What they want and what they need: the new role of the jurist in assisting the young space companies

4th Symposium on Space Educational Activities Barcelona, April 2022 What They Want and What They Need: The New Role of the Jurist in Assisting the Young Space Companies Maura Zara ,Sifat Kaur Alag 1 2 __________________________________________________________________________ Abstract 'New Space' economy is an all-inclusive concept that synthesises a real economic revolution in the space industry. It is characterised by the proliferation of new private actors that operate separately from institutional and governmental structures to seek their place in the market. Their primary objective is to allow low-cost access to space technologies, establishing themselves as one of the major growth engines of the space economy, fostering market competitiveness and technological development. Aware of this key role played by these new actors in the future development of the space industry, this paper adopts an empirical approach in order to obtain relevant information from those directly concerned, with the aim of identifying the crucial factors for their successful integration into the market and for their long-term permanence in the market. We have conducted 50 live interviews with founders and executives of small scale and start-up space companies from all around the world. The interviews are recorded and answers quantified to produce meaningful statistical data. Based on these results, the paper will focus on one of the fundamental problems for new actors. It will analyse these and further present possible inputs that can contribute to the development of the new space economy: The legal and bureaucratic dimensions in which new space companies are born and how they develop. In particular, the paper will explore the need to improve access to legal services from an economic point of view, with a focus on paralegal services; the difficulty shown by those directly concerned in guiding legislation on space activities and the need to rethink the training of lawyers, to make it more adherent to the peculiarities of the new space economy. In conclusion, after a reflection on the impact of the new space economy on the current market dynamics, with the analysis of the area of interest identified above, the paper will infer useful elements to set up some guidance suggestions for the implementation of the pathways of integration and development of young companies operating in the space market. This perspective, includes a reflection on the multidisciplinary dimension involving space activities and the opportunity to stimulate educational programmes with a training offers that reflects the now inevitable need for a less sectoral preparation that allows professionals in the space sector to acquire a more comprehensive view of the dynamics of the market. Keywords New Space; New Actors; Legal Services. _______________________________________________________________________ 2First Steps Legal, UK, [email protected] 1Corresponding author: First Steps Legal, Italy, [email protected] Page 1 of 6 4th Symposium on Space Educational Activities Barcelona, April 2022 1. Introduction Space activities present themselves as one of the most promising sectors of the world economy. The growing interest in the space market is articulated in a progressive increase of actors involved and the multiple uses to which outer space lends itself [1]. The story of the 'New Space' economy begins in the late 80s, it is an all-inclusive concept that synthesises a real economic revolution in the space industry. It is characterised by the proliferation of new private actors that operate separately from institutional and governmental structures to seek their place on the market. Their primary objective is to allow low-cost access to space technologies, establishing themselves as one of the major growth engines of the space economy, fostering market competitiveness and technological development [2]. The impact that the new space economy has on the market is extraordinary [3], it is the beating heart of the space industry, the product of the vibrant dynamism of young entrepreneurs determined to push technological progress. Therefore, one cannot ignore the role of these new players and, consequently, the importance of identifying their needs, in order to build a market in which they find the best opportunities for development. We believe it is crucial to listen to the voice of those directly concerned, which is why we opted for an empirical approach, doing a series of interviews with the founders of space start-ups [4], with the aim of identifying the difficulties that they encounter in their path, from the entry into the space market, to the possibilities of profitable permanence in it. In this paper we focused our attention specifically on the legal and bureaucratic dimensions in which new space companies are born and how they develop. From the results of our research, emerged, in particular, three fundamental needs, closely related to the contribution that can offer the figure of the jurist: the critical issues that arise in the communication between entrepreneurs and lawyers and the consequent need to rethink the training of lawyers; the need for improving access to legal services and the difficulty in guiding legislation on space activities. 