Sustainable courts: unbundling adjudication?

19 November 2013

There are some very good unbundlers among the street vendors in Mali. Walking the streets of Bamako, you can see plastic bags filled with water stacked up next to piles of plastic bottles and piles of plastic caps. These are all sold as separate goods. When I saw it, I found it funny at first but after having given it some thought it appeared as a textbook example of unbundling.

The bags of water, the bottles, the caps; each adds their own value. People who are thirsty buy the water and can immediately drink it. But when they want to transport it, they can also buy a bottle. And when they want to protect and store the water they can also buy a plastic cap. These street vendors thus unbundle two vital goods (water and its distribution infrastructure) by following function and added value.

We could look at adjudication in a similar manner and explore what value adding services courts deliver to see how they could be priced separately. Such perspective might shed new light and help to work towards more balanced court fees. Court fees that better reflect the real costs and thus contribute to making our courts more sustainable.

Unbundling is at the centre of the attention of people interested in the future of the legal services market. Practice shows a trend of legal services developing into a broader range of services with a narrower scope:

  • Helping people to help themselves by providing coaching services to self-helpers, including self-represented litigants, offering legal document templates, etc.
  • Providing reassurance to people by diagnosing legal problems, providing advice, reviewing draft documents, etc.
  • Preparing and taking legal actions on behalf of clients by drafting legal letters, assisting in negotiation, submitting documents to court, representing people during court hearings, etc.
  • Acting as a neutral facilitator who mediates between two people, structures communication, provides guidance on legal issues and direction for settlement.
  • Making agreements and decisions sustainable by providing follow up services that increase compliance.

Unbundling of adjudication services, however, is less commonly discussed. Court fees reflect this. The standard payment model for adjudication services is to work with flat court fees. Fees paid as an entry fee that do not cover the real costs. Court fees usually are set with both the need to keep courts accessible in mind as well as the desire to pose a barrier so people are discouraged to start a procedure too easily. They are not set with the value they add to disputants in mind.

Courts are crucial for resolving disputes, were it only for the fact they are the outlets of imposed decisions that are backed up by state coercion. But courts, obviously, are much more than impressive buildings where judges draft binding decisions. More than three decades ago, William Landes and Richard Posner were among the first to think of adjudication as something that can be seen as a service (they call it a good) that can be unbundled and separately marketed. In their analysis, courts delivers two goods. The first is the public good of creating legal information. Courts bring more concreteness to legal norms because they apply them to real cases. This helps to keep the law up to date and makes sure that possible gaps are filled. It might be difficult, however, to see this as value for disputants in a specific case but rather is something of value to society at large. The second value Landes and Posner discuss is the private good of resolving a specific dispute. When we look at the current practice in courts worldwide, this might come down to the following types of value courts add for disputants:

1. Providing a credible threat of a neutral intervention.

The simple fact that courts are always there and will take a decision that is binding is of immense value. By being available like this, courts do two things: A) They help to create incentives on parties to cooperate in a process that leads towards a solution. This is illustrated by the notion that people settle at the steps of the courthouse: the credible threat of a neutral intervention (after a court procedure has been opened) gets people in a more cooperative mode. B) They serve as an instance of last resort that will end a dispute when all else has failed

2. Establishing facts.

Courts are very much orientated towards establishing what happened. Extensive discovery procedures, tasks and assignments to provide evidence so certain facts can be established, hearing witnesses, etc. Courts add value for disputants to come to a joint understanding of what happened, which can be seen as a basis for finding a solution towards the future.

3. Indicating margins and suggestions for fair and effective solutions.

Even though some lawyers do not like it, the trend is that judges – subtly – nudge parties towards settlement. Sometimes they elaborate on a possible and hypothetical decision. Some judges take this a step further and show parties what outcomes other people settled for in similar situations and what objective criteria they used. This is a high value intervention because it gives parties direction on their settlement efforts. These margins and suggestions can function as objective criteria in their problem-solving negotiation efforts that help them to seek for solutions that safeguard the interests of both.

4. Deciding on legal issues so that there is clarity.

Sometimes disputants simply disagree on what the law is, how a legal norm should be interpreted. Courts then help to bring clarity so disputants can move on with other issues they have to solve. Personal injury claims is a good example of where courts can add this type of value. It might be needed to first establish a fault, which a court can do. After this is done, parties often go back to the negotiation table to find a settlement on damages compensation.

5. Coordinating the experts and interventions needed to solve a problem.

Sometimes, courts go much beyond strictly legal issues and really focus on safeguarding interests or solving a problem. They take the initiative for psychiatric examination, monitor the progress of rehabilitation of a drug addict, or tell divorcing spouses to maintain a joint care taking plan for their children. Judges add value by taking the lead and coordinating the process in such a way that interests are met and problems are solved.

The forthcoming HiiL Trend Report on the future of courts further discusses different types of value courts add (including innovations and trends in value adding services of courts). The trend report also explores a pay as you go court fee model that reflects these types of value.

If all these different elements of what a court provides have value for disputants then why not ask a separate fee for them? It might be a bit of a provocative thought, but we already accepted such payment models for other very important public goods like health care and education. In times where courts struggle with their budgets it is worth to explore the unbundling of adjudication services.