From 8f316a466f910349f59b49b7cd29ed8e70e593d1 Mon Sep 17 00:00:00 2001 From: tegwick Date: Wed, 29 Jul 2026 18:12:45 +0200 Subject: [PATCH] Add Global Contingency Share Determination Rule to Enforcement Network concept MIME-Version: 1.0 Content-Type: text/plain; charset=UTF-8 Content-Transfer-Encoding: 8bit Per maintainer request, replaces the flat "working default 50%" Contingency Share with a systematic per-jurisdiction rule, directly responding to WP-0005's finding that 50% is unsafe almost everywhere except the UK: 1. 50% applies if lawful in the jurisdiction. 2. Otherwise, the higher of: (A) the Jurisdiction Percentage Cap - the actual local statutory maximum, published by the Enforcement Registry as background information for prospective Enforcement Partners; or (B) a Standard Bounty Amount - a fixed sum (not a percentage), defaulting to $1,000 local-currency-equivalent, recalculated annually to 50% of the trailing-18-month average unpaid-fees amount where more than 10 settled cases exist (a sample-size floor to avoid thin-sample noise), announced by 31 July, effective the following 1 January, always capped at the specific case's own unpaid fees. Flags, as the highest-priority open question this rule itself introduces: whether a fixed, non-percentage bounty actually escapes contingency-fee prohibitions worded around outcome-contingency generally (India's Rule 20: "contingent on the results of litigation") rather than percentage- proportionality specifically (Germany's quota-litis-style rules) - the Standard Bounty Amount may not solve what it was designed to solve in exactly the jurisdictions that motivated it, and this is not yet verified. Added as new specs/EnforcementNetworkConcept.md §13 (Concise Definition renumbered §14; no other section numbers changed, so existing cross- references to §5.5/§6/§8/§9/§11 from workplans and history/ artifacts remain valid). Updated §5.5, §5.7, and §8's key findings to point to the new rule. Folded the rule's population and open questions into WP-0005-T10's synthesis scope. Co-Authored-By: Claude Sonnet 5 --- README.md | 2 + specs/EnforcementNetworkConcept.md | 46 +++++++++++++++++-- ...EV-WP-0005-enforcement-network-research.md | 26 +++++++++++ 3 files changed, 70 insertions(+), 4 deletions(-) diff --git a/README.md b/README.md index 7de6343..22d753b 100644 --- a/README.md +++ b/README.md @@ -51,6 +51,8 @@ Extracted and stabilized from the concept draft under `workplans/TREV-WP-0003-no [`specs/EnforcementNetworkConcept.md`](specs/EnforcementNetworkConcept.md) is a new, separate concept (2026-07-29): independent, locally-licensed Enforcement Partners pursue unauthorized Commercial Use in their home jurisdiction for a share of Recovery, so License §3 enforcement scales without the Licensor litigating everywhere directly. **The central open risk is that lawyer contingency fees are not legal everywhere** — Germany notably restricts them — so the concept requires a jurisdiction-conditional Litigation Funder/Local Counsel structure, not a single global fee mechanism. Backed by `workplans/TREV-WP-0005-enforcement-network-research.md`; 9 of 10 tasks are done (all 8 jurisdictions plus mechanism design — see `history/260729-TREN-*.md`), only the human-gated synthesis remains. Findings: 50% is only exactly valid in the UK; most jurisdictions cap lower (18–35%) or ban direct lawyer contingency outright (Germany, India); India cleanly confirms the split-role model is both necessary and legal there; Japan's fee-splitting rule means even the split-role fallback needs jurisdiction-specific structuring, not just an availability check. +The concept's §13 now defines a **Global Contingency Share Determination Rule**: 50% where lawful, otherwise the higher of the local percentage cap or a published Standard Bounty Amount (a fixed sum, not a percentage — defaulting to $1,000 local-currency-equivalent, recalculated annually from case data, announced by 31 July for the following 1 January). This is a deliberate design response to the finding above, but it introduces its own open question flagged prominently in §13.4: whether a *fixed* bounty actually escapes contingency-fee prohibitions worded around outcome-contingency generally (e.g., India's Rule 20) rather than percentage-proportionality specifically — not yet confirmed. + ## Repository layout | Path | Role | diff --git a/specs/EnforcementNetworkConcept.md