Already a Bloomberg.com user?
Sign in with the same account.
A towering state courthouse that opened in downtown Houston last year boasts 39 courtrooms and expansion space for more. But lawyers in the city say the new building, built to handle civil lawsuits, is often eerily empty. The reason: So few cases are going to trial.
The federal courthouses in the northern district of Florida, a sprawling region that includes Tallahassee, Pensacola, and Gainesville, have been similarly quiet in recent months. The four federal judges in the district presided over just 12 civil trials in 2006 and 5 in 2005.
Around the country, plenty of lawsuits are getting filed, but fewer and fewer are going to trial. The civil trial is one of the most iconic American institutions, a time-honored forum where disputes over injuries, divorces, and all manner of business disasters are resolved. Yet rising legal costs, decreasing judicial tolerance for weak lawsuits, and the surging use of alternative dispute resolution (ADR) are combining to make courtroom showdowns exceptional occurrences.
After peaking at 12,018 in 1984, the number of civil trials in all federal district courts has dropped precipitously, reaching a new low of 3,555 last year. That's almost half the number of federal trials that took place 40 years ago, even though the number of suits filed during the same period soared from 66,144 to 259,541. Now the U.S. Securities & Exchange Commission is considering a contentious proposal to allow federal shareholder lawsuits to be handled through arbitration, a move that could siphon additional lawsuits out of the court system.
University of Wisconsin law professor Marc Galanter has dubbed this trend the "vanishing trial." It has also played out in state courts. In 21 states for which data were available, the number of civil jury trials fell 40% from 1976 to 2004.
Is this development worrisome? Some in the legal community are happy that trials are becoming rarer. Courtroom litigation is "a very inefficient process" for most cases, says Victor Schachter, a lawyer in Mountain View, Calif., who represents companies in employment suits.
Yet others are worried, with concerns ranging from the profound to the practical. Nathan L. Hecht, senior justice on the Texas Supreme Court, says that the drop in the number of trials is resulting in a reduction in the number of precedents--the broad rulings that tell people and businesses how to behave in changing and legally ambiguous circumstances. "I think it's a detriment if we lose the development of the common law through cases and appeals that have been the [basis of the] rule of law in this country since its founding," says Hecht. Partners at law firms, meanwhile, wonder how their younger lawyers will ever develop the skills needed to try cases.
Companies began flocking out of the court system in the 1980s, steering disputes into alternative procedures such as mediation (nonbinding settlement discussions) or arbitration (in which a paid arbitrator or panel of three arbitrators decides a case). On a daily basis, millions of Americans, wittingly or unwittingly, enter into agreements to waive their right to go to court. Cell-phone carriers, brokerage firms, employers, and others commonly require individuals to submit disputes to binding arbitration.
These provisions can be controversial, and the recent push by business groups to have the SEC allow corporations to shunt shareholder lawsuits into arbitration provokes sharp criticism. "What they're saying is that when you've been defrauded, you've got to go to their private forum, not a public forum," fumes Damon Silvers, associate general counsel for the AFL-CIO. "There's a mountain of evidence that these kinds of things are captive of the industry." The concern is that arbitrators will be reluctant to rule against companies who they would like to serve again. Ironically, the move to put this issue on the SEC agenda comes on the heels of data showing that in 2006 the filing of shareholder class-actions fell to its lowest level in a decade. There is also evidence that arbitration is falling out of favor with some companies, particularly as a way of resolving disputes with other businesses.PRUNING THE DOCKETSStill, what amounts to private justice remains popular, partly because it is shielded from the public. In Seattle and surrounding King County, Wash., for example, a cottage industry of retired judges has risen up to resolve not just commercial disputes but also the divorce and child custody battles of the region's many high-tech millionaires in proceedings that are fast and confidential.
Other developments are also contributing to the trial drought. Changes to liability laws passed in many states have simply closed the door to many types of personal injury claims. Limits on damages, for example, have caused a sharp falloff in medical malpractice lawsuits in a number of states.
Judges themselves have also become much more aggressive about pruning their dockets, resolving cases through summary judgment, or pressuring parties to mediate or settle. That's not necessarily bad, but some say it's gone too far. "There's a divide in the judiciary," says William G. Young, a federal district judge in Boston. Some judges, he says, see their job as "managing" disputes and avoiding trial. Others, including himself, do not shy away from trials and think they play a critical role in American justice. In a July, 2003, letter to his fellow federal district judges, Young invoked Alexis de Tocqueville to lament that "the American jury system is withering away," and that without jury trials, the courts' "status as the grassroots guardians of constitutional values is threatened as never before."
Susan J. Craighead, a court commissioner in Washington State, echoes Justice Hecht's concerns about the diminished potential for development of the common law, which comes primarily from appellate courts issuing written opinions about trials. That's a matter of particular import to businesses as they push into new areas, be it biotech or blogs. "The law, to develop in a relevant way, has to be in touch with what is going on," says Craighead. "With private disputes, you can't get that."
David Berg, a longtime Houston trial lawyer, sees a future devoid of the courtroom dramas that have long captured the American imagination. In a manual on trial technique that he published last year, Berg wrote that he feared that "the great war stories of the next generation of trial lawyers would begin, 'And then, I looked that mediator in the eyes and I said....'" By Michael Orey