March 27, 2008

Software Freedom Law Center spins off law firm for profit-making clients

Author: Bruce Byfield

The Software Freedom Law Center (SFLC), which provides legal representation for free and open source software (FOSS) projects, is extending its services with the creation of a new law firm called Moglen Ravicher LLC. Named after the SFLC's legal directors, Eben Moglen and Dan Ravicher, the new firm will offer the SFLC's existing services to for-profit clients.

The new company is "wholly owned and operated by SFLC," Ravicher says. "We didn't want to form an entirely separated law firm, as Eben and I want any and all revenues from such for-fee work to go to support SFLC's operations." In return, Moglen Ravicher will use the SFLC's resources, including its lawyers' time.

The creation of the new firm was necessary because the SFLC's self-appointed mandate is to assist only nonprofit clients. "We formed Moglen Ravicher LLC in order to offer the same services we provide through the Software Freedom Law Center to those members of the free and open source community who are not eligible for SFLC's pro bono services," Ravicher says.

Part of the reason for this mandate, Moglen explains, is that "it enables us to explain in a clear and transparent way to our supervisory authorities -- that is, the Charities Bureau of the New York State Attorney General, which regulates us as a New York state nonprofit, and the Internal Revenue Service, which governs our tax deductions -- how we are conducting our operation."

However, even more importantly, the SFLC wished to ensure its donors, many of whom are corporate, that they "would not have to worry that our clients included competitors of theirs," Moglen says.

Although it was announced yesterday, Moglen Ravicher was in fact created "some time ago" says Moglen, in anticipation that the strict division between donors and clients might one day hamper the SFLC's main goal of defending FOSS. With an increasing number of FOSS projects being either created or monetized by businesses, SFLC's legal directors anticipated that someday they might want to be in a position to assist for-profit clients.

That day has arrived, along with OpenNMS, Moglen Ravicher's first client, a small company currently dealing with an alleged violation of the GNU General Public License (GPL) involving its network management products.

While neither Moglen or Ravicher is prepared to discuss the OpenNMS case in detail, Moglen does say that it is worth defending, but not "earth-shattering." However, representing OpenNMS "helps to benefit all our clients and the community, so we want to do the work."

Terms of engagement

Besides the general defense of the GPL, which is always a prime concern for the SFLC, another reason that Moglen cites for taking OpenNMS as a client is that network management tools are "an area where free software is going to make significant gains in the near future."

Moreover, with much of the market being in areas such as virtualization and embedded appliances, where free software has a significant market share, Moglen says, "We believe that there are a lot of consultants and supervisors in the free software community who will find that there are attractive business models in providing services and consulting in the area." Under these circumstances, defense of the GPL on behalf of OpenNMS could easily save future legal difficulties for others in the future.

"We will have an arrangement with OpenNMS that is closer to a traditional fee-for-service arrangement [than the SFLC's usual practice]," Moglen says. "And the money that the case generates -- which won't be much, I hear -- will be at the disposal of the SFLC to use for all its cases and clients."

Another consideration, Moglen says, is that, "We don't think that commercial counsel can economically serve this client. It's not a big money-maker, and commercial counsel might find that it's not attractive to represent them."

Moglen anticipates that many of the new firm's clients will be in positions similar to OpenNMS'. "I believe that we will see that the clients of Moglen Ravicher are not very many, and that they will not be very big or very rich predominantly. They are much more likely to come from the small business sector that grows up around FOSS.

"We want to advance the mission of FOSS. By and large, the way to do that is to advanced the projects that make the software. But where the project that makes the software has also become a profit-making business, we don't want to have to turn them away for that reason alone. I think that by and large we will be drawn to such clients because by and large they are not big enough or robust enough to be able to hire their lawyers on the open market."

For larger or more prosperous potential clients, Moglen says, the new firm will likely continue the SFLC's practice of referring them to other FOSS legal experts. "We have many colleagues, and we are not by any means trying to usurp their turf," Moglen says.

Nor will Moglen and Ravicher expand the SFLC's area of operations. "I don't expect us to become general business lawyers," Moglen says -- not even for FOSS-based companies. "If organizations come to M&R, it won't be because they want help going public, or preparing for an IPO, or dealing with the problems of incorporation. We will always refer that work to general business lawyers."

In short, Moglen and Ravicher represents an extension of the SFLC's work, and not a change of focus or direction -- nor even, primarily, a way to raise extra funds for the SFLC. "It's simply a differently named basket for the rare cases in which we have a for-profit client," Moglen says.

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