Sleepless in orbit: What's keeping Space GCs up at night

"Who are YOU?" said the Caterpillar. This was not an encouraging opening for a conversation. Alice replied, rather shyly. "I--I hardly know, sir, just at present--or at least I know who I WAS when I got up this morning, but I think I must have been changed several times since then."

--Lewis Carroll, Alice in Wonderland

I spent my first 18 years in the space industry as a general counsel for start-up and established space-based companies; private and public; US and international; but regardless of the differences, all of them were fast-paced, always transforming themselves and seemingly always in fund-raising mode. My next 16 years--an era of tremendous change in the space industry--has been spent advising space industry in-house counsel and executives as outside counsel.

Seeing the industry, and practicing law from both vantage points brings different, illuminating (and at times heart-pounding) perspectives of what issues space lawyers grapple with daily.

Similar to other industries, the past two decades have brought significant changes in the thinking of the in-house bar. To succeed and gain credibility, knowing the law was not enough and saying "no" without an alternative business-friendly solution was unacceptable. Real-world business decisions are often made in the unclear zones of gray and too seldom fall within the certain zones of all black or white. Practicing law in-house means a continued stream of issues and real time judgment calls.

Striking the right balance is particularly challenging in the space industry.

Space is an inherently risky business. The nature and range of space ventures are constantly evolving at a rapid pace, regulation has not caught up, and it's not always easy to predict the direction the laws (when enacted) will take. "Industry practice" is being developed in real time. The space industry is also inherently a global one, whether with respect to customers or suppliers, required regulatory licensing and approvals, investors, the changing geopolitical landscape and almost every other aspect of the industry.

Over the years, I have learned from in-house space counsel what keeps them up at night and have developed a "Top Ten" list. Here is a countdown to number 1:

10. Export control and trade compliance. Issues of export compliance bring fear to the hearts of almost all in-house space counsel. Most in-house space counsel come to know both commerce controlled (Export Administration Regulations, EAR) technology and International Traffic in Arms Regulations (ITAR) technology restrictions, including obtaining licenses, technical assistance agreements, screening for denied parties, and most recently the shifting sands of tariffs.

9. Regulatory license and compliance. Obtaining and maintaining licenses and other required approvals for satellite and space-based systems--whether for spectrum, launches, payloads, ongoing operations and novel activities--can be extremely challenging. These challenges can be significant,  whether measured in terms of the length for approvals (which in some cases can take years), the difficulty of obtaining the desired approvals (e.g., new spectrum allocation or operational parameters), the global scope of the efforts (e.g., in case of a megaconstellation deployment and landing rights), the confluence with other regulatory industries (e.g., life sciences or nuclear in space), or new applications not previously regulated (e.g., human commercial space flight, asteroid mining, commercial space stations). In space companies, these regulatory approvals are mission critical, and often both financing and commercial operations depend on receipt of these approvals. Regulatory licensing can spell the difference between business success and failure.

8. Shifting landscape (including geopolitical). More than ever, geopolitics influences (and/or is a deciding factor) on supply chain, investors, venture partners, customers and business operations. Space ventures often have a long horizon and determining how the geopolitical landscape will evolve can present a real challenge. Will taking X% investment by Y non-U.S. investor pose an issue in the future as to qualification for U.S. government business (and licensing)? Will contracting with the sovereign or a business in Country A for a module on a commercial space station raise geopolitical issues in the future; how do you safeguard against the changes that may arise over the next 20-50 years? What tariffs or other requirements may be imposed on business that may place a tremendous cost on the customer sales and/or supplier purchasing side of business operations? Have your agreements (including with your shareholders) accounted for the "what ifs" that could arise if a transaction needs to be modified (or unwound) or to account for changing economics?

7. Government contracting (contracting, bidding, compliance). Space and satellite companies depend on the U.S. government for so very much, ranging from licenses to contract awards, to regulatory compliance and more. One misstep can have serious repercussions on the ability to do business generally and, specifically, with the U.S. government. Add to this the complexity of compliance (whether it be export, compliance with the federal acquisition regulations, or otherwise) and this is another area of intensive in-house counsel focus.

6.Global space business contracts. Space lawyers provide legal advice on a global (and beyond) playing fields.  Choices are made on a daily basis in contracting with companies and sovereigns across the globe as to commercial terms, choice of law and forum, and implications for enforceability and unforeseen consequences.  These contracts are multi-year ones (or perhaps decades-long in case of commercial space stations) and based on uncertain evolving laws and regulations not only in the United States but across the globe. Even "standard" terms may not be standard anymore for the space industry and may prove costly in the future if not carefully considered. Balancing the enormity of the risks in global contracting in a shifting legal and regulatory environment, against the competing resource- and time-constraints of space transactions, earns a spot on the top-ten list.    

5. Messaging (disclosure; fund raising). For in-house space company counsel at public companies, when something goes wrong (or right), "messaging" becomes much more critical as to timing and scope than with private (non-public) companies. For example, where a launch "anomaly" has occurred (either a launch failure or an in-orbit issue), it often takes a while to evaluate the cause and impact of the incident. When and what do you disclose? Especially for smaller, start-up public companies, going public brings with it much greater disclosure obligations and risks.

4. "What I do not know".

"Everywhere I go, I'm the first." Mark Watney, The Martian (2015)

No matter how much time you spend in weighing commercial decisions and compliance actions taken, there is always a concern as to what is unknown. Decisions by in-house space counsel are almost always made with many unknowns, either based on the unknown evolution of the business plan, regulatory uncertainties, evolving legal principles, technology changes or changes to counterparties. Even the best in-house space counsel weigh decisions based on imperfect information and imperfect visibility into the future.  

3. Resource limitations. In-house legal teams are almost always resource constrained, and space in-house teams are no exception. Whether it is in headcount or outside legal budget, there is always more to do to assess and address the legal and business risks than is allotted. When I was a general counsel, I thought about my job as part of a triage team, trying to focus resources addressing the most urgent legal needs and most "life-threatening" legal needs. I also lived by the principle of trying to "keep it simple" wherever possible in order to avoid unnecessary export or other compliance risks; too often, unfortunately, my business teams did not ascribe to that same principle.

2. Something goes wrong (mistakes happen). No matter how much you carefully consider and "game theory" the various paths ahead of your space company, something goes wrong.

"I've been in mortal danger for months. I'm kind of used to it now." Mark Watney, The Martian (2015)

In-house space counsel quickly learn to work with uncertainty and risks of the business. It comes with the territory.

1. Keep the lights on. The in-house legal team at space companies is part of the team. You sit among your clients, whether engineers, sales, marketing, finance or business development clients, for whom you provide advice. Above it all, your job includes helping to make the business a success and helping the team to navigate the risks and benefits ahead of them in a commercially and legally sound manner, with a bit of clairvoyance thrown into the mix.

Ad astra. And don't forget the duct tape.