Rights against appellate double jeopardy

Double_Jeopardy!_-1The prisoner’s dilemma is a simple and famous illustration of a problem that’s very common. One of the areas in which it is common is the arms race where two parties competing with each other each invest to outdo the other. This is visible in lots of situations. In some areas of patent law it’s pretty obvious that there’s a net social loss – I’m thinking for instance of software patents where virtually all inventions that get patented would have come into existence without the patent and yet patents are acquired by rent seeking ‘patent trolls’, or firms that not surprisingly are happy to take the windfall of a monopoly over an invention they would have come up with in any event and if you’re in the industry and you’re not one of those firms, then you have to patent to prevent one of the patent trolls coming after you and getting you to pay them protection money.

In other industries the case regarding patents, especially those that require heavy investment to bring things to market and the innovation thus generated is easy to immitate, things aren’t so clear cut. Though there remains an incentive to overinvest in such things (for instance for defensive purposes) the regime may generate more benefits than costs and the relevant policy question is how it can be optimally calibrated.

And the law generally is such a prisoner’s dilemma with results as confirmed in this study.

Do the parties in a typical dispute face incentives similar to those in the classic prisoner’s dilemma game? In this paper, we explore whether the costs and benefits of legal representation are such that each party seeks legal representation in the hope of exploiting the other party, while knowing full well that failing to do so will open up the possibility of being exploited. The paper first shows how it is possible to test for the presence of such an incentive structure in a typical dispute resolution system. It then reports estimates of the incentives for the parties to obtain legal representation in wage disputes that were settled by final-offer arbitration in New Jersey. The paper also reports briefly on similar studies of data from discharge grievances, court-annexed disputes in Pittsburgh, and child custody disputes in California. In each case, the data provide evidence that the parties face strong individual incentives to obtain legal representation which makes the parties jointly worse off. Using our New Jersey data, we find that expert agents may well have played a productive role in moderating the biases of their clients, but only early on in the history of the system. Over time, the parties slowly evolved to a non-cooperative equilibrium where the use of lawyers becomes nearly universal, despite the fact that agreeing not to hire lawyers is cheaper and does not appear to alter arbitration outcomes.

What can be done about this?  Well one can ban legal representation, as happens in some small tribunals. But that can be very unfair to those with the least idea of what’s going on. They may find it prejudicially hard to put their case.

Perhaps you could also constrain the degree of legal representation.  What I’ve always thought is extremely unfair is the ability to give those in a case a very wide berth to double down on their own (but significantly also their opponents) costs and risks, not just by failing to cooperate in various ways but also by appealing and appealing as far as one can go.  And preferably letting it be known in advance that one will do so.

One of the things this exploits is the law’s assertion that procedural equality is substantive equality.  But that’s poppycock as a moment’s reflection reveals. Other things being equal the wealthy and the poor can bear very different levels of legal risk. When I was on the Cutler Review this is what was proposed (pdf):

 It is important that legal procedure more fully internalise the principle that legal costs should be proportionate to the amounts at issue in specific legal disputes. . . .

[T]here is a long history of modest outcomes from reviews of legal procedure. It is to be hoped that at least in some specialised areas more radical experiments might be tried, for instance stronger steps towards the level of case management typical of some of Europe’s more

efficient civil law systems. It would be very much in keeping with the spirit of innovation if some experiments of this kind could be undertaken in the area of IP litigation.

In the meantime there is a simple procedural rule that could be introduced into intellectual property litigation that would ‘level the playing field’ somewhat between large and small firms and so lead to a fairer and more efficient IP system. A right to opt out of ‘appellate double jeopardy’ would give each party to a dispute the right to elect not to appeal the finding of the court of first instance, except where the appellant funded the costs of both itself and its opponent. Wherever either side had exercised

such a right, both parties would be bound by it; that is neither party could appeal the decision of the court of first instance without meeting all their opponents’ costs.

Recommendation 7.4: Firms asserting or defending intellectual property should have a right to opt out of ‘appellate double jeopardy’.

It was so far outside the Overton Window that it sank without trace. It’s a classic example of the kind of thing that could be relatively easily done, but hey, it’s not something that the chattering classes are chattering about so if it’s mentioned in polite company people will rapidly tell you that “it could never be done” which is of course as complete a demonstration as one could ever want of why it should not be done, or even spoken about.

But I thought of it again as I read the abstract of the article again quoted above.

 

14 thoughts on “Rights against appellate double jeopardy

  1. Nice idea, Nick. Thinking strategically, this would lead to bigger initial court cases because losing the first round has more implications than before. So you would want this kind of possibility for areas where the possibilities for increasing the size of the first round is limited and the possibilities for dragging things on for many rounds are plenty. Knock-on effects in terms of reducing the expected costs of litigation might lead to more cases if it is a matter of trying ones luck, or less cases if its a matter of setting an example by attrition.

  2. Did I misunderstand, or is the idea behind appellate double jeopardy that either party can say up front that neither party can appeal unless the appellant funds the respondent’s costs?

    If so, rather than a clever structural change, you’re just reducing the likelihood of appeals by creating an additional financial penalty. It’s not going to happen only in Little v Big cases. It’ll be Little v Little as well. So for a whole bunch of people the availability of appeal courts will be even more remote. Do you really think that is justice enhancing?

