Special Masters: How to Make the Best of Both Worlds, Part III

Part Three: What Incentives Are We Creating?

By: Merril Hirsh, James M. Rhodes and Karl Bayer

In Part Two we urged that, while rule changes can be of some help in getting parties in litigation to a fair and efficient resolution, they are not a complete solution. Our concern is that fundamentally, changing rules changes how the game is played, not the fact that it is a game. We said we need a change that changes the incentive to play itself and suggested that special masters can change these incentives. OK, money where your mouth is time: how?

Let’s start by looking at what the incentives are right now. The cynics will say that lawyers have an incentive to earn money and so to multiply litigation, or that parties want costs to increase so as to magnify pain for their opponent or delay reckoning. But you do not need to ascribe bad motives to the participants to see how our incentives are currently disserving our expressed goal of just, fair and efficient resolution of disputes.

To begin with, we tell our lawyers in the words of the old ethics cannons to defend their clients “zealously within the bounds of law.” But the boundaries we set are inherently vague, debatable and (because we value parties having access to information) necessarily expansive. There is a tension here: you cannot make lawyers pledge to defend their clients to the death and then expect it to be effective when you admonish them not to overdo it. If we set up processes that encourage lawyers to overload the system with discovery disputes, we should not be surprised when they do just that.

Moreover, it has been such a long time since civil cases routinely went to trial, that there are legions of well-known lawyers at impressive firms who not only have very little trial experience, but learned at the feet of others who had little trial experience. Not only have they learned to litigate expansively, they also have an understandable fear of leaving stones unturned, lest they miss something. And what they have learned to do well is assemble massive staff and apply them to discovery, so that no stone (or for that matter pebble, or grain of sand) remains unturned.

In addition, because the vast majority of cases settle, the genuine effectiveness of these strategies do not often get tested by actual decision. The cost of the process, itself, encourages parties to settle, regardless of the merits. But it does not tell you whether the efforts that incurred those costs really helped either side to get to the best resolution. Like the real estate lawyers who put the word “enfeoff” in deeds not because they know what it means, but because other lawyers have done that since the middle ages, and there is no reason to risk finding out what happens if you take the word out, so too do litigators not want to risk going without methods everyone seems to use, at least until someone gives them a reason to do so.

Now we are getting somewhere. If we see that the current system creates incentives to drive up the cost of litigation, how do we create incentives to be reasonable and what role does the Special Master play? Stay tuned for Part Four!

Read Part One: The Problem.

Read Part Two: Improving the Process, Not Just the Rules.

Read Part Four: How Do We Create Better Incentives?

Read Part Five: Incentives Through Expertise.

Read Part Six: An Appellate Court Success Story.

Read Part Seven: Being the Neutral Eyes.

Read Part Eight: How Are Special Masters Perceived?

Read Part Nine: Beating the Rap.

Read Part Ten: Using Regularity to Start Beating the Rap

Read Part Eleven: The Rule Rather than the Exception

Read Part Twelve:  An Adjunct to Civil Litigation

Read Part Thirteen: Doing Disagreement as Effectively as Doing Agreement

Read Part Fourteen: Is Doesn’t Just Have To Be Construction That’s Constructive

Read Part Fifteen: Where Else Do We Bring Alternative Dispute Resolution Skills to Dispute Resolution?