We can only “fix” the medical malpractice “problem” if we fix all the problems we use medical malpractice to address. Universal coverage and medical malpractice cannot be separated from one another.

Walter Olson asks what we’re getting from our medical malpractice system — with “jury trials, contingency fees, lack of loser-pays, extensive lawyer-driven discovery” — that Canada, at 10% of the cost for its medical malpractice system does not. It’s only part of the question. Olson quotes Richard Epstein, who states “American judges frequently let juries decide whether honest mistakes are negligent. Judges in other nations are less likely to do so. American courts commonly think it proper for juries to infer medical negligence from the mere occurrence of a serious injury. European judges usually will not.”

Why is this going on? Is it just madness? Of course not. What Epstein and Olson ignore is that patients in Europe and Canada have national health insurance that will pay for the costs of medical care necessitated by inevitable — even if honest and non-negligent — bad outcomes that result from medical malpractice.

We can’t just “fix” the malpractice “problem” unless we fix the problem of being sure patients who suffer bad medical outcomes (a risk we’re all exposed to) being unable to pay for the care required by those outcomes. Why does Canada only spend 10% what the U.S. does on malpractice? Because Canada has national health insurance to pay for that care.

It worked for businesses with workers’ comp. Why not a no-fault liability system to pay for medical care and other consequential financial loss flowing from any bad medical outcome?

Consumer Protection: an old idea that’s new again.

It is remarkable how much times have changed, and how quickly. Since the election of Ronald Reagan the legal common wisdom has been that allowing individuals to enter into whatever agreements they wish, no matter how risky, leads us to the best of all possible worlds. Most usury laws became irrelevant. If you wanted to borrow at a ridiculously high interest rate, who was the government to say you couldn’t? I’ve been told that my opposition to that common wisdom was a belief that people are stupid. I suppose that’s one way to put it, but I certainly don’t except myeslf from the group I am judging. Saying I think people are stupid is just a way of saying I’m arrogant, paternalistic, and think I know what’s better for others than they do themselves. But give people the opportunity to take irrational risks, and they will. Give enough people enough opportunities to take irrational risks, and you put the entire society at risk. So now we’re speaking again (as we began to back in the Sixties)  in terms of consumer protection — laws limiting what terms consumers can be bound to and requring that whatever terms are agreed to are agreed to openly and plainly. Such regulation supplements the common law of contracts, which is founded on the idea of freedom of contract — precisely that individuals are free to make whatever stupid deals they wish. You want to sign up for a credit card with a 29% APR? Who am I to stop you. But there’s nothing wrong with limiting freedom of contract to some extent — it likely strengthens another core principal of contract law: that we should enforce contracts because they are agreements people consciously and intentionally enter into.

From the New York Times:

The federal consumer protection system failed the country, disastrously, in the years leading up to the mortgage crisis. One big cause was the sharing of responsibility for compliance with laws and regulations among several agencies that communicate poorly with each other and tend to put the bankers’ interests first and consumer protection second — if they pay attention to it all.

The Obama administration was right on the mark last week when it recognized this problem and proposed a solution: consolidating the far-flung responsibilities into a strong, new agency that focuses directly on consumer protection. The plan, modeled on a bill already introduced in the Senate by Richard Durbin, Democrat of Illinois, deserves broad support in Congress.

Doing justice versus making rules.

There is a tension in the common law between doing justice in an individual lawsuit and articulating rules of general application that can guide decisions in future cases. The beauty of the common law system, however, is that the primary goal is to do justice in the individual case. Civil law, the system that governs in non-Anglo-American countries, on the other hand, relies on a civil code of general application that provides predictability but often at the cost of individual justice.

One consequence of the common law system is that a “rule” articulated by a court in one case to reach the proper result in that one case can often be modified in a subsequent case in which the facts differ in a way that would make it unjust to merely apply the earlier “rule.”

One of my problems with Supreme Court jurisprudence in recent years has been that it has lost sight of this principal purpose of common law judging: to do justice in the particular case before before the court. The justices seem often more concerned with formal, abstract consistency than justice, an emphasis that to this common law lawyer seems very misplaced.

No more blatant example of this distinction exists than the Supreme Court’s recent decision in Caperton v. Massey (pdf). Thankfully, by a 5-4 decision, the Supreme Court reached what plainly was the right result, but Justice Roberts’ dissent (joined by Justices Alito, Thomas, and Scalia) epitomizes the ways striving for abstract, intellectual consistency can do violence to what, plainly, is common sense justice.

Caperton began in West Virginia, where a jury found the A.T. Coal Co., Inc. liable for $50 million for fraudulent misrepresenta-tion, concealment, and tortious interference with existing contractual relations. Knowing the West Virginia Supreme Court would consider an appeal of the verdict, Don Blankenship, Massey’s chairman and principal officer, contributed $3 million to the campaign of Brent Benjamin, who was running for the state Supreme Court against an incumbent. The $3 million contributed by Blankenship exceeded the total amount spent by all other Benjamin supporters and by Benjamin’s own committee. Benjamin won the election by fewer than 50,000 votes.

Subsequently, Caperton, who had won the $50 million verdict, moved 3 times to disqualify Benjamin from hearing the appeal of the verdict. Each time, Benjamin himself denied the motion. Benjamin also turned out to be the deciding vote that resulted in a reversal of the verdict against Massey’s company.

Apparently, as they say, money talks. There is, however, a constitutional right to “due process” under the Constitution, and, accordingly, Caperton appealed to the Supreme Court, which held, as anyone with any sense would hold, that Judge Benjamin could not be counted upon to be a fair and impartial judge of an appeal of a $50 million verdict against the man who got him elected. Justice Kennedy, writing for a majority of the Court, concluded that the primary legal quesiton is whether “under a realistic appraisal of psy-chological tendencies and human weakness,” the interest “poses such a risk of actual bias or prejudgment that the practice must be forbidden if the guarantee of due process is to be adequately implemented.”  Kennedy concluded: “There is a serious risk of actual bias when a person with a personal stake in a particular case had a significantand disproportionate influence in placing the judge on the case byraising funds or directing the judge’s election campaign when thecase was pending or imminent.”

