Are Courts Headed for a Market Failure?

Dissatisfied litigants and other unhappy "consumers" of dispute-resolution systems are increasingly choosing private options. Courts are working to improve, but are they doing too little too late?

Judge Justice reviewed the Illinois Circuit Court User Survey results he got from the circuit clerk. Circuit courts statewide recently conducted the survey to gauge the public's perception of the courts and consumers' satisfaction with their court experience.

Like private businesses, the judiciary is concerned about how its "brand" is being perceived and how the "user experience" can be improved. While the public has a generally positive view of the judiciary, there are many things about the civil justice process that litigants do not like or understand. In the meantime, alternative methods of dispute resolution, many of them tech-driven, may "disrupt" the traditional public civil justice court model, or at least marginalize its importance.

The marketplace for justice

If you look at civil dispute resolution as a service like others in the marketplace, you would expect consumers to choose how, when, and where to "purchase" it. They would explore their options, decide what they can afford, and evaluate what they get for their time and money, choosing among good, better, and best options. Increasingly, consumers are opting for simpler and lower-cost private alternatives to the public justice system.

Under our traditional public civil justice model, which is rooted in the adversarial system, courts and jury trials were established to be in the "best" category by default. That choice results in complex rules and processes and usually requires costly trained intermediaries - lawyers - to work smoothly and well. The complexity inherent in due process is hard to reduce and still have the "best" adjudication system. Only so many substantive and procedural protections can be removed without compromising fairness.

The public civil justice system once had a virtual monopoly on dispute resolution. But as the volume of litigation increased, stress on the system exposed flaws. Litigants and others complained of delay, uncertainty, high cost, and complexity.

As civil cases backed up in the courts and dissatisfaction grew, the system responded. Courts began voluntary and eventually mandatory mediation programs. Judges gave more attention to case management, settlement conferences, and alternate dispute resolution (ADR). Simplified rules and procedures emerged for small claims and other high-volume courts. Rather than a one-size-fits-all justice system, efforts were made to match the "fix with the fuss."

But it was too little too late for many sophisticated and well-heeled users of the system such as corporations. More and more opted for private dispute resolution, particularly mandatory arbitration, instead of the public civil justice system.

At the other end of the economic spectrum, ordinary consumers began choosing private dispute resolution, which they regard as cheaper, faster, and less confusing. They are willing to choose "good" over "best," and technology is helping them with online dispute resolution (ODR) sites like www.modria.com and www.virtualcourthouse.com. Some ODR sites provide a range of ADR services, including third-party resolution by a private judge.

Disruptive innovation

In The Innovator's Dilemma, Clayton Christensen coined the term "disruptive innovation" to describe when "an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility and affordability where complication and high cost are the status quo." If the public civil court system is the powerful incumbent in the dispute resolution market, alternate dispute resolution options and private justice systems are the competition.

The decline of Kodak is a cautionary tale for all who fail to heed market signals. Kodak was a market leader in cameras and film for decades. But the company refused to change its business model as digital cameras and smartphones came to dominate the market. They thought film was the best model, and when they still had time to adjust, they didn't feel the urgency. The result was the decline of a great company.

To prevent or delay innovations from becoming disruptive, the market-dominating incumbent - in this case, courts and legislatures - are using "sustaining innovations" to improve delivery or performance of their existing products or services.

Pro se courts, problem-solving courts, and family courts are examples. Judges are being asked to step out of their traditional referee roles and be more active in helping disputants reach solutions. Court forms, online legal help, and courthouse help desks are being expanded to help pro se litigants. Courts are even looking into online dispute resolution as a way to decide cases.

This process of accommodation has its critics. On the one hand, some wonder whether an anachronistic model can truly be fixed. On the other, some question how far the traditional system can be "dumbed down" before it is not a judicial system at all. ("One dispute resolution coming up - do you want due process with that?")

Many lawyers and judges are averse to thinking of dispute resolution as similar to other services in the marketplace. Many of us equate justice with the court conflict-resolution model that we are comfortable with and understand. We know that at its best - when powered by excellent lawyers, trial judges, and jurors - our American civil justice system is as good as any ever devised. More than that, public trials allow transparency, develop the common law, and allow citizen involvement through jury service.

But consumers are understandably motivated by private interests over public good. They see their conflict as personal. They are exercising their right to resolve it as they choose when possible.

For his part, Judge Justice did not think courts were at a "Kodak Moment." Nor, however, was he complacent. All providers of products and services, including courts, urgently need to reinvent themselves to meet the evolving demands of the market they serve. The speed at which disruption can take place in an interconnected, technology-driven society is blinding. We ignore the lessons of Kodak at our peril.

Ronald D. Spears of Taylorville is a judge of the Illinois Fourth Judicial Circuit and past president of the Illinois Judges Association.

judge.spears@gmail.com