John Steele Gordon: Tort Reform Is Essential

John Steele Gordon, in the WSJ (Aug. 25, 2004):

Tort lawyers and their political minions never tire of lauding the virtues of the American legal system, especially the so-called American rule (where each side of a case pays its own costs regardless of outcome) and the election of judges. Their arguments, and the counterarguments, are well known to the readers of this page. But here's another counterargument, one that might be called the argument of the marketplace.

Good ideas tend to spread through the human universe for precisely the same reason that good genes spread through a population: They yield a benefit to those who possess them. A new technology, for instance, only succeeds in the marketplace if it is better or cheaper (or both) than the technology it replaces. Really good ideas quickly become universal.

While the U.S. has produced more than its share of good technological and commercial ideas, it has been equally fecund of good ideas for organizing and governing society. Modern democracy itself, of course, first appeared in the U.S. and has now spread to all but a few benighted corners of the globe. Even the Constitution of the Fifth French Republic states that its principle is "gouvernement du peuple, par le peuple et pour le peuple."

Or take dollars and cents. In the 1780s, Thomas Jefferson devised the world's first decimal currency system. He even coined the word dime for the 10-cent coin. Less than 200 years later, Jefferson's good idea (perhaps his only one when it comes to financial matters) had spread to every country on earth.

American law has also produced ideas that quickly spread. In the 1840s, a New York lawyer named David Dudley Field wrote a new code of civil procedure to replace the endless complexities of the common law that were so savagely depicted by Charles Dickens in "Bleak House." The Field code was quickly adopted or adapted by the other states and the federal government. In 1873, Britain used it as the basis for reforming civil law in that country and it spread from there throughout the British Empire. Today, whether you're in Boston, Brisbane or Bangalore, the code devised by a great New York lawyer is the basis of civil law.

So, if the American rule (which dates to the 1790s) and the election of judges (which dates from 1812, when Georgia first provided for the election of some judges) are such good ideas, as the tort lawyers claim, why has neither spread beyond the borders of the U.S.? The alternative to the American rule, where the loser pays the costs of both sides, is usually called the English rule, but it would much more accurately be called the rest-of-the-world rule. Of all major countries, only Japan uses the American rule. And in Japan's confrontation-aversive legal system, getting into court at all is very difficult. As for the election of judges, there is not another country on the planet that chooses judges that way.

It is hard to escape the conclusion that other countries have looked at the U.S. to see what happens when each side pays its own court costs (a lot of dubious law suits get settled because it's cheaper than defending them) and judges are elected (a lot of clubhouse pols and lawyer-friendly judges sit on the bench).

Having seen, they said, "No thanks!"