Justice Roberts, jointed by Justices Scalia, Thomas and Alito, on the other hand, ignored the egregious facts before the Court because requiring disqualification based on a “probability of bias,” is a standard that “cannot be defined in any limited way.” Thus, Roberts complains, “[t]he Court’s new ‘rule’ provides no guidance to judges and litigants about when recusal will be constitutionally required.”

I think Roberts is full of it. Any law student knows that common law rules often turn on standards such as “reasonableness” and “probability.” What do we know based on Caperton? We know that deciding a case in favor of the man who has contributed more than 50% of the funds to get you elected to the bench is enough to establish a “probability of bias.” That hardly seems arguable. If it means we’ll get other cases arguing for a “probability of bias” under facts far less probabitive of such undue influence, the courts can deal with those cases by hearing the evidence and determining, using common sense and the guidance of precedents such as Caperton, whether there is or is not a probability of bias.

But Roberts, Scalia, Thomas, and Alito would prefer to let stand a travesty than to burden the courts with deciding exactly the kinds of questions the courts decide every day. That’s not doing justice, and it certainly isn’t common law justice. I’m not sure what it is.

Google’s Library of Babel and its opponents.

Steven Shankland has written a good piece on the proposed settlement of the lawsuits over the Google Library Project; the proposed settlement is “now under review by Judge Denny Chin of the U.S. District Court for the Southern District of New York.”

Under the proposed settlement, the owners of copyrights in books would need to opt out of the project to prevent Google from including those books in its Library database, which is being compiled by scanning the libraries of several major insitutions around the world. As Shankland points out, “that means essentially that Google would be permitted to show content from in-copyright, out-of-print books and sell online copies of those books even without an explicit agreement with the books’ rightsholders.” Copyrighted, out-of-print books constitute approximately 70 percent of the books in the library collections Google is scanning, and that 70 percent includes the vast majority of “orphan works” in those libraries. Orphan works are works whose copyright holders cannot be identified, a common problem because there is no registry of copyrights and the authors of the books are not necessarily the copyright holders. Rather, the copyright holders might include unidentifiable heirs or even corporate entities that have gone through mergers, dissolutions, or other forms of corporate reorganization that make it difficult or impossible to identify the entity that currently owns the copyright.

Nevertheless, some authors continue to oppose the Google Library Project:

“Under the actual law, it is Google’s burden and not yours to ask you for permission and then fairly negotiate terms of contract acceptable to you personally, not jam some monstrosity down your throat,” said Lynn Chu, a literary agent with Writers’ Reps who also called the proposed settlement a “ripoff for authors” in a Wall Street Journal opinion piece.

As a business matter, I don’t understand the view Chu expresses, as I’ve previously written. Why would someone whose work is out-of-print not want that work accessible to the general public? And if that someone wants to keep his work in the obscurity resulting from being out-of-print and available only at some far off insitution’s library, he can always opt out. Chu says that the “actual law” requires Google to ask permission first, not for the copyright holder to deny permission, but the wonderful thing about contracts (and a settlement is a contract) is that they can be a means parties have of altering the rules that govern their relationships in the absence of agreement.

I’ve been a fan of the Google Library Project since it was announced in 2003. It promises to make available for search the collections of many of the greatest libraries in the world. Google will only be able to display brief snippets of works that are in print and under copyright, but even that access will make known to researchers the availability of sources they never otherwise would have been able to find. The Project is one of those endeavors that make the internet and the digitization of information truly revolutionary and magical. It would be a shame if copyright law founded on old technologies and the unfounded knee-jerk reactions of copyright holders (it’s mine, and that means you can’t do anything with it without my permission!) were to end up preventing the realization of revolutionary magic.

Finally, Shankland points out that there is concern over the settlement because it would give Google an advantage over competitors: “Microsoft, Amazon, or the Internet Archive . . . –without their own handy class-action settlement [--] would be have to try to seek such permission in advance from each rightsholder or risk copyright infringement litigation.” But if copyright holders and their representatives are willing to reach this settlement with Google there’s no reason to suppose they wouldn’t with Microsoft, Amazon, or the Internet Archive. Google’s competitive advantage is the result of its initiative and daring in starting the Project in the first place and developing technology (including new scanning technology) to make it truly possible. Advantages gained by daring and initiative should be rewarded by the law, not stymied.

How does legal innovation occur? Slowly, by looking to the laws of other countries, and by disguising innovation as interpretation.

In “Inventing Invention: A Case Study of Legal Innovation,” Professor John F. Duffy recognizes that change and evolution in law are taken for granted but rarely studied in depth: “Legal change is treated as if it is something that just happens-that follows inexorably from the emergence of social needs and changed social conditions.” Duffy’s article is an antidote to these truisms, studying in depth the development of the requirement that in order to be patentable an invention must be “non-obvious.”  Duffy identifies in the development of this major legal innovation several characteristics he believes could be generalized to a lot of legal innovation:

(1) “Nation-states do not seem to create new legal conceptions independently nearly as frequently as they borrow them from other nation-states.”

(2) “Nations with similar legal cultures and industrial capabilities, such as the United States and England, sometimes maintain significant differences in their law for periods of decades. The speed of convergence on a single ‘common’ law seems extraordinarily slow.” This deliberate pace seems to be the product of a wait and see attitude: “because [one country does] not know whether the innovation is a pathbreaking and salutary development, like obviousness, or a disastrous experiment that will eventually be discarded,” it will wait and see the results.

(3) Courts are wary of the criticism often directed at them for “making policy” rather than merely applying existing law. As Chief Justice John Roberts puts it, his role is merely to be an umpire, not to determine what is a ball and what is a strike. Of course, Roberts ignores the fact that a strike zone is rather well defined, whereas law is full of open-ended standards (the requirement of “due process,” for example), gaps that do not fit cases that courts must decide, and outright ambiguities. But, as Duffy points out, the attitude Roberts exemplifies forces courts to engage in innovation under the guise of mere intepretation: “even when courts are trying to change the law, they often deny that they are doing so by creating clever reconstructions of the language that previously defined the relevant doctrine.”

