Litigation in Social Context: Costs, Funding and Roles October 12, 2009
Posted by Richard Moorhead in : Uncategorized , trackbackThis paper by Stephen B. Burbank[1], University of Pennsylvania was given at the Oxford Centre for Socio-legal Studies conference on litigation funding in the Summer. The Centre have been attempting a comparative exercise in looking at the costs of litigation across civil justice systems worldwide.
Discussions about the roles of litigation outside of the United States are likely to include reference to “American exceptionalism,” and even if not, quickly to manifest the discussants’ shared determination not to replicate what they take to be the excesses of a culture of “adversarial legalism.” In my brief remarks today, I want to suggest some dangers in such a categorical, and categorically hostile, approach to the American example, hopeful that in doing so I may shed a bit of light on the difficult business of drawing useful knowledge from the comparative evaluation of litigation costs and funding.
Comparing the costs of litigation and the arrangements for funding it in various countries is very challenging work in its own right. Yet, even if it were possible confidently to compare costs and funding mechanisms, there would be little point in doing so without also attending to the roles that litigation plays in the countries in question, and to the benefits that litigation may produce.
Thus, for instance, assume that the amounts expended, and that the other, non-monetary “costs” incurred, by the parties in litigation of the same type in two different countries were identical, and that the public monies consumed in, and not recovered from, such litigation were also identical. What useful conclusions could one draw without attending to the social costs of false positives and false negatives, and, relatedly but more importantly, to the benefits of the litigation in the systems compared?
Surely we would not be content with a conclusion that the litigation was equally costly if in one system it served only to resolve a private dispute, and to compensate for injury in part, whereas in another it afforded full compensation and, in addition, either clarified standards of conduct or deterred wrongdoing or both.
From this perspective, one danger in an enterprise like this one is similar to a danger lurking in economic approaches to law. In the hands of those who are not careful, who are allergic to that which is not easily monetized, or who focus exclusively on efficiency narrowly defined, the economic analysis of law may either leave out of account an essential element of articulated public policy or hinder an adequately capacious normative view of the possible roles of litigation in social ordering.
It is true that American litigation systems are distinctive for the extent to which they appear to empower private individuals to do work that, in many other societies, is either not done at all or done by the State, as for instance through administrative enforcement or social insurance. But the United States is hardly unique in conceiving of litigation as a public good. Hazel Genn’s 2008 Hamlyn Lectures persuasively argue that common law systems of adjudication have that quality by enabling clarification and change in the law and thereby facilitating the every day activities of people and firms living and working in a market economy. She also makes a powerful argument that the recent, budget-driven, tendency in the U.K. to make civil litigation pay not just for itself but for part of the criminal budget, and the more general tendency to demonize lawyers, (1) pollute public discourse, (2) occlude attention to the social benefits of private civil litigation, and (3) let the government off the hook while the public is ignorant of what it is losing.
Even if that is true, surely conceiving of litigation as a public good is restricted to common law systems. I think not. My friend, Professor Richard Marcus, has cautioned that comparative analyses predicated on a common law/civil law divide are skin deep, but his point was that American litigation really is exceptional.[2] I am here arguing that, when the social purposes of litigation rather than its incidents are considered, there may be more similarity than meets the eye. For that purpose, I need not belabor the quaint fictions that, for instance, French courts do not make tort law, or that their decisions have no influence on behavior because not precedential. For, it is hard to explain the recent interest of so many countries in group litigation without considering as one possible cause grudging acknowledgment that litigation may usefully serve purposes either not previously served by the State or that the State has determined, for philosophical, political or budgetary reasons, might better be served (or served in part), on a decentralized basis through private litigation.
Well yes, but aren’t the root causes of the nascent group litigation phenomenon in Europe a European Union mandate to provide better protection for consumers, coupled with the reluctance or perceived inability of member states, even those previously known for paternalism, to take on the additional financial burdens, particularly in a time of global economic crisis? Perhaps, but I venture that there will be other areas in which EU initiatives make the traditional affection for the status quo that has been characteristic of some member states no longer tenable. When that happens in Europe — and when a more capacious view of human rights similarly takes the status quo off the table as an option elsewhere in the world — finding solutions to budgetary pressures may seem more important than posturing about the excesses of American litigation.
This process would be facilitated by education concerning the facts of American litigation, in particular the fact that many of its alleged excesses are urban legends (or if you will “cosmic anecdotes”), and the fact that the American litigation landscape has changed dramatically over the past few decades.
In seeking the facts about American litigation, Sean Farhang’s recent work on the institutional incentives underlying, and dynamics affecting, “formalized, private enforcement regime[s]”[3] is suggestive. That work challenges a common narrative that attributes the enormous growth of federal statutory litigation starting in the 1960’s to American political culture, and in particular to an imperial judiciary responding to the self-interested efforts of irresponsible lawyers. Instead, his evidence suggests that the phenomenon was the result of conscious congressional choices to empower private litigation through devices such as pro-plaintiff attorney fee-shifting and multiple damage provisions, thereby insulating congressional preferences from an ideologically distant executive (that would be able to subvert those preferences in a system of administrative enforcement). Moreover, recalling the “stickiness of the status quo,” Farhang demonstrates how resistant litigation-empowering statutory provisions are to change (even by congressional majorities with ideologically opposed preferences).
