The Vanishing Trial: A Hayekian Perspective

0:00I'm going to be discussing the Vanishing Trial from a Hayekian perspective. I'm assuming that most people in this room understand the very basics of Hayek's Theory and the law, so I'm not going to spend too much time discussing that other than using it as a critique for the other versions. So this is what the Vanishing Trial says. We went from here for trials to here for trials. They have found this in not only what we have here is civil trials in the circuit, I'm sorry, in district courts, but also in appeals courts. It went from 11.5% in 1968 to 1.5% in 2002. So that's an enormous drop in trials. So what happened first is that this guy, Paul Galanter, from University of Wisconsin writes a paper, is 111 pages, contains something like 50 or 60 pages of just charts and numbers.

0:51So nobody reads it, right? Because it's a 111-page law review article. And this won't move on, so I can't, there we go. So what are the fears from this, right? The fears from these, from the drop-in trials that the law will cease to develop.

1:10Owen Fiss from Yale says the other problem we're going to have is coercion. And this one is still confusing to me. He says that what's going to happen is we're going to see parties basically bullied into accepting negotiated outcomes they wouldn't Under Normal Circumstances. So if one party is very wealthy and the other party is very impoverished, the wealthy party will just basically bully the impoverished party into accepting a deal that's not in their best interest. This has been widely criticized, mainly because that rich person can afford a much better attorney than the impoverished person as well. So it's really unclear as to what the judicial system would be any better for the impoverished person. The next fear here is that this whole movement catches steam when a three-page article comes out in the American Bar Association litigation journal. I think I would be remiss not to mention that the litigation journal is arguing for more trials. That probably shouldn't surprise a whole lot of people.

2:14So here's the first theory that comes out. This is from Ms. Rifo. She's the one that by the ABA Journal. We have a dispute, and we can all agree that the dispute occurs. Then we go to trial through the ruling. This is important because it creates the law through stare decisis. So every time a trial occurs, a judgment is rendered from those judgments the law is created, and that is how society knows how to behave. I'm sorry, this is widely, lawyers run for the hills from this. Even those that support the Vanishing Trial think that this is complete nonsense because at the end of the day we all know that just because something is ruled on doesn't make it so it's going to be followed.

3:01And Paul Galanter, the guy I mentioned initially, he comes out and says, no, no, no, that's That's not what I meant at all. You confused what I was saying. What I meant is legal pluralism. So what's legal pluralism? Legal pluralism is that courts provide signals through language and pretrial motions. So the courts are going to start to say, hey, your side's going to lose here. I would settle. And then they will settle. So it's not that these disputes are not getting heard by the courts. They're just not going through to trial. And there's some Some evidence of this. The percentage of decisions through trials has certainly decreased substantially, but the number of lawsuits filed has dramatically increased. So at the end of the day, this has some evidence for it. This is called litigation. So yeah, we're all going to go through the motions like we're going to trial, but nobody really believes they're going to go to trial I mean, very small percentage of cases.

4:02This is also called negotiating in the shadow of the courthouse. The courthouse is setting what the negotiation terms will be, and so it's not really clear how much the trial is really important anymore. They also, the other big criticism from the legal pluralism school is that the vanishing trial in the ABA sense painted way too broad of a stroke. We see certain regions of the country still having a great deal of trials. We see a lot of prisoner petitions still taking place. So they painted this whole thing as way too broad of a stroke. So what do they say happens? They say, listen, there's two things. First, we both agree again that there's a dispute here. And from this, the laws can be decided in some ways through venue choice, right?

4:49So more free market approach in some very odd ways. So instead of going through to trial, where I kind of take my risk, if I'm going to win or lose, but there will be a winner and a loser, maybe we can both find some ways to win. So if I wreck your car and I say, hey, you know, I'm sorry about that, and you say, oh, that car, my mother gave that car to me, that car is very sentimentally valuable, I want $100 million for it, that car meant a heck of a lot to me, well, wait a minute now, that $5,000 worth, you know, would you take $5,000? No, no, no, no, no. So maybe we can reach an agreement and that says that perhaps car disputes don't need to go through the courts as often. And here's the big, big addition that I don't think has gotten enough attention. Spontaneous order, which is SO in my presentation, continues used through the ADR process. The law does not cease to develop exclusively because there's

5:53no stare decisis. That's very Hayekian and very correct. I should surprise nobody here. So this led me to think that this is all very good, but I think there's something more here. Hayek believesivides a spontaneous law, a spontaneous order creates a law. The law is created through Heed says that societal norms and expectations will always be what we decide by law. He says this is certainly not true for legislation. There's a very clear divide here. Law is done through spontaneous order. It will protect societal expectations. Legislation might not.

6:38Okay? And a judicious decision can be legislation in the Hayekian sense, in that if it goes against what we can consider our societal expectations, it is not the law, even though it's been ruled on by a court, rather it's become legislation. He also says that law is likely at its best when it's not written. When you put something in words, what we have known intuitively, problems will arise. So let's use a very good example. I noticed something incredibly odd at this conference so far. When they always ask for questions, you guys raise your hands. And I read Mises.org pretty close to every day, and I've never seen that rule written down anywhere, that for questions we expect you to raise your hand.

7:26Now, let's say we say, okay, that's fine. I'll write it down. When you have a question, you raise your hand. Well, now let's say we're in a classroom with a test and I don't know one of the answers. I raise my hand and say, I don't know the answer to this question on the test. Well, no, that's not what we meant. Now we have to have an exception to the rule. And we can see how this continues indefinitely. Now there's exceptions to the exceptions, and it creates a whole big problem. So law is at its best when it's something we know intuitively, Something that society decides as a whole and is also transmitted through imitation, normally. I would likely guess that none of us ever was told to raise your hands when you have a question.