The influence (not) of law professors

Justin Hughes, Of World Music and Sovereign States, Professors and the Formation of Legal Norms, 35 LOY. U. CHI. L.J. 155, 157 (2003)(emphasis added):

You want the best indicator of how an American court will decide a major intellectual property case in the Internet era? Look for the amici or parties’ brief with the dozens of law professors  – those theories are how the court will not decide the case.

Requiring McDonalds to disclose the calories in the Big Mac: good for consumers, or treating customers like idiots?

Today’s Wall Street Journal Law Blog has a post that nicely summarizes the varyious views on the impact of individual lawsuits on corporate behavior.  Referring to an article in the Wall Street Journal by Nathan Koppel (subscription only), the blog explains that “a surge in litigation against food companies for allegedly selling unhealthy products and for misrepresenting their products’ nutritional value” has led the food companies to adopt “a host of health-promoting steps, like reducing their use of trans fats, limiting marketing of sugary products to children, and toning down boasts about their products’ nutritional value.”

Thus, for example, in New York Restaurant Association v. New York City Board of Health (pdf), the United States Court of Appeals for the Second Circuit upheld a New York City law requiring restaurant chains to post calorie information on their menus.  In doing so, the court rejected the argument that the fact the restaurants already satisfied the federal regulations on required disclosures issued by the FDA meant that the city’s regulations were “pre-empted.”

As I mentioned last month, the U.S. Supreme Court recently rejected arguments by a pharmaceutical company that having satisfied FDA labeling requirements, it should not also be subject to state law that imposed even stricter requirements on the company regarding what it must warn about in selling its drugs.  The Supreme Court in that case emphasized the important role litigation plays in supplementing federal regulation, pointing out that regulatory agencies are limited in what they can do and should not be relied upon to alone police an industry unless Congress makes it clear that the agency is supposed to have that exclusive authority:

The FDA traditionally regarded state law as a complementary form of drug regulation. The FDA has limited resources to monitor the 11,000 drugs on the market, and manufacturers have superior access to information about their drugs, especially in the postmarketing phase as new risks emerge.

A lawyer in the New York Restaurant Association case argues, though, that such lawsuits are “part of a larger ‘paternalization of society,’ adding that such litigation ‘in effect, says the masses aren’t intelligent enough to understand what they are buying.’” He is not alone in his sentiments, even if he lost his most recent case.  Michael Doyle, a reporter for McClatchy’s Washington Bureau, wrote in the aftermath of the decision that the “calorie police have won another one.”

Richard Prince, Patrick Cariou, and Appropriation Art

Back in January photographer Patrick Cariou sued Richard Prince, alleging that the collages Prince had exhibited at the Gagosian Gallery in 2008 because they had appropriated photographs of Rastafarians Cariou had taken and published in his book Yes Rasta in 2001.  A few days ago Prince filed his answer, claiming his use of the photographs constituted fair use.

As Brian Sherwin explained at myartspace.com last January, if the case is not settled, the court decision in it could have a profound impact on the art world, either clarifying that the widespread acceptance in the art world of appropriation art is legally legitimate or opening the door to an increased number of lawsuits by copyright holders against artists engaged in collage, sampling, satire, and any  number of other genres that have become increasingly easy to engage in with the digitalization of media and the rise of the internet:

[Cariou's] case could be groundbreaking in that it will establish some order concerning fair use– either for or against it. If the court sides with Cariou and his demands are honored it would mean that there will be drastic changes in the art world. Gallerists, curators, and publishers may think twice before promoting an artist with a history of copyright infringement allegations.

Prince has been engaged in a particularly confrontational style of appropriation since the 1970′s.  As Randy Kennedy has written:

“Since the late 1970s, when Richard Prince became known as a pioneer of appropriation art – photographing other photographs, usually from magazine ads, then enlarging and exhibiting them in galleries – the question has always hovered just outside the frames: “What do the photographers who took the original pictures think of these pictures of their pictures, apotheosized into art but without their names anywhere in sight?”

Most civil lawsuits — the vast, vast majority (over 90%) — settle, of course.  And it seems likely Cariou’s lawsuit will settle too.  Prince is very, very succesful, and there likely will be some amount of money he is willing to pay and Cariou is willing to take for them both to avoid a decision that, if it goes against Prince, almost undoubtedly would be appealed and the outcome of which may be very much debatable.  So it’s unlikely we’ll end up with the legal clarification the art world might desire.  The fact the development of judge-made law is entirely dependent on the outcomes of individual lawsuits is precisely why such questions can remain so long unresolved.  The fact such questions remain unresolved, however, may not be a problem.  It is, perhaps, a better thing for artists who appropriate and artists whose work is appropriated — as well as the world of critics, museums, galleries, collectors and patrons that exists as a result of those artists — to slowly work to a solution of these questions themselves.

Fix the law, but don’t forget what the law has already tried to fix.

Opinions about law tend to focus on its defects, and there are plenty of those.  What too many of those opinions ignore, however, is that law is rarely arbitrary or one-sided.  There are imperfections, but those imperfections are flaws in an effort to address real problems.  To fix the flaws in existing law without attending to the problems that law addresses is to trade one set of problems for another, often bigger, one.

The U.S. legal system is an immensely complex product of decisions made in courts, legislatures, and administrative agencies at the federal level as well as the state and local level.  When one considers the monumental number of individual decisions that make up the workings of those tens of thousands of jurisdictions and the fact that law persists over time until it is changed, it is plain that the “law” is the product of a massive collective wisdom.

That is not to say the system is perfect — it is far from perfect, and its complexity is in no small part directed at perpetually refining the defects that perpetually appear as new problems arise in new contexts that include new ways of looking at things.  Not only do we continually face new facts, but what we think and feel about those facts always changes.  As Nicholas Kristoff points out this morning, for example, new industrial farming methods and new ideas about the morality of ignoring the suffering of animals is has produced “a broad push in Europe and America alike to grant increasing legal protections to animals.”

But my point today isn’t about new law — it’s about the efforts to fix existing law.  If one is going to do so in an effective way, it is not enough to identify a problem and eliminate it.  One must also figure out what the existing law is trying to do.  Medical malpractice is a lottery, giving big awards to certain injured plaintiffs while leaving most uncompensated.  It also does a less than optimal job at distinguishing between negligent doctors and non-negligent doctors who, after all, practice a profession in which perfect performance will not necessarily lead to a good outcome.  It also likely increases the costs of health care by forcing doctors to practice “defensive medicine.”

