Defending Innovation for Platform-Based Companies
Platform-based businesses and gig economy companies have vastly transformed how goods and services are received today. A quick perusal of any phone’s home screen will likely confirm this. On a larger scale beyond the screen, the transportation, commerce, and logistics industries have, perhaps, been the most impacted. While these models offer efficient, streamlined services, they also present legal challenges that may not fit neatly into the traditional civil litigation framework. For platform-based clients operating in Louisiana, these challenges are further shaped by the state’s unique and sometimes threatening legal landscape. Successful defense requires litigation experience, local knowledge, and a true understanding of the unique needs of these clients operating modern platforms in real time.
What the Gig Economy Really Is
The gig economy is a sector of the labor market characterized by short-term contracts or freelance work, as opposed to permanent employment. Gig economy workers are most often independent contractors. The gig economy is comprised of those individuals providing services through those apps on your phone, whether through rideshare, grocery delivery, or dog walking. Platform-based companies within the gig economy are experiencing staggering growth and, as a result, increasing legal exposure.
First Step—Understand the Platform, Mission, and Risk
Unlike conventional employers and traditional companies, most platform-based companies are connectors that use technology (often in the form of a cell phone app) to facilitate services requested by a user to be performed by independent contractors. Even within the broader gig economy, because of the diverse and innovative community of app-based businesses, there is no “one size fits all” legal strategy for these companies. The service provided and the parties involved are unique to each platform, and any agreements or contracts between those parties are likewise unique.
The Questions That Shape Strategy
- What is your company’s mission?
- How do you want your company’s brand to be conveyed through my legal work?
- What is your company’s tolerance for risk?
- What are your localized concerns? What are your national concerns? What are your international concerns?
While these are questions defense counsel should ask every client, the answers that app-based companies provide will be unique. After asking, the answers must drive the recommended litigation strategy. While counsel must always advise clients on potential outcomes, learning in earnest their business goals helps to tailor a unique resolution strategy in handling their claims.
Aligning Legal Strategy with Brand and Community Impact
Galloway’s goal is to be a trusted and privileged member of our client’s team responsible for protecting their brand. When a well-established legal argument was available to an app-based client, they chose immediately to forego that argument because it contradicted one of the pillars of their company—to provide services to under-served areas of the community. An understanding of the client’s mission and brand was imperative in navigating that particular dispute well.
Addressing Common Litigation Challenges in the Context of Platform-Based Work
Whether through intent or habit, opposing counsel often attempt to force platform-based companies into outdated legal categories. Perhaps no issue is currently more contested than the unsupported arguments of company control where none exists. Therefore, a defense strategy must start with a deep understanding of the client’s technology, policies, user agreements, onboarding processes, and day-to-day operations to accurately and precisely explain the platform model to judges, juries, and opposing counsel to defeat arguments for control.
Venue Strategy and Jury Perceptions for Gig Economy Cases
In this same vein, as defense counsel must do in every case, it is essential to evaluate a judge and venue for clients – and not just based on the conventional standards. Effective counsel must take it a step further and provide substantive advice to clients on experience with local judges and juries’ perception of gig economy work and any positive or negative outcomes in platform-based work. Predicting a judge’s tolerance for a company’s mission and anticipating how a jury may perceive an app-based company is key.
Protecting Data, Trade Secrets, and Privacy in Discovery
Often most significant for many platform-based clients is privacy. Although other companies in the transportation industry, such as motor carriers, emphasize privacy concerns, in the case of gig economy clients, the business is, more often than not, the data. Therefore, for reasons of privacy, security, trade secret protection, and competition, protection of data is paramount. Defense counsel, therefore, must be prepared to defend against disclosure of commercially-sensitive materials to every extent possible and to present strategies that balance the rules of discovery with asset (platform) protection. Being equipped to explain a platform-based company’s proprietary information and key concerns is vital to communicating with opposing counsel and reaching agreements with counsel on disclosure outside of the courtroom. If that is not possible, defense counsel must be equipped to do the same with the judge. Prompt and continuous communication of discovery disputes ensures clients are well-equipped with local knowledge to make the right decisions for their companies.
Building a Defense Strategy That Keeps Pace with the App
Effective defense of platform-based clients requires moving beyond one-size-fits-all litigation strategies. Early case assessment is crucial particularly where venue, jury composition, and local practice norms can significantly influence outcomes in discovery disputes and at trial. An effective defense leverages nonconfidential platform data and/or user agreements to establish what the platform does and does not do. Clear explanations of app functionality, decision-making processes, and independent contractor autonomy help counter opposing arguments that attempt to equate these platforms with traditional employers or carriers.
Responding at Platform Speed
Prompt responsiveness to clients is not optional under any circumstance, and it is especially crucial when working for platform-based businesses that evolve and operate at a fast pace. A partnership approach between clients and counsel allows businesses to focus on their growth and innovation while maintaining confidence that their legal interests are being protected.
With the fast-paced nature of the industry comes improvements and change. While a company’s mission often remains unchanged, the tools these companies use are constantly being improved. This results in evolving regulatory and compliance needs, which warrant skilled advice from local counsel. This also results in a need for flexible and quick understanding of app changes and the documents that control the relationships created, such as the Terms of Service or similar user agreements. Year over year, the gig economy is evolving because the businesses within it are on the cutting edge. An effective defense strategy must accommodate quick learning and an ability to master topics you may not be familiar with. Efficient counsel must be on the cutting edge alongside the platform’s team.
Defending What’s Next
As apps continue to reshape commerce and transportation, litigation will continue to evolve alongside it—albeit, likely at a slower pace. By combining litigation experience, individual operational insight, and a team approach, technology and transportation lawyers at Galloway can help platform-based companies establish accurate understandings of employment issues, protect clients’ business models, and navigate risk so that these unique clients can focus on their next big innovation in the app-based environment.
Disclaimer: This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between Galloway and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions.
