The U.S. Legal System as Seen from Abroad

By October 28, 2008Briefly Legal

The American Enterprise Institute’s Legal Center for the Public Interest hosted a panel discussion Monday on the U.S. Supreme court’s rulings — past and anticipated — on business-related cases. Lots of good debate from a panel of real experts, and the entire program’s audio will be posted at AEI’s website soon.

The conventional wisdom, promulgated vigorously by the mainstream media, is that the current U.S. court is a “pro-business” court, a characterization that the panelists took issue with.

AEI Scholar Michael Greve argued that the court may appear that way because it remains the last U.S. institution that has not succumbed to populism and the spreading around of power and wealth that a prosperous society can afford.

Andy Pincus of Mayer Brown — former general counsel in the Clinton Commerce Department — said, “I don’t think the court is business friendly. I think it’s friendly to some ideas that may also be of interest to business….” For example, Pincus said, the justices are reluctant to replace Congress in the writing of laws and will therefore not find new causes of action. In addition, he contended, the justices see the jury process as a costly, inefficient and inaccurate legal process, shifting costs to parties who probably shouldn’t have been sued at all. To the extent the legal framework allows them to bring some rationality to the process, they will attempt it.

Pincus also provided the perspective of the U.S. legal system from outside.

I know in some quarters it’s heresy to talk about comparing our judicial system with the rest of the world, but in fact, if you represent ….foreign clients, and you say to them, well, you’ve just been sued, and now you have to spend some money to file a motion to dismiss. And, by the way, the way that gets decided is that the judge assumes that everything in the complaint is true, even though you know of course that many of the things are totally preposterous.

And if that’s denied, you have to spend $1 million — with electronic discovery, maybe $10 million, $100 million —  defending yourself, which you have no chance of getting back, even if at the end of the day you’re quite confident you’re entirely innocent, not liable, under whatever the claim is. In most countries of the world, that’s sort of craziness, but that’s the system we have.

Yes, it is. Which goes a long way in explaining this comparison, analyzed by the Tillinghast business of Towers-Perrin, March 2006:

The U.S. had a 2.2% ratio of tort costs to GDP, compared with Germany (1.1%), Japan (0.8%) and the U.K. (0.7%). Aside from Italy (1.7%), the other countries examined in the study have tort costs comparable to historic levels observed in the U.S. in the 1960s and 1970s.

Leave a Reply