2. Methodology and Findings 2.1. Data Collected [5] We conducted online semi-structured interviews with founders of 50 space start-ups, based in 18 countries [6]. The total revenue of all companies represented in the study at the time of interviewing was estimated to be around $76 million, equaling roughly 1.33% of the global investment in space startups. An interesting data to report is that the participants were mainly males, accounting for 47 or a little over 90% of the interviewees. With regard to the educational and professional background of the participants, the majority was engineering, accounting for 69% of all participants, or 27 interviewees; business and management for 15%, science for 15% and “any other background” including legal accounted for 1%. It should also be noted that 59% of the participants were already working in the space industry in some capacity before starting their own companies and that 21% of the interviewees considered themselves “serial entrepreneurs” and were running more than one company at a time. 2.2. Analysis Methods [7] The chosen method of analysis is based on the observation of the direct source of information, the founders of space start-ups, with the realization of a Page 2 of 6 4th Symposium on Space Educational Activities Barcelona, April 2022 questionnaire related to their personal experiences as entrepreneurs that operate within the context of the space industry. These sets of questions covered several topics such as idea formulation, budgeting, investment plans, perspectives on the current state of the industry and background. The interviews were analyzed using qualitative methods attempting to uncover and track patterns regarding the regulation of space activities and their relationship with starting businesses and their finances. In fact, the initial intention of the study was to provide a picture of the average space entrepreneur and advise on business planning for aspiring space founders. However, certain trends emerged in the interviews that piqued our interests, including information relating to the legal and bureaucratic dimensions in which new space companies are born and how they develop and the role played by the jurist. 2.3. Findings [8] Based on the results of our research, in order to evaluate the role of the Jurist in the dynamics of the new space economy, we can highlight a series of factors that emerged clearly. First of all, as we noted in our research on the background of participants, most of them came from a technical background that reduced their ability to read, understand and interpret legal documents and terminology. Therefore, it was evident that, to ensure the legal compliance of their companies and technologies, they needed the guidance and assistance of a legal expert. In relation to this premise, we noted, however, that while 74% of participants asked for expert advice when founding their space companies, a mere 19% budgeted for professional legal advice. The main consideration when contacting legal specialists was the cost. Most respondents reflected on the need to recruit or employ people with the right skills, however it has been acknowledged in several interviews that hiring a law firm to assist them in legal initiatives is often costly. This lead us, in particular, to carefully evaluate the potential offered by more flexible paralegal services [9]. Another factor related to the above premise concerns difficulties encountered in the regulatory guidance on space activities [10]. From the analysis of the interviews it became clear that the legal regulation of space companies both nationally and internationally is often frustrating and confusing for their founders and operators. Finally, a fact that has become clear is that, besides the affordability of legal services, many respondents noted that there is an evident shortage of skills among lawyers, they do not necessarily understand the specifics of the space industry and the legal requirements these starting companies need to comply with. It emerges, in this regard, the need for reflection on the communication between entrepreneurs and lawyers (rectius, jurists), as well as on the multidisciplinary dimension involving space activities and the opportunity to stimulate ad hoc educational programmes [11]. 