But if one produces a solution that merely solves these problems without recognizing the problems the system is trying to address, one is merely serving one set of interests.

There are two major reasons the medical malpractice system operates the way it does.  Patients suffer major harm from medical procedures, and they can’t afford to pay for the care that harm requires.  In addition, the threat of liability has made the standard of care in U.S. health care the highest in the world.  (It’s an interesting instance of selective vision, I think, that political opposition to medical malpractice and to universal health care come from the same political sector and the opposition to universal health care is based on a promotion of the superior quality of U.S. health care, as if that quality has nothing to do with the incentives imposed by the threat of medical malpractice.)

Thus, I wrote recently in connection with Philip K. Howard’s Life Without Lawyers: Liberating Americans from Too Much Law, that if “doctors really want to reduce malpractice problems in a way that will satisfy everyone . . . [they should] create a patients’ compensation law that provides relief to patients injured by adverse medical outcomes.”  I am gratified to realize I am not alone in my thinking.  Writing today in the New York Times in response to Mr. Howard’s one-sided solution to the problems of the malpractice system, Clifford Allo points out that the biggest problem — the one the existing system is an imperfect remedy for and that Mr. Howard ignores — is that patients who suffer hard resulting from medical procedures (a risk we all face all the time no matter how perfect our doctors might be) are not provided the financial means to live with that harm:

The biggest reason for bringing the most expensive malpractice claims – for example, adverse incidents at birth – is to find some source to pay for long-term care. A single-payer system would provide that care without threatening any doctor’s personal wealth.

We use the courts to allocate yesterday’s fault so that tomorrow’s bills may be paid. If tomorrow’s care were assured, care review could focus on quality assurance rather than on fault. We need to overcome the ideology that prefers private profit to universal security.

And Jerry Frankel, a doctor, writes that Sweden already has a system like the one I described:

The problem with the proposal advocated by Philip K. Howard is that it’s very difficult in most injuries to discern negligence from an unfortunate complication or complications.

Honest, objective medical experts often can’t agree about what is the standard of care, much less whether a complication was negligence or not.

In Scandinavia, anyone who suffers a major medical injury is compensated by a no-fault system where the compensation has been set based on the type and severity of injury. This eliminates our lottery system, where few patients are compensated at all.

Physician report cards are maintained to protect the public from bad doctors, but no-fault liability payments are not part of doctors’ evaluations.

Patients in this system have the ability to opt out and sue, but if they lose in court, they lose their no-fault option. Few, if any, opt out.

Why do we enforce contract promises?

Over the course of my professional career, Law and Economics has grown from one school of thought among many to one so dominant that many of its postulates have virtually become unquestioned premises from which legal reasoning begins. The Law and Economics school of thought is wide-ranging, but might fairly be described the way Wikipedia puts it: Law and Economics is an “approach to legal theory that applies methods of economics to law. It includes the use of economic concepts to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated.”

One of the most influential premises of Law and Economics is that contractual promises are enforced purely because of their capacity to maximize the society-wide allocation of resources. Thus, it is said that the contractual promise has no moral value over and above its economic value. This view both explains why typically someone suing for breach of contract can recover only the financial equivalent of the benefit they would have received had the contract been performed. There is no additional quantum of damages added to provide an incentive not to breach.

Thus, it is said, a contractual promise is in fact a promise either to fulfill the promise or to pay the damages that result from breach. This view, it is argued, has long been the view of the common law, as exemplified by Oliver Wendell Holmes’ late 19th Century statement that “the duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it, and nothing else.” Thus, the thinking goes, if someone who has made a contractual promise can make out better by breaking the promise, paying damages for breach, and entering a different deal, that result is not merely tolerable — it is to be desired. Such a breach of promise is known as an “efficient breach” because it theoretically results in an increase in overall resources: the party injured by the breach is supposed to get everything he was supposed to get under the contract, the breaching party is getting something better, and the new party with whom the breaching party contracts is getting a deal he would not otherwise have gotten.

The Law and Economics view is by no means the only one current in the theorizing about the basis for enforcing contractual promises (and the interpretation Law and Economics devotees put on Holmes’ statement is disputed). As a contracts professor and litigator, though, my experience is that the idea that the contract promise has no moral value over and above its economic value is a very, very influential one.

It is a view, too, that is of a piece with the rise to virtual unquestioned dogma that unregulated free markets always result in the highest social good. One problem, though, is that unregulated free markets entrench the power of the wealthiest. So people bound by promises (the “promisor”) can force the person to whom they are bound (the “promisee”) to change the terms of the promises if the promisor has greater financial ability to force the promisee into a legal resolution that is unacceptable to the promisee.

The disparity in economic power the theory of efficient breach does not account for is on display in the power corporations hold to renegotiate employment contracts.  Since an employee can only recover for breach whatever damages are available to him through law, the threat of being limited to that remedy can be a powerful one. Thus, as the New York Times pointed out last week,

Contracts everywhere are under assault.

The depth of the recession and the use of taxpayer dollars to bail out companies have made it politically acceptable for overseers to tinker with employment agreements.

But, as David Skeel, a law professor from the University of Pennsylvania quoted in the article points out,

We run roughshod over some contracts and not over others. . . . Right now, employment contracts seem to be the type of contract that is viewed as eminently rewritable.

So we have Larry Summers, President Obama’s Chief Economic Adviser, arguing in connection with the bonuses paid to AIG employees that the contractual promises are too sacred under the law to undo: “”We are a country of law. . . There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system.” On the other hand, the UAW’s agreement to give up rights under its contract with the auto companies was required by the government as a condition of the federal monies the automakers received.

So, are contractual promises “sacred” in some way, or are they only worth whatever the parties to them can extract given their relative financial strength and political influence? I don’t think I know.

The financial crisis is an opportunity for innovation in legal practice and law schools.

