Knowledge And Decisions

Costs are a crucial factor in all forms of legal proceedings. A legal right worth X (in money or otherwise) is not in fact a right if it costs 2X to exercise it. This is obvious enough when the rights and the costs can be reduced to money. The principle is no less true in cases where the values are nonfinancial. For example, a woman’s right to prosecute a rapist can be drastically reduced — for some women, obliterated — by allowing the defense attorney to put her through an additional trauma on the witness stand with wide-ranging questions and observations, publicly humiliating her but having little or nothing to do with the guilt or innocence of his client. There is some belated recognition of this cost in some places with changed trial rules in rape cases, but this is usually seen as a special problem in a special situation, rather than a general problem of costs in legal procedures. Where a right is so defined, in legislation or by judicial interpretation, that either the plaintiffs or the defendants can impose large costs on the others at little or no cost to themselves, then the law may be so lopsided in its impact that the right can be reduced to meaninglessness or expanded far beyond its original scope or purpose. In the case of rape, it is the defendant who can impose disproportionate costs — reaching prohibitive levels for many women. In other kinds of cases and rights, it is the plaintiff who can create huge costs for the defendant at little or no cost for himself. For example, recreational interests (“environmentalists”) can impose large costs on builders of everything from bicycle paths to power dams by demanding that they file “environmental impact” statements, in effect putting the burden of proof on the accused. Although such statements are officially defined by their hoped-for results, they have virtually no demonstrated effectiveness for predicting how any environment will in fact be affected.¹⁴ They are, however, very effective in imposing both direct financial costs and costs associated with delay. For projects requiring large investments, the mere delay can cost millions of dollars and doom the project, since the value of a given physical thing varies with the time at which it becomes available. That is, so-called “environmental impact” requirements impose high costs on one party at low cost to the other party, regardless of the legal outcome of the case.

The law and legal critics are both so preoccupied with the ultimate disposition of cases that costs of the process itself tend to fade into the background. Yet these process costs may determine the whole issue at stake. For some, to be totally vindicated after years of filing reports, attending many administrative hearings, trials, and appeals is often meaningless. Under environmental impact laws, the case to be made by the plaintiff to keep a costly legal process going is either nil or may consist solely of speculation. He does not bear the burden of proof.

Although adversary legal systems put much emphasis on litigants, or at most on the categories of people they represent, all legal systems are ultimately social processes serving social purposes, including transmitting knowledge for social decisions based on costs entailed by alternative social behavior. When the legal system causes the trade-offs between opposing private interests, or opposing social concerns, to take place in ways that put more costs on one side than on the other, this affects much more than the justice or logic of the final decision in those cases that are adjudicated. In legal as in economic processes, the transactions that do not take place at all may represent the largest cost to the public. The electric generating capacity that is not built, and the traumatic blackouts that result from overtaxed electric generating capacity, may far outweigh the annoyance of a handful of lakeside resort owners or the Sierra Club — if the costs of the two results could be equally accurately conveyed through either the economic system or the legal system. Where the costs of transmitting one set of knowledge (the demand for electricity, in this case) is artificially made greater than the costs of conveying the other set of knowledge (recreational demands), then the distortion of knowledge can lead to results which neither the economic nor the legal decision makers would have reached had accurate knowledge been equally transmittable from opposing sides at equal cost. In the criminal law as well, the real costs of the legal system are not the financial costs of such transactions as happen to take place, but are primarily the social costs of those transactions that do not take place — the cases that are not tried but dropped or plea bargained because of the prohibitive cost of doing otherwise.

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