:56):

So, it's, the board has delegated power kind of down into that seal, and then, and then an officer of the company can, can take that seal and go, bang, see here it's been authorized.

Jose Leal (27:11):

What about a, a slightly different, well, not slightly different than a completely different thought, which is that I, as an individual with the same powers and rights as everyone else in an organization, rather than being a CEO or a chairman of the board or whatever it may be can, can that apply in, in the fact that a bunch of individuals who don't have any more rights than one another is able to bring about a collective signing of something. Say, for example, we generate an agreement, and three-quarters of the members decided that they want to be part of that agreement to purchase something or to do something. But not every member wants to do that. So those individuals that sign on to that are the ones that are in there. Is there a mechanism for that, to help or, you know, subsets of the larger group work in that way?

Scott Phillips (28:21):

You could, you could absolutely build that. We've not thought through that in the specific sense that you described, but I think that's entirely possible. And I think that fractional Seals aspect kind of speaks to that as well because you can, you can then have rather than, rather than a formerly constituted board, you can have a majority requirement. So, you know, a two-thirds majority, let's say, to then create that specific fractional seal and then anyone in the organization can then utilize that and, and authorize the money or the, you know, application of

Jose Leal (29:08):

And in this case, it wouldn't be so much a voting scenario as you've described, but more of what Matt likes to call a banner, which is a group of individuals who are doing something outside of the norm, normal operational day-to-day, and identifying a, a special case, a special investment, a special project, something unique that only a part of the organization wishes to be involved in and, and condones and, and being able to, to, to lay both claim any responsibility for those individuals rather than the whole of the organization. So really becoming sort of fractional in nature about n not having to force everyone to do certain things if they don't think it's the right thing to do. If, if half the organization wants to do an experiment, then half of the organization goes away and does that experiment, and the other half might want to do a different experiment. And, so those agreements and, and then, the protocols within them and how they're going to do them is as would be assigned within these agreements. And then an understanding of who's behind it and who's, who's funding it and so forth would be built into that.

Scott Phillips (30:28):

This is, this is exactly the concept of a Dao, right? And so, in 2016, I was a token holder in the original Ethereum, Dow, the perhaps somewhat arrogantly named Good Dow which spectacularly blew up when it got hacked. And 62 million drained out of it which was very unfortunate. But when that was when that was a thing, how that was structured was that it was actually a fractal Dow I suppose you could you'd call it, because that was set up such that the, the mothership contract, the mother, Mother Dow could create child DAOs. This thing was more or less a crowdfunding system on an Ethereum smart contract. And, and so when people collectively, you know proposed projects and it was agreed on that they would that would get funded, then it would, it would produce a replica of itself, and it created a [INAUDIBLE] and that [INAUDIBLE] would then get funded from the mothership and it could go off and do its own little project. So that's kind of the structure that I think you are pointing towards, which is that you could have this sort of structure where you, it's almost like creating subsidiaries, right? Right. So, you create a subsidiary venture, the people that are interested jump into that for a while and, you know, make it work. And people that don't care about it, they don't have to, but there's some degree of common ownership and, you know, you could, you could mix it up any way you like in terms of the people that contribute, maybe they're picking up you know, shares in the, in the subsidiary venture directly. And then, you know, the, the, the mothership venture owns a bunch of the equity as well. So, everybody's still, it's still a common purpose, common organization, right? Then there's, you know, just a bit of a wiggle room for people that, that get really into a particular topic.

Matt Perez (32:47):

Well, we, we we're about five minutes from, from the hour, and this has gone for quite a bit, so it must be interesting. And I'd like to announce that next week our guest is going to be Tina [INAUDIBLE] no relation to a singer, I don't think. And there she is. And she's a partner at AdaptiveOrg. And we have known Tina for a long time. It's Tine with an E at the end, not Tina, with an A. And we've known her for a long time, but she's going to a new venture now and, and want to see what that's about. So, with that, I'd like to you know, make your closing remarks and…

Jose Leal (33:41):

Yeah, thank you. Thank you, Scott, for joining us today and for telling us about your thoughts on Uncommon Law and, and the work that you're doing with Vaulted Adventures. Anything you want to just sort of wrap up with your thoughts on what it is that the common law is going to do for us in the future and, and the opportunities that there are in connecting those two webs three and the common law concept?

Scott Phillips (34:14):

Yeah, thanks, Jose. I think that this, the whole, the whole space of Web Three has been absolutely captivating for me personally for many years. And for a lot of people. And yes, the opportunities in it are just vast. I can see how common law, legal rights and contracts and money and all that stuff can really be applied at the protocol level, at the, at sort of level of APIs and can be, can be programmed into our networks and, and, and into applications and be, be done in a, in an efficient way that is still actually quite human. Because what we're, what we've got at the moment is kind of the internet of things, right? We have internet I'm sorry, IP addresses internet protocol addresses. They address four things. That's our devices, it's our phone, it's our laptop, and the, the framework that we are talking about is a layer on top of that, if you like which is really the internet of people and, and bringing in these common law rights, that's people's rights, right? It's not devices. So that's what this is really about to bring a layer in here that works for people. I mean, it sounds a bit scary and technical at times, but, really what this is about at the level that matters is organizing our digital world so that it works for human beings. And I think that's, that's probably a, a good point too, to wrap up on because that's really the essence of all of this.

Matt Perez (36:23):

Course. Thank you. Thank you, Scott. Thank you, Jose. And we'll get another show.

Jose Leal (36:31):

Perfect. Thank you, Scott. Have, a “good eye”, as you would say,

Scott Phillips (36:39):

All right, enjoy.