Contracting for Procedure

Judicial decisions of public courts increasingly are based on “contract procedure,” private rules of procedure that the parties draft and assent to before a dispute even has arisen. These rules govern such matters as the forum in which the proceeding will be conducted, whether a jury will be involved in adjudicating the dispute, the scope of rights of discovery, and rules of evidence. The practice deserves greater attention, and should raise more profound concerns, than the academic literature currently suggests. We argue that contract procedure operates as a form of privatization, a way of outsourcing government functions to private contracting parties. As such contract procedure has the potential to promote self-governance, encourage innovation, and secure efficiency. Yet it also permits unelected and unaccountable contract drafters to reshape the adjudicative function with virtually no meaningful oversight by Congress, agencies, or the courts. The lack of oversight is of concern because contract procedure has effects that spill over from the private world of the contracting parties into a world in which more public modes of deliberation and decision making have traditionally prevailed. Our argument that these spillovers may be negative draws from well-developed theoretical concerns about the potential inefficiency of the private production of public goods, the potential threats to political competition posed by allowing economic actors to influence the exercise of adjudicative power, the dangers of exit from public institutions highlighted by Albert Hirschman's theory of exit, voice and loyalty, and Michael Walzer's account of the appropriate boundaries of the different “spheres of justice.” We suggest a package of reforms that are aimed at the system effects that we identify and that are designed to capture the benefits of privatization, while ensuring the transparency and information production that are essential to sound judicial administration. The two central reforms are 1) a requirement that litigants disclose in the civil cover sheet at the time of filing whether they have agreed to deviate from any public rules of procedure and 2) that the court consider and assess the likely effect of the customized rule during a pre-trial conference