    • Pedro, It would be interesting to survey people going to court and ask them how much they want justice and how much they want resolution. Of course both lower courts and higher courts are going for justice – justice is the resolution they’re aiming for.

      Now let’s assume for argument’s sake that higher courts can deliver more justice (often a big assumption because as things escalate justice may become more difficult to deliver for a wide range of reasons – like equality between parties of different size and delays in delivering a decision which can impose huge costs both in terms of exacerbating the costs that the dispute is about, and also because of the decay of evidence – though I appreciate that generally an appeal doesn’t involve any new evidence).

      But more justice is not costless. So let’s look at some illustrative numbers. Let’s say that in the lower court you get justice 80% of the time and in the lower court allowing appeals you get justice 85% of the time.

      And you’re a litigant and you’re told that the court of first instance will cost you $100,000, and that the appeal will cost $100,000, then you’re getting seriously worse value out of that second $100,000. It’s a straight case of diminishing marginal returns. So yep, I’d say that the proposal I have put is both justice enhancing as between litigants of different sizes and efficiency enhancing regarding both.

      And with the system I’m proposing if both parties agree with you and both parties feel strongly that they want that extra 5% for $100,000 they can elect to have it. If both parties can’t agree on this, you want a system where the party that wants the extra 5% for $100,000 gets that decision by default and I want the opposite. Further remember if, judged ex post, the court of the first instance has delivered a judgement that the loser considers to be very shaky – let’s say they think there’s a more than 10% chance of the appeal being granted, then they will get value for money for the $200,000 they put up to go to appeal.

    • I agree that there is a risk of diminishing marginal returns, and I don’t think this is easy. I also agree that the money power is a factor in the quality of outcomes in the system. However, leaving aside the cost, there almost certainly will be “more” justice dispensed by appeal courts because they are less likely to get it wrong.

      It seems to me that:

      1 Somebody probably has the statistics on decisions overturned (I’m not a trial lawyer so I don’t have any particular sense of this, but I do read cases and original decisions are overturned often enough).

      2 If a good percentage of decisions is overturned then maybe it’s not so marginal.

      3 Some judges are notorious for being overturned. A system that even further reduces the number of appeals will hide the extent of this problem. The appeal part of the system can also be seen as a quality control cost if you are looking at this in a macro sense.

      4 I expect that the discipline of possible appeal is a good incentive for tenured judges to stay sharp. Imagine the forum shopping and list management that will happen if you can majorly reduce the chance of an appeal.

      5 Perceptions of quality are important to the general acceptance of the institution.

      6 People who want resolution without worrying so much about justice will likely settle no matter what. Deep pockets are still a settlement-shaping weapon.

      If the expense of justice is a problem, then I’d like to think the last solution sought is to reduce the quality of justice. Most days I get an email listing recent judgements in important courts. I haven’t done a count, but it seems the large majority are listed under the heading “practice and procedure”. I’d also be looking under that rock for savings.

      In summary, I think your proposal might increase efficiency but will certainly reduce justice. If it reduces justice enough then it might reduce efficiency because a justice system in disrepute will not be efficiency enhancing.

      Mind you, it could be that your proposal will not affect the incidence of appeals because maybe it’s already the case that vast majority of appellants have deep pockets.

  3. Pedro, I guess it’s a matter of weighing how many appellants would lose access to appeals because they cannot afford to fund the respondents, verses how many initially successful litigants would lose their case simply because they cannot afford the appeals process. At least the former would have had at least one shot at justice. The later could have the one shot they can afford taken away by a wealthy opponent.

    Perhaps the more important consideration is the wider outcome of the system. The impact of imposing (potential) judicial error randomly across litigants would not cause an imbalance wider society. It would be just another cost/risk of doing business, and arguably reducing the amount of appeals would lower the aggregate burden of legal costs on business. A system that adds legal privilege to those who already have financial privilege, via a mechanism of being able to outspend your opponent, will create a significant power bias toward larger firms and wealthier individuals in a way that may harm wider society.

    Of course you could also provide more balance to the system by having the state pay for any successful appeals on the basis that some level of judicial negligence would be required to give rise to a successful appeal in the first place.

    • Desipis, While I wouldn’t endorse it per se, if we have to use government funds to subsidise the court system – which we do – I’d rather use it in the way you propose – subsidising successful appeals which generate a public good (new law) than the current system of generally subsidising the cost of the courts. (Though presumably one wants to leave some means tested subsidies in there for those with limited means.)

    • Our laws are made in the parliaments and in the courts through the common law and statutory interpretation. Decision on appeal on questions of law are an important part of that process and a public good. So I think that there is a case for subsidy, but the legal profession has some very keen snouts so you can imagine the risk of offering them. But if you set some bureaucrats to decide who should get the subsidy then you’d have some conflicted gatekeepers.

      I don’t mind the general subsidy for the court system, its part of the commons.

  4. stupid laws or lawyers!!

    You are making this tread a learning experience Pedro.

    Nick,
    I hope you realise I can give you no greater praise than calling you the Australian David Glasner

  5. Homer, obviously stupid lawyers are not an asset to the system, but individual stupidity is hard to get rid of. The collective stupidity of poorly thought out laws is another matter.

    I’m surprised you’re a Glasner fan. Is it because he linked your blog a while back?

  6. Pedro,
    You shouldn’t take the bait!

    I have been linking Glasner articles for some time. Whether you agree or disagree they always make you think and the commenters are first class.

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