This blog is supposed to be about law and innovation — both the ways law affects innovative and creative endeavors and the ways creativity informs the practice of law.  I’m not sure where I go t the nerve to believe I have something worth saying on these matters, but it is gratifying when I find out that I’m not entirely empty-headed.  The New York Times yesterday published an editorial observing that the economic downturn is hitting the legal profession just as profoundly as it is hitting any other occupation.  As the Times notes, The “American Lawyer is calling it ‘the fire this time’ and warning that big firms may be hurtling toward ‘a paradigm-shifting, blood-in-the-suites’ future.” The thrust of the editorial, though, is that crisis is an opportunity for change and that the legal profession is much in need of change: “The silver lining, if there is one, is that the legal world may be inspired to draw blueprints for the 21st century.”

I am not at all happy with the job market, especially for my students.  They are talented, well educated, and hard working people who will do a lot of good for their clients.  But I am gratified that the types of changes the Times are ones I’ve long believed are important.  I do believe the U.S. legal system is a brilliant embodiment of practical justice, but it’s biggest defect in achieving justice is its cost.  It is appalling that achieving any sort of justice against any adversary willing to fight you (regardless of the merits of his cause) will invariably cost you enormously.  The fact someone whose position has little or no merit can make you expend enormous amounts of money to prove the demerits of his claims undermines justice by tilting the entire system radically in favor of the more wealthy members of our society. The internet has brought home this phenomenon to artists who want to make their work available and to people who want to post their family videos, but it will be one familiar to anyone who has called upon the legal system or been dragged into it, whether through divorce, the need to obtain payment from one’s customers, the need to get relief from economic or physical threat, or any of the myriad other ways one might need to call upon legal process to attain justice.

Two ways the economy will force down the costs of using lawyers are (1) the salaries of lawyers at the top end (which the Times notes begin at $160,000 at the wealthiest law firms) will have to be reduced and (2) the reduction of money available to spend on lawyers will mean “more leverage to push . . . for successful outcomes” on the part of those who have traditionally been less well financed.

Moreover, law firms will have to change their billing practices, replacing the “billable hour,” Law firms also, of course, will have to come up with more efficient ways of delivering their services.

The Times also suggests the economic crisis might require law schools to “become more serious about curricular reform,” in particular by “including more focus on practical skills.”  I could not agree more — making clear the inextricable bond between legal theory and legal practice has been central to my work as a law professor.  I don’t understand how you can teach law without understanding how it works.  My conviction is evidenced, I hope, by the school i’ve chosen to teach at this year and (at least) next, the University of Detroit Mercy Law School.

But I am skeptical of the power of the economy to change law schools.  Lawyers and judges have for a long time called for  law schools to focus more on training lawyers (rather than teaching legal theory in a way that makes sense primarily to law professors, not lawyers or judges), and still the changes have been very, very slow and very, very minor.  Law schools do not look to their success at training lawyers to guide their curriculur decisions; rather, they principally look to a rankings system that rewards law schools that admit students most like the students at the schools that are already the highest ranked. That’s a formula to entrench the status quo, not a formula for change. Nor does the critique from within law schools of the most influential rankings system really do much to solve the institutional deference to the status quo.  Brian Leiter, a law professor at the University of Chicago, publishes his own rankings and regularly critizises the most influential rankings, but even he relies principally in judging law schools on the “scholarly reputation” of faculty (which is largely based on where the professors teach and the law reviews in which they publish, both of which are merely indicators of how well those professors fit the prevailing view of quality) and student undergraduate grade point averages and LSAT scores (both of which correlate to success as law students, not as lawyers).

It cannot hurt, though, that the New York Times has joined the chorus calling for law school’s to focus their curricula more on the practice of law.

Who should most influence the creation and intepretation of our laws?

Where did our laws go wrong and help create the current financial crisis?  My own experience over the 28 years since I began law school has been that at the intellectual level we have become more and more enamored of the idea that the free market is the best measure of all value and that at the professional level we have become more and more obeisant to the financial industry.  Markets do a lot of good, but it boggles my mind when complex legal problems involving competing values and belief systems are in facile ways reduced to a weighing of measurable quantities.  And the investment bankers I worked among during my years as a lawyer in New York City were bright, but they were no smarter than the lawyers, painters, non-profit fundraisers, contractors, social workers, doctors, nurses, teachers, writers, and engineers I knew.

As Simon Johnson, a Professor at MIT’s Sloan School of Management and former chief economist of the International Monetary Fund, points out in the Atlantic, it might precisely be our willingness to defer politically to the people we referred to as financial “wizards” that got us in this mess:

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

The problem is that, as Joan Walsh points out, the Obama administration’s efforts to “fix” the financial industry seem to perpetuate the misplaced reliance on the financial industry that the Democratic Party started back in the Clinton administration and that continues, unabated, to this day in the actions of Tim Geithner and Charles Schumer, the Democratic senator from New York.

Perhaps, though, we’re in on the beginning of a trend in a direction other than the one we’ve taken in the 30 or so years of my professional life.  With the demise of investment banks we’ll no longer see the best and the brightest of our college graduates flowing into investment banking and financial consulting jobs.  At a recent job fair at Columbia University, Kevin Long, a recruiter for Environ, which provides international consulting services on environmental sustainability, cleanup and other issues, was quoted as follows:

We’re delighted. In the past, we have had to compete with investment banks, hedge funds people that were pulling the best engineers and scientists out of these schools. And this year, because of the conditions of the economy, we’re getting an opportunity to go after those students.

Who knows?  If the people we consider the smartest are engineers and medical providers and social workers, maybe we’ll pass laws that enrich them rather than laws that enrich investment bankers.  And maybe that will be better.  Certainly it will bring in a broader range of views.  I don’t mean we should ignore the financial industry, but we should realize when someone tells us by making laws and policy that are intended to directly enrich them we will indirectly be doing ourselves the greatest good, we should perhaps start checking our wallets.

The law firm of the future?

The Toronto Globe and Mail reports on Richard Susskind’s predictions regarding the future of lawyers and law firms.  Susskind is no one to be ignored; in 1996, when he predicted that lawyers would soon send legal advice and most legal documents via e-mail, he was derided and even considered dangerous.  I can testify first hand to the resistance law firms had to the internet.  Even earlier, in 1994, I lobbied my firm for an extra telephone line so I could attach my personal laptop’s modem to the dialup connection for my Manhattan-based ISP (the innovative and much-missed “Pipeline“).  My firm hemmed-and-hawed and finally refused my request, worried somehow that the connection threatened their own internal computer network.  Try as I could to explain that the phone line and the network had no connection to one another and that, therefore, the access through the phone line could in no way provide access to even the most sophisticated of post-Soviet criminal hackers, I was unable to get permission.

