Why law school's love affair with economics is terrible for the American legal system

Law schools are putting more and more emphasis on a cash-crazed free market ideology. Here's what's at stake

Published July 26, 2014 6:00PM (EDT)

Bob Odenkirk as Saul Goodman in "Breaking Bad"      (AMC)
Bob Odenkirk as Saul Goodman in "Breaking Bad" (AMC)

Like nearly 40,000 other young Americans, I recently completed my first year of law school. For our cohort of would-be attorneys, the past 10 months have consisted of little beyond underlined casebooks, cold calls in lecture and obscure citation methodologies. The dividends, at least so we tell ourselves, are brains better equipped to parse the verbal contortions of our overly legalized society, and temperaments hardened against the drudgeries of a famously pugnacious profession.

This summer, as we fan across the world to complete internships at bright-eyed nonprofits, cash-strapped bureaucracies and sprawling mega-corporations, we’re forced to start deciding how to use those newfound skills. Lawyers are not famously honest people; as a whole, attorneys’ ethics are well within reproach. Two years shy of taking the bar and already immersed in this suspect culture of law, then, we would-be advocates have to choose whether to conform to the desultory trend or buck it -- to pick either good or evil, you might say.

A year ago, I imagined — as most people probably do — that the initial year of legal studies would put a heavy emphasis on the good. I anticipated lots of lofty vocabulary about justice and rights and freedom. Attorneys may not have the cleanest reputations, but it seems fitting that an introduction to the life of the law would aim high, if only as an idealistic and rhetorical reprieve before the realities of the job market set in. But while there’s certainly some discussion of liberty and righteousness in the halls of our law schools, there’s not quite as much of it as you might think. The path to the bar is not paved with sentimental cobblestones of the Good and the Right. It’s much more pragmatic than that.

In fact, the most repeated word in my first year law curriculum was not justice, or liberty or order.

It was efficiency.

You may be picturing a well-oiled engine, an LED light bulb, or a marathon runner. I’m picturing game theory tables and dense paragraphs of economic speculation. Efficiency, new law students will soon discover, doesn’t quite mean what Merriam-Webster claims it does: “the ability to do something or produce something without wasting materials, time, or energy.” No, no. It refers to how well, and how cheaply, legal rules accomplish their purposes.

Since September, I’ve been encouraged to think about the law less as a journey toward justice and more as a means for distributing resources. In Civil Procedure, we examined the wisdom of allowing average people to bring lawsuits based on the overall court costs involved. And in Property, the problem of whether to permit the building of a cement plant in a residential neighborhood turned on the national industry’s need for cement. In nearly every discussion of a given law or a proposed policy, the first question was feasibility, and the second (or third) was justice. "Feasibility" means financial soundness. Financial soundness requires measurement. So in order to measure and mete out our resources, legal questions grasp for the harsh insights of computation.

According to this oddly constrained worldview, the legal system is just another (and comparatively imperfect) means for achieving “wealth maximization.” We want a “bigger pie,” so the incessantly repeated metaphor goes, and law is merely about deciding which yeast works best. The impassioned cris de coeurs of Blackstone, Cardozo or Sotomayor notwithstanding, “the life of the law” is not, to paraphrase another luminary, “experience” — it’s accounting. If only we would spend less time with the romantic and messy concepts that have beguiled the likes of Holmes and Brandeis for millennia, so the thinking goes, we might actually be able to make things work.

In the obvious — and obviously ideological — corollary to all this, law school has tried to convince me that it’s not lawyers or judges that should decide the hard questions of law: It’s economists. The white knights of the 21st century legal academy, economists are uniquely equipped, so they claim, to furnish us wishy-washy idealists with the quantitative rigor to perform the difficult, and consummately serious, analysis that policy and politics require.

In other words, society is a problem. And legal economics is here to solve it.

The law and economics movement, born at the University of Chicago in the 1970s, gave birth to this type of thinking and now enjoys unquestioned academic supremacy over the more prevaricating methods of legal realism, critical legal studies and legal formalism. Law and economics’ doyen Richard Posner, a professor at Chicago, Seventh Circuit judge and famous advocate of all things market-oriented, is the most cited legal academic of the 20th century. Ronald Coase’s “The Problem of Social Cost,” which reduces debate over legal rules to the calculation of transaction costs, is the most cited legal article. Passions have cooled somewhat since the raucous debate in the ’80s and ’90s over law and economics’ takeover of the legal academy -- which was aided in no small part by generous donations from private, free market-promoting foundations -- but that’s just because the movement’s methods have become part of the background. No other approach to adjudication dominates class discussion to such an extent, or shapes the way in which cases are selected and read.

The economic analysis of law, then, has become the standard against which other approaches are measured. And even if many professors still believe that cost-benefit analysis, with its incessant focus on data and calculation, brandishes empiricism the way Descartes brandished self-reflection (read: with excessive faith in a promising but limited approach), only a cantankerous cynic would argue that it’s all hogwash.

But that’s not to say there isn’t much to pause over.

Here’s a typical example: Legal economists generally assess the value of a resource — land, loans, even lives — by how much someone is willing to pay for it. This makes sense at a very basic level: The sandwich is worth $8 because you won’t pay $9 but you’ll pay more than $7. But how effectively can dollars capture worth when people have different abilities to pay? It seems a bit obtuse to claim that the owner “willing” to pay $200,000 for her home values it less than the developer  “willing” — read: able — to spend $1 million. And that’s just marketable assets. What about more elusive “resources”? How do we price, say, the happiness of children? (Don’t worry: economists have tried.)