b/specs/EnforcementNetworkConcept.md index 5c718b9..a44cd65 100644 --- a/specs/EnforcementNetworkConcept.md +++ b/specs/EnforcementNetworkConcept.md @@ -85,7 +85,7 @@ The total amount actually collected as a result of an Enforcement Action (judgme ### 5.5 Contingency Share -The portion of Recovery paid to the Enforcement Partner (or, where local law requires a different structure, to the Litigation Funder — see §8) for pursuing the Enforcement Action. **Working default: 50%**, per the Licensor's original proposal — not yet validated against any jurisdiction's fee-regulation limits (see `workplans/TREV-WP-0005-enforcement-network-research.md`). +The portion of Recovery (or, for the Standard Bounty Amount component, a fixed sum rather than a portion) paid to the Enforcement Partner (or, where local law requires a different structure, to the Litigation Funder — see §8) for pursuing the Enforcement Action. **Determined per jurisdiction by the Global Contingency Share Determination Rule at §13** — not a flat global percentage. The Licensor's original 50% proposal is the rule's ceiling case, used wherever it is lawful; §13 defines what applies where it is not. ### 5.6 Platform Share @@ -93,7 +93,7 @@ The remaining portion of Recovery after the Contingency Share, payable to the Li ### 5.7 Enforcement Registry -The Trust Service component that records Alleged Violations' status, Enforcement Partner engagement, Enforcement Action status, and Recovery/allocation facts, per §3.2's non-discretionary principle. +The Trust Service component that records Alleged Violations' status, Enforcement Partner engagement, Enforcement Action status, and Recovery/allocation facts, per §3.2's non-discretionary principle. Also publishes, per §13, each jurisdiction's current Jurisdiction Percentage Cap and Standard Bounty Amount as background information for prospective Enforcement Partners. ### 5.8 Enforcement Partner Agreement (EPA) @@ -182,6 +182,8 @@ All eight jurisdiction/family tasks are now complete. The pattern is more varied 2. **The split-role structure is not universally safe either.** Japan's Article 12 fee-splitting rule is the first finding in this program suggesting the Funder/Counsel split needs jurisdiction-specific structuring, not just jurisdiction-specific *availability* checking. 3. **China likely needs a dedicated EPA governing-law rider**, not just a dedicated fee structure — the same foreign-related-contract constraint found in `workplans/TREV-WP-0004-global-jurisdiction-research.md` T06 applies to the EPA itself. +Finding 1 above — that a flat 50% is unsafe almost everywhere — is exactly what §13's Global Contingency Share Determination Rule (added 2026-07-29, at the Licensor's request) is designed to handle systematically rather than jurisdiction-by-jurisdiction improvisation. + A concrete Litigation Funder/Local Counsel mechanism design and payment-flow diagram (built from the first three jurisdictions researched) is at `history/260729-TREN-MechanismDesign.md` — its §4 feasibility table is now superseded by the fuller table above and should be read alongside it, not in place of it, pending T10's formal synthesis and human-accept update. ## 9. New legal instrument: Enforcement Partner Agreement (EPA) @@ -224,6 +226,42 @@ Proposed principles (not yet finalized): - **Monetization Extension Specification**: §6 above proposes a new canonical extension, `enforcement-recovery`, following the existing six-field contract exactly. - **Trust Service (`specs/TechnicalSpecificationDocument.md` §4.1)**: needs a new component, the Enforcement Registry, following the same observe/record/publish boundary as the existing Breach/Compliance Record component. -## 13. Concise definition +## 13. Global Contingency Share Determination Rule -> The Enforcement Network is a proposed mechanism by which independent, locally-licensed Enforcement Partners pursue unauthorized Commercial Use of a Milestone Release in their home jurisdiction, funded by a Contingency Share of any Recovery, with the remaining Platform Share flowing to Development Credit for the applicable Phase. Because lawyer contingency fees are not available in every jurisdiction, the mechanism must be capable of separating the economic-risk-bearing role (Litigation Funder) from the locally-compliant legal-representation role (Local Counsel) where local professional-conduct rules require it, rather than assuming a single global fee structure works everywhere. +**Added 2026-07-29, at the Licensor's request, in direct response to `workplans/TREV-WP-0005-enforcement-network-research.md`'s finding that a flat 50% Contingency Share is unsafe in most researched jurisdictions.