It’s hard to believe that was only fifteen years ago.

Now, Mr. Susskind predicts for the near future:

Small law firms that dispense customized legal advice will be pushed out of business by technology-savvy and more nimble firms that dispense run-of-the-mill advice and legal documents through websites. Larger law firms will evolve into commercial enterprises with vast stables of legal, accounting and other experts geared to preventing and managing clients’ legal risks. These big firms will outsource basic legal services to cheaper quasi-legal experts and they will build retail kiosks or websites that allow clients to download regulatory expertise and draft legal documents any hour of the day.

And, of course, it is already happening.  Linklaters LLP, a London-based law firm, has long had a “Web-based service called Blue Flag that allowed clients to research regulation and compliance standards around the globe.”  Other firms use “online document drafting services to download within minutes financial term sheets, employment contracts and other standard documents.”  In addition, “a pair of retired U.K. judges recently launched an Internet startup that allows lawyers to quickly generate judicially approved directives and motions for the courts.”  Just last November, Toronto lawyer Michael Carabash launched an online legal service called Dynamic Lawyers that charges lawyers a modest annual fee of $30 to connect with individuals who privately post legal questions on the website.”

On another point, already addressed on this blog, Mr. Susskind predicts a ‘radical shakeup’ of law firm billing practices that charge clients according to hours of service provided. The days of billable hours are numbered, he said, because it ‘rewards inefficiency’ by handing the largest pay for the most time spent on an assignment.

What will the next great innovation be in online legal representation?  Stay tuned.

Remix America, I salute you!

I am thrilled to have found Remix America¦America’s Digital Public Square. I’m no technical wiz. I’m always looking for easy ways to do technically difficult things. One thing I’ve searched for and asked friends about for a couple of years is a Friedman-friendly way of mixing and mashing up video and audio clips. I’ve wanted the contemporary equivalent (and therefore the multi-media) analog to the mix tapes I used to make on a cassette tape deck, and I need it to be as easy as making a mix tape on a cassette tape deck. My technically intelligent friends have had suggestions, but none have seemed accessible enough to me to be worth the investment of time and/or money they seemed they might require. But now I’m in techno-idiot heaven. As Remix America explains:

RemixAmerica.org is a multi-partisan, non-profit website that uses digital technology to give everyone the chance to own the words, the music, the images and sounds of America in digital form; to remix those expressions and ideas with their own; and to send the products of our community’s creativity out to the world… where others will come back to us and start it all over again…

And it works! I have a long way to go before I’ll be able to create a mashup that deserves to be posted, but, thanks to Remix America, that day is in sight. And I’m flattered beyond words that Erika Johansson, Producer and Program Coordinator for the site, paid me the compliment of writing to me that “we’ve got similar interests and aims.”

Despite the fact she runs circles around me when it comes to actually using the technology, Ms. Johansson is right that our interests and aims are similar. I approach  the innovation and creativity that is the subject of this blog as a lawyer, a role not typically considered innovative, creative or artistic. But it’s plain that being a lawyer requires fluency in the technical realities and practicalities one addresses as a lawyer.

I believe the law governing any particular set of circumstances expresses  society’s conceptions of what constitutes justice and fairness in those circumstances . In stark contrast, many lawyers and law professors believe law is the product of abstract notions of justice and fairness applied to the world as we find it.

If I am going to write persuasively about any given set of laws, my approach requires that I understand as well as I can the material reality those laws apply to. To understand contract law, I need to understand commercial practices and expectations. To understand market regulation, I need to understand how the financial markets run. To understand copyright law, I need to understand the technical details concerning the production and dissemination of information.

A necessary implication of my approach is that when the material conditions underlying any field change profoundly, the laws that govern that field should change profoundly. And in the last twenty years we’ve experienced a profound change in the material conditions that govern the way we produce, reproduce, and disseminate information. So the law governing the production, reproduction, and dissemination of information has to change — otherwise we’re stuck with the inevitable injustice that arises when you apply rules developed for one set of facts to an entirely different set of facts. There’s a revolution going on, but a lot of people don’t even recognize the revolution. And you can’t begin to understand the revolution unless you understand the the technical details that the revolution consists of.

So Remix America is a godsend to me. It gives me the means to create for myself (very crude) approximations of the mashups and remixes and collages I find so compelling and creative but that many consider theft. If I can understand and actually engage in an approximation of those creative acts, I can understand better and communicate better why those works are genuinely creative works, not merely ripoffs of original works that technology has unlocked.

I  salute and give a gracious thank you to Remix America and urge you to go there yourselves, see the works Remix America is making possible, and maybe start remixing and mashing up and creating your own original works.

Let us regain the understanding that law is to do Justice.

There are many, many changes I’d like to see the Obama administration implement and encourage in the law, and today’s collective effort to comment on our hopes for the new administration in each of our respective areas of expertise will spur me to address many of these specific matters in the coming days and weeks.  But for today, I would like to address a topic particularly dear to my heart: the art of legal interpretation.

Over the last 30 years or so, there has been a relentless drumbeat from the right attacking judges deemed too liberal for being too “activist,” for “making” law, not merely applying it.  The judges we need, it’s been said, are “strict constructionists” who apply the law “as it is written,” not as the particular judge might wish it to be.

This rhetoric has obscured what judging is.  It is not a controversial proposition to state that interpretation of legal language is not merely a matter of applying words to facts.  Words are too ambiguous, and the world is so complex that the legislators who write the words of statutes cannot possibly foresee every possible situation to which the statutes will apply.  Judges, thus, must make judgments.  Judgments require weighing different possible interpretations and different possible implications and different possible intentions.

Worst of all, however, I fear we’ve lost sight of the fact that judges are part of a justice system.  Their efforts to properly interpret and apply the law should always be guided by the effort to achieve justice.