Here’s another example: Economic analysis evaluates environmental regulations according to the net social value of restricting industrial activity versus the activity’s economic value absent regulation. Even beyond the difficulties of measuring such things, how do we decide where to draw the line between what “counts” as value in such a calculation and what doesn’t? When dealing with something as resistant to quantification as a wild stream, this puzzle has no end. Is the stream only valuable to those who live by it? To those who live in it? What about those who hear stories about it, or who would drink from it in 90 years, or the painters who might never see it? Does their value “count”?

I don’t mean to suggest that any attempt to put numbers on tricky resources leads to heartless reductivism. For one thing, administration on any large scale requires at least some sort of abstract balancing, and putting numbers on things helps. What’s more, quantitative rigor need not be the opposite of equity. Law and economics’ methods are often intended to more effectively reach the ideals that law has always grasped at: cost-benefit analysis in the service of justice.

But there’s one big reason to be suspect of the success of this approach, and that’s the track record of our economic and political institutions over the past 40 years. If economic analysis really did promote wiser and fairer policymaking, we should have seen the results by now. Instead, the life of the law and economics has curiously coincided with the rise of inequality and the triumph of the 1 percent. From a normative standpoint, this alone should cause us to question the movement’s basic assumptions.

Along this vein, liberal critics of law and economics take aim at the method’s free market biases. It’s not just about the size of the pie, these critics argue. It’s about how we slice it. Economic analysis should look not only to how big we want the pie to be, but how evenly distributed. True efficiency, in other words, respects individual difference.

It’s a fair point, even if I insist once again that we look to the thinkers’ real-world track record before judging the value of their critique. But adding another dimension to legal economics only goes so far; it still accepts the method’s basic view of communal life. More than tinkering with its results, we need to consider economic thinking’s ideological and imaginative effects.

Simply put, our social life is much more than a pie-eating contest. Our shared resources are meant to serve our shared ideals, not vice versa. Yes: a rising tide might sometimes lift all ships, and we need to enjoy our bread before we can enjoy our rights. But the two biggest specters on our communal horizon, climate change and inequality, demonstrate where a singleminded obsession with economic growth can lead us. Taking care of ourselves and our planet means much more than taking care of our wallets.

In an era crying out for radical thinking and radical solutions, we can ill afford the strictures of the cost-benefit mindset. The complete immersion of our legal class into this language of economics has a corrosive effect on its imaginations, leaving our lawyers unequipped to think outside the box. A singleminded pursuit of efficiency loses sight of the inherent messiness of society and the legal rules that grapple with it. By reducing everything to entries in a formula and by seeing human behavior as limited to “rational pursuit of maximum value,” law and economics conjures up a version of the self-interested and self-destructive world that we now inhabit.

After all, when we concede that our society’s legal life is essentially about growing the economy, it becomes very hard to argue against leaving the tough decisions of rule design and market legislation to the growth experts and wealth maximizers. Not surprisingly, those folks have lately turned out to be expert mostly at maximizing their own wealth and that of their friends, while minimizing the wealth, and the happiness, of everybody else — those less willing, because less able, to pay for their share of our resources.

Three years of law school spent evaluating society according to the metric of transaction costs will inevitably produce lawyers less attuned to the more ephemeral, and more essential, considerations -- the kind that could actually inspire the reforms and revolutions we need. A law school acculturation process whereby the hard facts of economic analysis are constantly if implicitly vaunted over the less determinate methods of ethical reasoning necessarily generates attorneys more sympathetic to those who traffic in the material of such analysis — namely, bankers, hedge fund managers, and their similarly-educated regulators — and it's just such economic essentialists who are overrepresented in the ranks of the enemies of social change.

From outside the legal world, the classic image of an attorney is the Clarence Darrow type, thundering against this sort of injustice. From inside the legal academy, the image of the lawyer is a number-cruncher peering at a spreadsheet. Law school deans like to say that their institutions teach students “how to think like a lawyer,” but today that often means “how to think like an economist with a law degree.”

This needs to change. As a law student, I of course have a lot at stake in how our law schools approach their subject matter, and I want more of the difficult, wishy-washy ethical stuff -- more questions than answers. But we should all be concerned about what being embedded in the language-world of efficiency does to the nascent legal mind. Like it or not, attorneys make lots of big decisions, and these decisions affect you. Lawyers draft your contracts, they command your army, and they decide what happens to that stream you’re so fond of. They tend to lead revolutions, and also to quash them.

Attorneys may never be an altogether altruistic bunch. But they’d probably do better if they spent their law schools days focusing less on the elusive search for mathematical solutions and more on the inherent contradictions of society. Our world today is facing many unprecedented dilemmas, dilemmas that require ambitious and global solutions. Such solutions inevitably require asking uncomfortably imprecise questions about justice, fairness and order. We should be eager, I think, to confront such questions with the most wide-ranging imaginations we can.

Changing the intellectual tenor of our law schools is not going to save the world. But if law students are encouraged to think less in terms of numbers and more in terms of people, and if they are presented with a vocabulary of compassion rather than one of cold calculation, they stand a good chance of helping it along.

You can’t put a price on that.

Ted Hamilton is a student at Harvard Law School.

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