** This section defines a single rule that determines the Contingency Share for any jurisdiction, so the framework does not need bespoke percentage negotiation each time a new jurisdiction is added. + +### 13.1 The rule + +For a given jurisdiction, the Contingency Share is determined as follows: + +1. **If a 50% Contingency Share is lawful** in that jurisdiction for this kind of engagement (i.e., a Local Counsel or Litigation Funder may lawfully be entitled to 50% of Recovery), **the Contingency Share is 50%.** +2. **Otherwise**, the Contingency Share is the **higher of:** + - **(A) the Jurisdiction Percentage Cap** — the maximum percentage of Recovery lawfully payable to the Enforcement Partner (or Litigation Funder) in that jurisdiction for this kind of engagement, per §13.2; or + - **(B) the Standard Bounty Amount** — a fixed monetary sum, not calculated as a percentage of Recovery, per §13.3, **capped so it never exceeds the unpaid Commercial Use fees actually owed by the specific Customer in the specific case** (a case-specific fact established through the Enforcement Action's evidence, the same way a Development Credit amount is established). + +### 13.2 Jurisdiction Percentage Cap (A) + +The Jurisdiction Percentage Cap is the maximum lawful percentage found for that jurisdiction (e.g., the UK's 50% DBA cap, South Africa's 25% Contingency Fees Act cap, China's sliding 18%–6% scale by claim size, Argentina's 35% ordinary cap). Where no lawful percentage-based fee exists at all for a direct Enforcement Partner (e.g., Germany, India), the Jurisdiction Percentage Cap is **0%**, and the rule falls through entirely to (B). + +**The Enforcement Registry (§5.7) publishes the current Jurisdiction Percentage Cap for every jurisdiction with an active or prospective Enforcement Partner**, as background information for prospective Enforcement Partners and Litigation Funders — this is a publication obligation, not a discretionary determination, consistent with §3.2's non-discretionary principle. + +### 13.3 Standard Bounty Amount (B) + +**Default:** the local-currency equivalent of **US $1,000**. + +**Annual recalculation:** once per year, at a mid-year calculation date, for each jurisdiction: if **more than 10** Enforcement Actions have settled in that jurisdiction with a Recovery in the trailing 18 months, the Standard Bounty Amount for the following year is recalculated as **50% of the average unpaid-fees amount across those settled cases**. If 10 or fewer qualifying cases exist, the Standard Bounty Amount remains the US $1,000 (local-currency-equivalent) default — this sample-size floor exists to avoid setting a jurisdiction's bounty from a statistically thin sample. + +**Governance calendar:** the recalculated Standard Bounty Amount for a jurisdiction (or confirmation that it remains the $1,000 default) is **announced no later than 31 July**, and takes effect for Enforcement Actions in that jurisdiction from the following **1 January**. A jurisdiction's Standard Bounty Amount therefore changes at most once per year, on a known, published schedule — never retroactively, and never mid-cycle. + +**Cap.** Regardless of which figure applies, the Standard Bounty Amount actually paid in a specific case cannot exceed that case's own unpaid Commercial Use fees — it is a floor/fallback incentive mechanism, not a windfall. + +### 13.4 Open questions this rule introduces (not resolved here) + +1. **Does a fixed, non-percentage bounty actually escape a jurisdiction's contingency-fee prohibition?