We’ve lost sight of the fact that judges are people whose judment we must trust to do justice.  As Euripides put it, you must “judge a tree from its fruit, not from its leaves.”

The infamous Lily Ledbetter case is a perfect example of what has gone wrong.  As Gail Collins recently summed up the facts of the case:

Ledbetter, now 70, spent years working as a plant supervisor at a tire factory in Alabama. How, when she neared retirement, someone slipped her a pay schedule that showed her male colleagues were making much more money than she was. A jury found her employer, the Goodyear Tire and Rubber Company, to be really, really guilty of pay discrimination. But the Supreme Court, in a 5-to-4 decision led by the Bush appointees, threw out Ledbetter’s case, ruling that she should have filed her suit within 180 days of the first time Goodyear paid her less than her peers. (Let us pause briefly to contemplate the chances of figuring out your co-workers’ salaries within the first six months on the job.) Until the Supreme Court stepped in, courts generally presumed that the 180-day time limit began the last time an employee got a discriminatory pay check, not the first.

The operative language of the statute provided that “A charge under this section shall be filed within one hundred and eighty days after the alleged unlawful employment practice occurred.”  Interpretation of a statute is typcially described as an effort to determine the intent of the legislature that passed the statute.  Could Congress have intended to outlaw discrimination in employment on the basis of sex and yet have provided that someone who could not have found out about a discriminatory decision until long after it had intitially been made could not recover.  Such an interpretation seems absurd.  Thus, it is no surprise that prior to the Supreme Court’s decision courts had typically held that each new paycheck for an amount less than it would have been in the absence of the discrimination constituted an “alleged unlawful employment practice.”  Thus, the employee could sue for disrimination within 180 days after the most recent pay check that resulted from the discrimination.

These decisions made perfect sense.  As I said, it would be absurd to believe Congress intended people like Lily Ledbetter, who had no knowledge until she neared retirement that her pay was lower than that of her male colleagues merely because she is a woman, should not have an opportunity to sue over that unlawful discrimination.

Yet, “Justice” Alito held that that absurdity was precisely what the statute required the Court to find.  As Justice Ginsburg explained , joined by Justices Stevens, Souter, and Breyer in her dissenting opinion, Alito’s reading was a “cramped” one that flew in the face of what Congress plainly had intended:

[U]nder the Court’s decision, the discrimination Ledbetter proved is not redressable under Title VII. Each and every pay decision she did not immediately challenge wiped the slate clean. Consideration may not be given to the cumulative effect of a series of decisions that, together, set her pay well below that of every male area manager. Knowingly carrying past pay discrimination forward must be treated as lawful conduct. Ledbetter may not be compensated for the lower pay she was in fact receiving when she complained to the EEOC. Nor, were she still employed by Goodyear, could she gain, on the proof she presented at trial, injunctive relief requiring, prospectively, her receipt of the same compensation men receive for substantially similar work. The Court’s approbation of these consequences is totally at odds with the robust protection against workplace discrimination Congress intended Title VII to secure. See, e.g., Teamsters v. United States, 431 U. S., at 348 (“The primary purpose of Title VII was to assure equality of employment opportunities and to eliminate … discriminatory practices and devices … .” (internal quotation marks omitted)); Albemarle Paper Co. v. Moody, 422 U. S. 405, 418 (1975) (“It is … the purpose of Title VII to make persons whole for injuries suffered on account of unlawful employment discrimination.”).

This is not the first time the Court has ordered a cramped interpretation of Title VII, incompatible with the statute’s broad remedial purpose. See . . . 1 B. Lindemann & P. Grossman, Employment Discrimination Law 2 (3d ed. 1996) (“A spate of Court decisions in the late 1980s drew congressional fire and resulted in demands for legislative change[,]” culminating in the 1991 Civil Rights Act (footnote omitted)). Once again, the ball is in Congress’ court. As in 1991, the Legislature may act to correct this Court’s parsimonious reading of Title VII.

Congress did fix the Court’s wrong, and on January 29 of this year President Obama signed into law the Lilly Ledbetter Fair Pay Act.  But it should never have gotten to that point.  Judges should judge, should bear the fruit of justice.  To say so is not to argue that judges should ignore what the law says.  But it is to say that judges should be open to what the law does as well, and that what the law ultimately is supposed to do is justice.

Thus, I would like the Obama administration to appoint judges whose judgement we can respect and trust, and to push hard to re-educate the public about what law and justice are — to, in other words, begin to redress the cultural tide of the last 30 years that has learned to fear critical judgment and to ignore justice.

A funny thing happened on our way from the Cold War

Who would’ve thought it? We win the Cold War, but unfettered free markets don’t lead to prosperity and peace.  We sanctify property, but we find property rights don’t promote productivity.  Nature Biotechnology reports that a new survey shows scientists consider the proliferation of intellectual property protection to have a strongly negative effect on research.

Righting wrongs the American way

One of the ways our legal system adjusts is that old process we remember from our first elementary school courses (and perhaps think of as trite and archaic): the system of checks and balances.  I grew up at a time when the federal courts were a substantial check on state legislatures, state courts, and local police forces.  Since my childhood, though, the political system has grown increasingly conservative, and by now the federal courts too have become conservative.  Last year, as the New York Times explained yesterday, the Supreme Court “made it much harder for people to challenge discrimination in employment, education, housing and other fields. Lilly M. Ledbetter lost her sex-based pay discrimination case at the Supreme Court in 2007, a decision that other courts have cited in rejecting lawsuits. Congress may overturn the ruling.”

The Court held that employment discrimination claims must be be filed within 180 days of the  ”the alleged unlawful employment practice” – the initial decision to pay Ledbetter less than men performing similar work.  Previously, courts had held that each paycheck after the initial discriminatory act (each of which would have been for less money than if the discrimination had not been committed), constituted a new act of “continuing discrimination.”  Thus, as long as the employee filed her claim within 180 days of a paycheck reflecting the impact of the discriminatory employment decision, her claim could be heard.

The decision was roundly criticized at the time and quite plainly cut off an enormous number of discrimination claims (whether the unlawful action had been discovered within the 180 days or not).  Now it seems Congress is ready to right this judicial wrong.  The bil it is is considering “states that a violation occurs each time a person receives a paycheck resulting from ‘a discriminatory compensation decision.’” “President Bush threatened to veto the bill, but Mr. Obama is eager to sign it.”

