Independence from the litigants
Another reason for seeking judicial independence is to avoid judicial decisions being dependent on private interests and driven by specific economic or social forces. Judicial independence then directly refers to the notion of impartiality.
From this perspective, the economic analysis appears less forthcoming about the means for achieving it than about the issue of the dependence of the judicial decision on the influence of litigants and the various forms it can take. Indeed, by analogy with rent-seeking contests, it usually considers litigants as interest groups in competition for the assignment of a ‘rent’. In this logic, contending parties try to induce the court to make a favourable decision by spending resources on legal research to produce arguments that will help the judge’s decision in their case. The probability of being found guilty or not guilty is supposed to be a function not only of the objective merits of the case but also of the litigation expenditure (Katz, 1988). From this perspective, since litigation induces a fee shifting that does not occur in alternative rent-seeking situations, it constitutes a specific type of rent-seeking distinct from pressure activities oriented towards legislators or bureaucrats (Farmer and Pecorino, 1999). Following up this line, an analogy can be drawn with the analysis of corruption and bribing that assumes passive judges responding to the pressures exerted by parties (Rose-Ackerman, 1979). The rent-seeking approach to litigation also builds on common premises with signalling models of judicial behaviour that consider judges imperfectly informed about the reality and issuing decisions according to the probability that they affect the realization of various states of nature (that is, the probability of a party being guilty or not). This probability represents a signal that the defendant can modify by engaging in a certain level of litigation expenditures, so as to induce the judge to revise his/her prior belief. The posterior belief of the judge is a function of the information acquired during the trial process. Rubinfeld and Sappington (1987) show that the standard of proof and the penalty imposed on defendants who fail to meet the standard are very sensitive to the relationship between the litigation efforts of defendants and the judge’s ultimate assessment of a defendant’s guilt. Thus, within that framework judicial decisions are determined mainly by the expenditures of litigants.At a more general level, not only judicial decisions but also law can be seen as the outcome of the rent-seeking activities of parties. The extension of rent-seeking models of litigation from one-shot to repeated games assumes that parties demand not only judicial solutions to conflicts but also durable precedents as a joint product of the conflict resolution (Landes and Posner, 1976). Therefore, according to whether they expect to be involved in future conflicts or not, parties value a favourable decision differently and are more or less prone to engage in high amounts of legal expenditure. From this perspective, the level of litigation expenditures accounts for the judicial development of the law towards rules that are more favourable to powerful interests. In particular, parties able to organize so as to internalize the gains of litigation may succeed in changing the law in a favourable direction (Bailey and Rubin, 1994). In that sense, rent-seeking models satisfy the results of the critical law studies according to which the law evolves to benefit the most powerful interest groups. They also provide contrasting predictions with the efficiency theory of the common law. According to the latter, litigants have a stronger incentive to challenge inefficient rules before the courts since in the aggregate they derive higher gains from the transition from an inefficient rule to an efficient one than from the reverse evolution (Priest, 1977; Rubin, 1977; Goodman, 1978; Landes and Posner, 1979).
By contrast, the rent-seeking approach to legal evolution does not predict that efficient rules have a tendency to prevail in the long run, but rather focuses on the redistributional nature of many judicial decisions and suggests reasons why a number of legal ‘anomalies’ such as inefficient doctrines or inefficient changes may exist and survive (Osborne, 2002). In addition, it shows that litigation and lobbying are not disparate activities but that the forces shaping common law are similar to those shaping statute law. In other words, an interest group may obtain legal changes through either litigation or lobbying and have an incentive to combine the two methods for achieving its goals in complex legal battles (Rubin et al., 2001).Whereas the rent-seeking models of litigation emphasize the momentous role of pressure groups in shaping the law, they do not so far clearly provide a satisfying analysis of the issue of judicial independence. On the contrary, they focus on the motives of litigants and confine the judiciary to the role of a supine provider of conflict resolution and rules in response to the relative effort of the parties. This restrictive vision of the judge is consistent neither with the law and economics assumption of self-interested agents nor with the noble conception of courts advanced by the legal scholarship. Further developments explicitly assume a judge to be a rational self-interested rent setter. Von Wangenheim (1993) finds that if selfish judges base their decisions on the opinions of their peers, the evolution of judge-made law may follow irregular movements rather than tend towards efficiency. Bailey and Rubin (1994) also mention that judges may be ideologically motivated and able to thwart legal evolution such as it would occur if driven by the mere pressure of litigants. Even then, however, judges remain reliant on the litigation behaviours of parties, since cases must be litigated to enable courts to modify the law. As a consequence, parties aware of the willingness or unwillingness of judges to effect legal change may adapt their litigation and seizure behaviours so as to let or not let the preferences of judges shape the law. Whether judges pursue efficiency, as assumed by Posner, or redistributional goals is not conclusive in the literature.