8:13We saw it in the movies. Maybe we saw our parents do it. Maybe we came to a conference like this and saw others doing it and we figured it out. It's passed on through imitation, not the written word. Once again, normally, so I put a caveat on that one. Here is the most important part, in my view, of the Hayekian theory. Laws change endogenously, meaning from within the system. There is nobody that comes from above and says your new societal expectations are X. They can't do that. We all as a group decide this through spontaneous order.

9:04The other big limitation on what Hayek says the judge can do is that he must work his is rule into a framework of already decided expectations, okay? So if we already, you know, so it's very rare to have a brand new case come before the court. It's likely to be decided a thousand times before. If you, you're going to have to work your theory, that law, that rule, into the general framework of all the other laws and rules. And this is why. Legislation can be nullified through the trial, and I would argue also through the ADR system. If a law is created, either through legislation as we know it, or through a judge deciding something that's against societal expectations, it will be nullified through the judicial system.

10:01It won't be enforced. I can prove this very, very easily. I'm assuming all of you drove to some way, either to the airport or to Mises. Raise your hand if you didn't speed. Raise your hand if you went exactly the speed limit or below the entire way. Oh, you guys are lying, whoever rose their hands. I will call all of you out, whoever rose their hands. Well, of course you sped, and I'll give you a little hint. The speed limit around here was 70. I went 73 in front of a cop. He didn't Hayek pulled me over. Why? Because the law says I'm allowed to speed. It's not written down. But if he pulled me over for going 71 miles per hour, I'd think he's crazy. And I would take it to court and I would bet that Jerry would find a way to make me win.

10:46I would argue, hey, it's more safe this way. If I go the speed limit and nobody else does, I can cause an accident. There could be problems. I'll say there's mitigating circumstances. And I'll bet you dollars to doughnuts, I walk. And Hayek says, that's beautiful. That is the law. The law says the speed limit's not 70. The speed limit is some number above 70. That's wonderful. Now, if I got pulled over for going 120, which I haven't done, my car would fall apart, then I would certainly get pulled over, and I'll bet you that Jerry looks at me a little bit differently, right? Because now I'm not following a law. Here's the big, big takeaway.

11:34I know I've bored you guys plenty already. Society creates their norms and expectations through spontaneous order. Those laws are created before the dispute. The Vanishing Trial is looking at how law develops too late in the process. And this makes inherent sense, I will argue. How the average dispute occurs because I have wronged you or you have wronged me. What do we mean by wronged? I mean, you have violated my societal expectations. You have done something that society says you cannot do to me that is actionable. If the laws only decided after the trial, I'll have no way to know that you wronged me.

12:25The rule must be created before the dispute. If not, the system as a whole makes no sense. And so this also leads to the thought that, hey, Hayek says that rules are discovered, not created. Well, if the rules are truly discovered, it doesn't matter which party discovers them. If the rules are really obvious to society, that same rule should be discovered through either ADR, Alternative Dispute Resolution, I'm sorry, or through the trial system.

13:11It shouldn't matter which system the participants choose because the same rule will be discovered. So here's what I think, you know, Hayek is far more brilliant than I could ever dream of being, so I couldn't, you know, he could be laughing at me up there and I won't know. But here's the big things on trial center, right? So these laws are created before the dispute occurs. And stare decisis means very little if not in accordance with societal expectations. My paper last year discussed Hayek and the civil law. And I showed, I think somewhat convincingly, that even in civil law countries where the legislature supposedly writes the rules, supposedly says exactly what the law is, how it should be enforced and what is to occur.

14:04Even there, societal expectations were more important than what the legislature said. The courts found a way around it to meet societal expectations. And then he would also question, why would we assume that the law can only develop through trials? That seems like an absolutely absurd assumption. Here's what I think he would say on legal pluralism. Still, laws are created before you say they are. Then he would say, yeah, consumer choice is good, like that's, yeah, good. Then he would say that they understand how law can develop through ADR. So I think he'd be a lot more positive on legal pluralism. I think he'd still say there's some problems in the underlying theory of when law is created, but that's pretty good.

14:51So lastly, I'm going to look at what's gained. So let's say these fear mongers are true and there'll never be a trial again in the United States. What does this mean? What's good? Good means that the rules are not written anymore. So things will go back to being, there won't be a stare decisis. There won't be any need for courts to try to find a way to wiggle around old precedents to get to societal expectations. They'll just be able to say it. Same very similar thing, you know, as I said earlier, courts will find ways to wiggle around stare decisis. Let me see this in every single situation where there's a hard and fast rule that if society would demand a different result, the courts will almost always find ways around it.

15:39And also, people control their fates. If I don't want to accept a plea deal, I won't have to. If I disagree with the judge's result, he will use force to make me obey, or the threat of force. I'm not going to have time to discuss that. So what's lost? Jury nullification is lost. So juries are very good because they tell us what societal expectations are. If they go away, there's a fear that perhaps that process will start to go away. I question this, but I think this is something to at least discuss. There could be some constitution problems. If legislation is exclusively done by coercion, And so if I say you're going to buy health care or I'm going to beat you up, well, I'm not sure there's a really good way to get around that except for a trial because the fear of force is what's making that law effective, not societal order. That's a very real problem that I don't think Hayek addresses spot on. And that can be a real issue and that's something

16:44I'm actively researching as we speak. And that is it. Yeah, so that's my presentation. and I hope it was at least somewhat helpful.