3. Discussion and results 3.1. Importance of improving access to legal services A large number of founders of space startups are from STEM backgrounds (69.3%). Out of the 50 companies involved in this research only 10% had budgeted for any legal services. Whereas 10.2% companies admitted during the interview that they faced issues with legal work or legal paperwork. Page 3 of 6 4th Symposium on Space Educational Activities Barcelona, April 2022 Legal issues faced by a majority of companies boil down to having a weak foundation in terms of a lack of structured employment contracts, founders agreements and division of equity held by each members of the company. Very often these startups find themselves stuck in a loop as they do not invest in legal help initially due to limited funds and then fail to attain funding from investors due to a lack of structure and accountability in their company. A large number of these startups start off with little to no funding and bank on the investments as they go along. Unfortunately, many are unable to receive the funding needed due to a failure to represent their company to be built on solid foundations, with reliable employees. At the end of the day investors are often seeking to form a partnership with startups which not only have good ideas and ambitions in place but also have paperwork in place to avoid any issues caused due to fundamental errors which lead to the company falling apart and going into loss. Proper legal advice in the developmental years of a startup could be considered crucial to set up relevant documents and create a strong foundation. Space startups often attempt to avoid the heavy legal costs by avoiding to hire legal professionals in the initial stages and assume they should only approach lawyers when a ‘real’ legal issue arises. Although this might save them some funds initially it can have major repercussions in the future such as lost investors and higher legal fees due to the spiral of issues that they’ve created by postponing reaching out for advice. Another issue that arises in space innovation quite frequently is that of patenting and registering the technology created by the companies. The patenting procedure in itself remains imminently time consuming and expensive on top of which the company may face various issues if the innovation was developed in collaboration with other parties. Thus, making it essential to consult legal professionals throughout the innovative process. A way to avoid the exponential costs would be to opt for paralegal services. Whereas document creation services are concerned paralegals are capable, skilled and trained to produce the same quality of work as a solicitor and often charge much lessed for their expertise. Document services may include a variety of contracts, non-disclosure agreements etc. Paralegals may also prove to be beneficial in providing legal advice and signposting where needed while setting up the start up and creating a strong foundation to avoid facing problems in the future. 3.2. Difficulty in guiding legislation on space activities. Founders have often displayed a lack of legal know-how and inability to gather necessary legal information. Many participants in the study mentioned the time it takes to carry out paperwork as one of the most frustrating aspects of setting up a company and carrying out administrative functions. Since a majority of the participants came from a technical background their ability to understand and interpret legal documents and terminology is limited to quite an extent. Their academic and professional training often varies substantially from what is required of them to secure the legal compliance of their business and technologies. Difficulties may also arise due to the vague nature of many treaties governing space law. Founders admitted to struggling to discern lengthy bureaucratic processes to attain the legal documents and licensing Page 4 of 6 4th Symposium on Space Educational Activities Barcelona, April 2022 for their technological innovations. As well as with trivial administrative matters including filing taxes, registering a limited company as well as serious legal concerns including international regulations and multilateral agreements. A solution to this would be incorporating legal and business education into STEM university degrees or attending legal informational seminars, which could also help understand legal advice better. 3.3. The Need to rethink the training of Jurists The field of space activities falls into a multidisciplinary dimension, a mixture of sectoral knowledge (scientific and technological, economic and financial, legal and bureaucratic) that must find their harmony in the current complex economic framework. The new entrepreneurs have a background mainly oriented to scientific and economic knowledge [12] but they need, in order to guide their activities, to engage with legislation and more specifically bureaucratic aspects of the path that can lead them to gain a position on the market. It is therefore necessary to equip the jurists with the necessary tools to deeply understand the dynamics of the space sector. It would be useful to act directly on the training of the jurists, inserting specific modules in law school curriculums, focused on the process of entrepreneurship. But extra-curricular programs, specifically focused on the world of space activities, are also an excellent resource. In this regard, there are, on the international scene, valid models of educational programs that are moving in this direction and that should be implemented for the future. A first example is the Master in Space Institutions and Policies, organiszed by the Italian Society for the International Organiszation and the