** This is the most important open question the rule itself creates, and it must not be assumed away. Several prohibitions found in `workplans/TREV-WP-0005-enforcement-network-research.md` are worded around outcome-*contingency* generally, not percentage-*proportionality* specifically — India's Bar Council Rule 20, for example, bars a fee "contingent on the results of litigation," which a fixed bounty paid only on success may still trigger regardless of it not being calculated as a percentage. The Standard Bounty Amount is a promising design response to the percentage-specific prohibitions (Germany's §4a, quota-litis-style rules), but it has **not** been verified against outcome-contingency prohibitions that would catch a fixed sum just as readily as a proportional one. This is now the highest-priority legal question for `workplans/TREV-WP-0005-enforcement-network-research.md` T10's synthesis. +2. **Currency conversion methodology for the US $1,000 baseline** — which reference exchange rate, and as of what date, is not yet defined. Working assumption: the rate prevailing at the announcement date (31 July), published alongside the announcement — not yet confirmed as a rule. +3. **Precise definition of the 18-month look-back window** — whether it means cases settled within the 18 months immediately preceding the mid-year calculation date (the working assumption used in §13.3), or some other reading of "settled 18 months before." Should be stated unambiguously once this rule moves toward legal review. +4. **Who is paid what when both (A) and (B) could apply, and (A) does not sum cleanly with the Local Counsel/Litigation Funder split-role structure** — e.g., in China, where (A) might be a low single-digit-to-teens percentage of a large Recovery while (B) is a fixed sum that could exceed it. The rule as stated picks the higher of the two amounts, but does not yet specify how that amount is then divided between a Litigation Funder and Local Counsel under §8's split-role structure where one applies — likely a matter for the Enforcement Partner Agreement's own terms (§9), not this rule. + +## 14. Concise definition + +> The Enforcement Network is a proposed mechanism by which independent, locally-licensed Enforcement Partners pursue unauthorized Commercial Use of a Milestone Release in their home jurisdiction, funded by a Contingency Share of any Recovery determined per jurisdiction under §13's global rule (50% where lawful, otherwise the higher of the local percentage cap or a published Standard Bounty Amount), with the remaining Platform Share flowing to Development Credit for the applicable Phase. Because lawyer contingency fees are not available in every jurisdiction, the mechanism must be capable of separating the economic-risk-bearing role (Litigation Funder) from the locally-compliant legal-representation role (Local Counsel) where local professional-conduct rules require it, rather than assuming a single global fee structure works everywhere. diff --git a/workplans/TREV-WP-0005-enforcement-network-research.md b/workplans/TREV-WP-0005-enforcement-network-research.md index fa11928..d84d3a2 100644 --- a/workplans/TREV-WP-0005-enforcement-network-research.md +++ b/workplans/TREV-WP-0005-enforcement-network-research.md @@ -341,3 +341,29 @@ synthesis and proposed concept-doc edits and leave this task `todo` — **Deliverable:** `history/-TREN-Synthesis.md`, plus proposed (not yet applied) edits to `specs/EnforcementNetworkConcept.md`. + +--- + +**Added 2026-07-29 (maintainer request):** `specs/EnforcementNetworkConcept.md` +§13 now defines a Global Contingency Share Determination Rule (50% where +lawful; otherwise the higher of the Jurisdiction Percentage Cap or a +Standard Bounty Amount — a fixed, non-percentage sum defaulting to +US $1,000 local-currency-equivalent, recalculated annually from a +>10-case sample where available, announced by 31 July, effective the +following 1 January). This task's synthesis must additionally: + +- Populate §13.2's Jurisdiction Percentage Cap for all 8 researched + jurisdictions/families from the T01–T08 findings (values are already in + each jurisdiction's `history/260729-TREN-Jurisdiction-*.md` file and the + consolidated table in `specs/EnforcementNetworkConcept.md` §8.1). +- Treat §13.4 open question 1 (does a fixed, non-percentage bounty actually + escape outcome-contingency prohibitions worded around "contingent on + results," as opposed to prohibitions worded specifically around + percentage-proportional fees?) as the **highest-priority legal question** + in the entire WP-0005 program — it determines whether the Standard + Bounty Amount actually solves anything in India (Rule 20's wording) and + Germany, or merely relocates the same compliance problem. +- Resolve §13.4 open questions 2–4 (FX reference methodology, exact + 18-month window definition, and how (A)/(B) interact with the + Litigation Funder/Local Counsel split where one applies) or state + plainly they remain open pending counsel.