The e-book will open a new front in an ongoing legal revolution.

The New York Times reports today that “[f]or a decade, consumers mostly ignored electronic book devices, which were often hard to use and offered few popular items to read. But this year, in part because of the popularity of Amazon.com‘s wireless Kindle device, the e-book has started to take hold.”

An e-book that works well is a dream of mine.  At any given moment, I literally am reading 25 different books.  Whenever I travel, one of my toughest choices is which 2 or 3 I’ll bring with me.  Not only are my infinitely wide, but my moods change constantly.

But as the e-book takes hold, expect a new wave in the copyright wars.  With more and more books being published in electronic form, they’ll be as easy to copy and disseminate as music is now.  So illegal copying and distribution will be inevitable.

In addition, the cutting and pasting of portions of books will create a whole new set of questions regarding fair use.  We will witness the resurrection of the commonplace book:

“Commonplacing is the practice of entering literary excerpts and personal comments into a private journal, that is, into a commonplace book or, to use a 17th century synonym, a silva rerum (“a forest of things”).  Typically the excerpts were regarded as exceptionally insightful or beautiful or as applicable to a variety of situations, and so as such they are often especially quotable. . . . The practice of commonplacing can be traced back in the European tradition to the 5th Century B.C.E. and the Sophist Protagoras.

Historically commonplacing has played an important role in education, and it has served as a vital tool of erudition.

“Boys … had to keep notebooks or commonplace books in which to record, and then learn, idioms, quotations, or figures useful in composition or declamation. Not a little of that wide learning and impressive range of quotation adorning Elizabethan literature comes from these commonplace books.” Schools in Tudor England, by Craig R. Thompson (Washington: Folger Shakespeare Library, 1958): p. 16, cf. 44.

“Students with literary tastes, in days when books were hard to come by, kept ‘commonplace’ or notebooks into which they copied out verses or prose extracts that particularly appealed to them.” The Intellectual Life of Colonial New England, by Samuel Eliot Morison (Ithaca: Cornell University Press, 1965; reprint of the 2nd ed., 1956): p. 49.

–Norman Elliott Anderson, Commonplacing in the Spiritual Traditions

Will a professor’s commonplace book require permission for the reprinting of every excerpt?  There inevitably will be questions about when the excerpts are too long, though I would imagine a collection of excerpts that are small enough and together comprise a wholly new work (a literary collage) should be considered transformative enough to constitute fair use.  Inevitably, though, there will be lawsuits arising in particular situations.

Charges of plagiarism, no doubt, will also increase.  I strongly suspect that some of the recent incidents of plagiarism involving respected writers were the results of the inevitable errors that creep into works that require an enormous amount of research.  A quotation taken during research from one work is mistaken at the writing stage as a paraphrase and ends up verbatim in the finished product.  Someone spots the quotation (a process that will be even easier when the texts themselves are all electronic), and, voilà, charges of plagiarism fly through the blogosphere and plague the historian for the rest of her career.

These legal problems are inevitable.  I’ve said it before and I’ll say it again.  Law is a product of the material circumstances in which it arises, not an abstract set of truths brought down and imposed on reality.  When the material circumstances change, the law will have to change.  We are living through the most profound change in the availability of information since Gutenberg.  The law will change, and it will be a very interesting ride.

Should we even consider foreign law in making our own?

Justices Scalia and Thomas have argued that the the Supreme Court should not even refer to foreign law in justifying and explaining its decisions (except perhaps in interpreting treaties), because it would violate the original intent of the Framers. Scalia has even called invoking foreign precedent a “dangerous practice.”

The refusal to even consider the views of foreign courts has always struck me as nonsensical. An argument’s persuasiveness is measured by its persuasiveness. If an argument based on foreign law is persuasive, why forbid its consideration except from some misbegotten xenophobia?

Paul Finkelman, in “Foreign Law and American Constitutional Interpretation: A Long and Venerable Tradition,” refutes Scalia and Thomas for three principal reasons summarized in the introduction to his article. First, “[i]f the Court is going to rely on history, then surely historians must push the Court to offer the best history it can. It serves no good purpose when a justice claims adherence to history and then ignores vast amounts of historical evidence that do not fit with his preferred outcome.” Second, “[t]he history of the Court in the eighteenth, nineteenth, and early twentieth centuries demonstrates that the Court often used foreign law to help it decide cases that did not involve treaties. . . . Indeed, such use of foreign law might constitute a jurisprudential tool equivalent to stare decisis-it has been legitimized because it has been used for so long and so often by so many different justices.” Finally, “early in our history the Court often used foreign law to suppress liberties. Given this fact, it would be jurisprudential hypocrisy for the Court to turn against the use of foreign law now, when it might be used to protect or enhance liberty and fundamental rights.”

Involved in a lawsuit? Be ready to welcome the world into your life.

One of the downsides of engaging in litigation, even on behalf of a righteous cause, is the way in which you must open much you consider private not only to your adversary but often also to the public.  Your motives, your finances, your personal relationships, and, in certain circumstances, your physical and emotional health will be subject to inquiry in the course of a lawsuit.  Often, these questions and answers will be part of the public record.  Court records, after all, are public records.

Fortunately, unless you are considered newsworthy, most of the public will not go rooting through court files.  It is inevitable, though, that the new technologies and media outlets will be used to exploit the exposure of personal matters.

So I am not surprised that, as reported in the ABA Journal, “Outraged by deposition testimony in a fraud suit against a Houston automobile dealership, a client of a Texas attorney arranged, with the lawyer’s help, to post a six-minute excerpt on YouTube.”

In this case, the judge ordered the post taken down (because the deposition was not yet part of the public record in the case), but he refused to sanction the lawyer and client who had initially posted it. “However, the final salvo hasn’t yet been fired in battle to publish the deposition excerpt on YouTube. [The plaintiff's attorney] plans to file a written transcript of the deposition at the courthouse, as part of the record in the case, and then post the full deposition on the site. Under those circumstances, says [the defense lawyer] . . . , his client would be unlikely to protest.”