Aug 21 2012

In Italy, a good wine matures faster than a court case. Reform is on its way, though, as it is in Portugal, Greece and many other countries with ineffective court procedures. Most reform is managerial and imposed: the IMF and the EU see to it that courts in medium sized towns are closed and judges get targets for writing decisions on time. In its August 16 edition, The Economist has doubts. Rightly so, because doing the old things more quickly is not going to solve the problems. The main challenge is to let judges innovate their court procedures so that they deliver more justice at lower cost.

A recent presentation by one IMF expert  reveals the current orthodoxy in judicial reform. It recommends closing ‘justices of the peace’ courts, just as banks once did away with their branch offices. Next, judges get targets of 6 or 12 months to render a final decision. If judges manage their cases more actively, giving interim decisions rather than waiting for the case to mature, they can solve divorces, debt issues and commercial disputes much faster. So courts also get management tools, better IT systems and more data that court managers can monitor.

The reasons for these reforms are not that politicians or lawyers badly want it. The IMF and the EU want their money back and the economy to grow. Courts are crucial for this. They make people pay their debts on time. Italy’s famous family businesses will grow much faster if they get a license to operate from the government, instead of paying protection money to their equally famous “security sector” entrepreneurs. The Economists quotes the Bank of Italy saying that inefficiency in civil justice costs Italy as much as 1% of annual GDP.

Managerial reforms monitored by international institutions are not a bad thing. Experts agree that a lack of incentives is the main reason why courts are not very good at solving people’s actual problems on time. If court bosses have to report performance data to the EU and the IMF, that adds to incentives, at least temporarily.

Lasting incentives remain a challenge that has to be addressed. Publishing performance data for each individual judge is effective, as is tying court budgets to actually having solved cases, not pushing them to a next stage in proceedings. A very simple version is to pay the court if it can show a final settlement or a judgment, but more sophisticated systems for paying courts where courts also receive money for clarifying the law are possible as well.

But the major problem is that civil justice procedures are old fashioned and do not use the latest insights on how conflicts between people are best solved. Have you ever met a judge at a party who recommends you to come to his court because it delivers top quality service at an affordable price?

Mediation is a case in point. Italian law now even makes mediation compulsory as a first stage for most disputes, acknowledging that it is much better than starting civil justice proceedings. Lawyers were the only ones to object.

The Italian wholesale solution is also a sign of a fundamental design flaw in court systems. In most countries, judges are not responsible for their own procedures. They just follow the Code of Civil Procedure, which can be 100 years old or more, and ossifies a system in which lawyers, notaries, bailiffs, judges and other members of the legal profession have protected positions. Such a centralistic approach is an enormous barrier for court innovation, which has to come from simplifying procedures, online interfaces between judges and clients, integration of elements of mediation, smart designs of court hearings and judgments which are easy to write and understandable for clients.

Specialization is another key to successful court reform. All over the world, specialized courts perform better than courts of general jurisdiction. Neighbour disputes, debt issues, conflicts in commercial supply chains or personal injury cases require a different treatment.

Australia is a country with some interesting court innovations. Accidentally, it is one of the countries where judges can design their own procedures, within broad terms of reference set by the legislature. Perhaps the Italians could give this a try as well. After all, Italy is famous for its great design and innovation skills, always invigorating traditional products such as chairs, coffee, cars … and courts?