From this perspective, the system of so-called notice pleading introduced by the Federal Rules of Civil Procedure can be seen as an important architectural element of a private enforcement regime that was created by the federal judiciary pursuant to congressional delegation. Once entrenched, it became part of the status quo and thus was highly resistant to change through the statutorily prescribed process for promulgating prospective supervisory court rules that brought it forth – “The Enabling Act Process.”
Perhaps the most troublesome possible consequence of the Supreme Court’s recent pleading decisions, which effectively repudiate notice pleading and arguably do so on the basis of the same urban legends that are so popular in Europe, is that they will deny access to court to claimants who have meritorious claims but cannot satisfy those cases’ requirements either because they lack the resources to engage in extensive pre-filing investigation or because of informational asymmetries. Of course, normative assessment of this possible development depends, or should depend, on careful identification and comparative evaluation of the costs and benefits of the litigation system to which notice pleading contributed and that which is proposed as a replacement, as well as consideration of alternative institutional avenues of change.
Even more important to a realistic appraisal of American litigation systems, however, is attention to an aspect of those systems that is not brought out by the U.S. questionnaire responses for this conference. They are chronically and seriously underfunded. When considered in the light of Professor Genn’s account of the current situation in the U.K., according to which civil litigation must pay for itself (as well as for a portion of criminal litigation), the fact that the costs of court systems in the United States are largely underwritten by the federal and state governments is revealed as a superficial difference, since the result is the same. In neither system do civil courts have adequate resources to enable claimants, at reasonable cost, to secure adjudication of their supposed rights. In both systems, civil courts are hell-bent on managing to settlement, rather than trying, those cases that they have not been able to shed through formally or effectively compelled ADR and, recently in the United States, through summary adjudication and dismissals on the pleadings.
In both systems, therefore, the value of litigation as a public good is diminished by the inability of judges to do the work that traditionally has been thought theirs to do. Moreover, as the Supreme Court’s recent pleading decisions attest, both increasing inability and the politics of the judiciary, which is not after all immune to urban legends (or in the United States to electoral politics), may breed unwillingness, even when and where the resources exist, to deliver on the promise of access to justice.
No wonder, then, that in a recent working paper about the demand for and supply of legal services, including but not restricted to litigation services, Professor Gillian Hadfield concludes that “Americans appear significantly more likely to ‘lump’ their problems and do nothing compared to people in other countries with arguably more robust delivery systems to provide individuals with access to legal resolutions” and that “while the US system ostensibly relies heavily on law to mediate relationships among people and institutions, in practice there are few resources devoted to making law effective in practice, and apparently less so than in countries that are arguably less law-driven than our own.”[4] She asks: “Is there a paradox lurking in here that in the system of adversarial legalism that Robert Kagan describes as distinctive of the ‘American way of law’ (to be contrasted with the greater reliance on bureaucratic means of policy making and implementation found in Europe) law is in practice less a salient part of everyday life than elsewhere?”
At the end of the day, then, a realistic approach to the American litigation model requires acknowledgment that, at least in recent decades, the promise of access to justice has far too often been broken as the result of political decisions to starve the courts, prompting institutionally self-regarding behavior by judges, some of whom have been quite content to use resource constraint arguments, often in tandem with attacks on lawyers, to disable litigants from securing rights that those judges disfavor. The fact, however, that the United States is, at least now, not really exceptional (except perhaps in levels of hypocrisy) should not prevent other countries from recognizing the social progress that its litigation systems have enabled in the past, or from acknowledging that it should be possible to harness the generative power of American-style litigation without replicating its destructive elements. Ultimately, the remedy for litigation’s negative externalities is the same as in any other market: regulation.
Most other countries in the world are better positioned than the United States to achieve a sensible regulatory regime, because they have not previously abdicated regulation to the bar and the judiciary, in other words to the legal profession. As Professor Hadfield observes: “The bar [in the United States] has by and large steered utterly clear of the idea that it is responsible, politically responsible, for the system-wide cost and complexity of the legal system, far beyond the ethical call to help the poor and perform pro bono work. It requires a political process to shift perceptions – much as perceptions about the federal government’s responsibility for high gas prices or stock market failures are molded not in the abstract but in the crucible of political contest and public debate.” And what better time to fashion a sensible and transparent regulatory regime for litigation than the present, when the public needs no education in the ravages of laissez-faire capitalism? Can we please just be honest about what we are doing and why?
[1] © Stephen B. Burbank 2009
[2] See Richard Marcus, Exceptionalism and Convergence: Form v. Content and Categorical Views of Procedure (July 2009). “In sum, even where there has been seeming convergence the distinctive American commitment to private enforcement means that the actual content of American litigation is likely to be different from that of most other systems.” Id. at 23.
[3] Sean Farhang, Public Regulation and Private Lawsuits in the American Separation of Powers System, 52 Am. J. Pol. Sci. 821, 825 (2008).
[4] Gillian K. Hadfield, Higher Demand, Lower Supply? A Comparative Assessment of the Legal Resources Landscape for Ordinary Americans, available at http://ssrn.com/abstract=1410890
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