Italian Space Agency in collaboration with the Institute of International Legal Studies of the National Research Council [13]. This initiative is geared to forming a new professional figure, in line with the specific needs of the space market, equipped with all the necessary tools to operate in the field, with knowledge not only legal, but also institutional, technical, scientific and socio-economic. Another good example is the ECSL Summer Course on Space Law and Policy, organised every summer by the European Centre for Space Law in cooperation (ECSL) with a host institution (for example a university) [14]. The course offers to participants intensive lectures and seminars giving them the opportunity to meet not only important university professors but also professionals of the space industry. This is a very relevant aspect, because, although the course is based on the study of the legal and political frameworks that regulate space activities, it offers a comprehensive learning dimension that allows a more complete view of the entrepreneurship phenomenon. These two examples show the ongoing change in the educational offer in the field of space law and policy, in response to the demand for an academic and professional path that is able to fully understand the phenomenon of space activities. 4. Conclusion Thanks to our research, specifically related to the phenomenon of New Space economy, we have highlighted the indispensable help of a jurist in the conduct of space activities, emerged from the identification of the primary needs of young entrepreneurs in the legal and bureaucratic sphere, which are the need of improving access to legal services e the Page 5 of 6 4th Symposium on Space Educational Activities Barcelona, April 2022 difficulty in guiding legislation on space activities. We then pointed out the difficulties in the communication between jurist and entrepreneur, determined by the multidisciplinary dimension of the space industry, which requires specific preparation in the field of space law as well as an adequate understanding of the business dynamics and technicalities of the space sector. On the basis of these considerations, we draw the conclusion that it is time to rethink the educational path of jurists which allows a declination of their role with respect to the specific dynamics and requirements of the new space economy, bringing some virtuous examples from the international scene. References 1. For an in-depth analysis of the topic see: S. Hobe, The Impact of New Developments on International Space Law (New Actors, Commercialisation, Privatisation, Increase in the Number of Space-Faring Nations), 15 Unif. L. Rev. 869 (2010) 2. For an interesting analysis of the evolution of the new space economy see: M. Grimard, Dr G. Reibaldi, NewSpace Recent Evolution: an Opportunity for Europe to Enter the Game? IAC-16-E6.3.8, 67th International Astronautical Congress (IAC), Guadalajara, Mexico, 26-30 September 2016 3. With regard to the impact of new space in the space market see: N. Frischauf, R. Horn, M. Wittig, O. Koudelka, Newspace– European Perspective, IAC-19.B4.3.7, 70th International Astronautical Congress,Washington, USA and N. Frischauf, R. Horn, T. Kauerhoff, M. Wittig, I. Baumann, E. Pellander, O. Koudelka,NewSpace: New Business Models at the Interface of Space and Digital Economy– Chances in an Interconnected World, IAC-15.B2.5.1, 67th International Astronautical Congress (IAC), Guadalajara, Mexico, 26-30 September 2016. 4. See par. 2. 5. A. Marinova, M. Gould, M. Zara, Newspace, Old Rules: An Empirical Approach To Understanding The Needs Of Young Space Businesses In Relation To Current Space Regulation, IAC-21,E7,7,2x63023, 72th International Astronautical Congress (IAC), Dubai, United Arab Emirates, 25th – 29th October 2021. 6. List of countries: Brazil, Bulgaria, Canada, England, Finland, Germany, Greece, Hungary, India, Iran, Mexico, The Netherlands, Poland, Singapore, Scotland, Sweden, The Netherlands, United States of America. 7. A. Marinova, M. Gould, M. Zara, Newspace, Old Rules: An Empirical Approach To Understanding The Needs Of Young Space Businesses In Relation To Current Space Regulation, IAC-21,E7,7,2x63023, 72th International Astronautical Congress (IAC), Dubai, United Arab Emirates, 25th – 29th October 2021. 8. A. Marinova, M. Gould, M. Zara, Visualisations Of Trends Among Newspace Companies To Help The Optimisation And Modernisation Of Current Regulatory Regimes In Space, GLEX-2021,12,3,10,x62711, Global Space Exploration Conference (GLEX 2021), St Petersburg, Russian Federation, 14-18 June 2021. 9. see par. 3.2. Improving access to legal services. 10. see par. 3.3. Difficulties in orienting legislation on space activities. Reflection on funding. 11. see par. 3.1. Critical communication between entrepreneurs and lawyers. Need to rethink the training of lawyers Improving access to legal services. 12. see par. 2.3. Findings. 13.https://www.sioi.org/master_corsi/masteri-in -istituzioni-e-politiche-spaziali/. 14.https://www.esa.int/About_Us/ECSL_-_Euro pean_Centre_for_Space_Law/ECSL_Summer _Course_on_Space_Law_and_Policy. Page 6 of 6