A recent ICANNfocus article discussed the magnitude of ICANN’s legal fees. Specifically, ICANNfocus questioned whether the extent of ICANN’s legal fees, about 20% of their total revenues, was related to the organization functioning as a regulator instead of simply as a technical manager of the internet.

In an article in the National Journal’s “Technology Daily,” ICANN’s General Counsel discusses the organization’s legal costs. The ICANN official is quoted as responding to questions about the organization’s legal expenses by stating that internet is built on interconnected contracts and that, “[l]egal expenditures are necessary to both construct these legal relationships and to resolve disputes that may arise as these relationships mature.”

ICANN’s statement appears to bolster the theory that the significant size of their legal bills is due to: 1) the organization’s regulatory activities; and 2) the closed nature of their regulatory development and enforcement processes. An example of how ICANN’s regulatory actions increase their legal bills may be found in the Explanatory Notes to their Request for Proposal for new sponsored Top Level Domains (sTLD).

The ICANN RFP explains that, following an evaluator’s recommendations regarding an application for a new sTLD, “ICANN staff will proceed with contract negotiations and develop an agreement reflecting the commercial and technical terms to be agreed, although such terms may be subject to further amendment, as appropriate.”

What ICANN does not explain is why they are developing such “commercial and technical terms,” along with “further amendment” on a closed, case-by-case basis in the first place. It appears that ICANN’s legal bills for contract development and resolution could be sharply reduced if they were to offer a simple, standardized legal agreement open to any party meeting necessary basic criteria.

Use of basic standardized legal agreements would likely reduce ICANN’s legal costs while substantially enhancing the organization’s transparency and reducing their discretion. Thus, use of simple, open legal agreements could help return ICANN to the path of being a technical manager, rather than regulator, of the internet.