The Greeks do not seem to be very disciplined in paying their bills. Small wonder, when you look at their civil justice system, which is due for reform. Today the Greek parliament will vote to change the laws of civil procedure. Getting the civil procedure on track was one of the conditions to the agreement reached with the EU early Monday morning on July 12. This seems to be an odd condition for a bailout. Macroeconomic reforms are okay, but should Europe’s prime ministers interfere with the laws telling Greek citizens how to interact with their judges?
In a well-functioning economy, people pay their bills because they know a court will check the bill summarily and put a stamp on it within a few weeks. With this judgment, a creditor can ask your employer to withhold your salary or ask a bailiff to sell your house. The amount due will be taken from the proceeds. So you better pay, or ask to be relieved from your debts through a bankruptcy.
High appeal rates
Greek courts have a similar system; however, more than 50% of the judgments are appealed, so it goes to a second court on appeal. How can this high appeal rate be explained? Appeals are meant to correct judgments of the first court. They provide quality control in the justice system. Appeal courts can remedy corruption, errors in the application of laws and take into account new evidence. In theory, they are responsive to the needs of their customers. If one of the parties feels “aggrieved” by the first judgment, there is a review in appeal. So high appeal rates suggest a high level of voice from citizens.
But there are other reasons to appeal. Perhaps you want to improve your bargaining position in order to get a discount on your bill. Delay can also be desirable in itself. If the judgment cannot be enforced during the two years that an appeal court is reviewing your case, then you buy time and the creditor is still yearning for her money.
Best practices, simple solutions
The solution is simple: the judgment should be enforceable during the appeal process. If you paid on the basis of an unfair or corrupt judgment, you can recover the money from your creditor after your appeal is successful. Most modern justice systems have this rule now. They even tend to apply it to the criminal justice system. Perpetrators of criminal offences serve their sentence during an appeal, unless they can show that an appeal is likely to be successful. This discourages tactical appeals.
Why do the Greeks not adopt this very sensible system and have to be pressured by the very Angela Merkel to do so? Following the money usually gives a first indication of an answer to such questions. Lawyers gain from a system where every bill can be litigated in court, again in appeal and yet again at the Greek Supreme Court, the Areios Pagos, which is aptly named after a steep hill in Athens near the Acropolis.
Follow the career path
Greek lawyers went on a strike against the reforms in November 2014, which also included a change to written proceedings. Currently all evidence is presented in an oral hearing. This type of resistance is not a typical Greek problem. Lawyers who are paid by the hour to litigate cases do not benefit from more effective proceedings. When they see their livelihood threatened, they know how to raise their voice on parliament square.
Please also do not underestimate the humanity of judges. For judges, promotion to an appeal court is usually the major career step they can make. Cutting the number of appeals decreases their access to a better future.
This is not a typical Greek issue as well. Recent statistics from the Council of Europe reveal that almost 30% of European judges serve in appeal courts and supreme courts. Because these judges are better paid, the corresponding slice of the budget is even bigger. Can you imagine a company spending 30 or 50% of its budget on quality control, second guessing the output of the production line? Greece is Olympic in this “nice judicial career league” with 41% of the judges at the higher court levels. Only Romania (52%) and tiny Monaco (57%) provide an even better stairway to judicial heaven.
Legal reforms need a Merkel to succeed
The Greek parliament did not dare to confront the lawyers and judges. The reform bill was not accepted. Typical Greek problem? No, of course not. In a state adhering to the rule of law, the legal profession consisting of lawyers and judges is uniquely positioned to protect their own vested interests. Leading lawyers and judges write the rules as professors, parliamentarians or as civil servants at the Ministry of Justice. They are very genuine in their belief in fair procedures for bringing law and order to society, but have a blind spot for the inefficiencies from which their colleagues benefit.
Now let us compare legal services to banking. Everybody understands that the rulemakers for banking should be isolated from the bankers who are working under the rules. Why is that not a principle for the regulation affecting lawyers and courts? Judges will not take a case when they have a conflict of interest or might be perceived to have one. Could that idea, guaranteeing their independence and impartiality, be applied to the laws of procedure and the regulation of the legal profession?
In the meantime, politicians who want to stay out of trouble, dislike and fear the organized legal profession everywhere. It is exceptional for Ministers of Justice to succeed in building a regulatory framework for legal services and court procedures that benefits the legal profession and the general public alike. A real crisis, such as the current Greek one, with a lot of outside pressure can provide a breakthrough.
A better way forward
Is there an alternative to picking up a fight with the legal profession? At HiiL Innovating Justice, we think there is. It is much better to take judges and lawyers seriously and go back to the values they support. Most leaders in the legal sector see as their mission as bringing order to society so that people can prosper and economies can grow. Many modern law firms and legal services companies add value by solving problems with their clients rather than escalating them. Ask those companies what type of regulation and procedures they need to achieve this, and how they want to get paid for the value they add.
Judges can be made responsible for designing procedures under which they solve conflicts. This is better than submitting them to rules that were designed centuries ago. The courts most successful in delivering fair and fast procedures should be applauded rather than subjected to endless appeals. Career opportunities for judges can be open for those who provide innovative and high quality services. Courts, we found out, need a sustainable business model like any other organization. Allow them to bring in more money if they provide more value to society.
True reform requires clear values and complicated deals to bring everyone on board. The Greek crisis can teach us a lot about reforming governance, and also about how reforming the legal system.