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Be Nice to Losers

-- By EricSoehnlein - 27 Feb 2009

One of this course’s goals is to facilitate creative thinking about the law (the “activity of making things change with words”). However, in examining the ways legal thinking develops and the way that thinking interacts with social constructs, we have failed to appreciate the problems of transitional equity that inevitably flow from changing the law (or using the law to change society, or changing the law to mirror society). Just as Holmes cautioned that judges too often failed to “weigh considerations of social advantage” in the way they reasoned to legal rules, we must be careful that we don’t gloss over issues of transitional equity that arise when we, as lawyers, try to change the world. Those changes will affect the lives of people who (whether they chose to buy into it or did so unconsciously) ordered their lives around activities the law had previously encouraged. Take for instance the implications of Felix Cohen’s approach to legal reasoning. Cohen asserts that when courts merely do what they’ve always done (strict, mechanical adherence to precedent) it leads to disjoinder between legal rules and underlying social reality. Instead Cohen advocates that judges rest their decisions on a “functional” method, crafting legal rules based on social and ethical values. Although Cohen is undoubtedly correct in asserting that law should correspond to social reality (e.g. what people really value), his account ignores the fact that there might be a value in adhering to precedent for its own sake; namely that individuals within the system order their lives around legal rules that give and protect value. Such rules have encouraged men to cultivate meaningful trade names, or have encouraged men to establish corporations in a certain way. In short, legal rules have encouraged well meaning, hard working people to play our societal game by its rules to “win.” Though there is a natural rejoinder—namely that if something is “valuable” it will still be protected in accordance with the underlying social values of society (perhaps even becoming law through industry custom)— change that comes in accordance with Cohen’s approach inevitably undermines certainty, and change that comes from court decisions in accordance with shifting “societal values” will inevitably result in there being some “winners” and some “losers.” How we treat the losers matters. This issue is illustrated in starker terms in Thurmond Arnold’s account of “the Spirit of 1937.” There, Arnold tells of a group of “bankers, businessmen, lawyers, and professors” who in the spring of 1936 were resistant to the idea of the Interstate Commerce Commission setting rates for the bankrupt New York, New Haven and Hartford Railroad. Arnold attributes their distrust to “pure idealism” stemming from what these men saw as a “violation of the great principle that government should not interfere with business” as it had been conditioned into those men through the social institutions of American capitalism. Arnold is dismissive of the businessmen’s arguments that the “investors would be hurt” since “the investors already had suffered.” He further argues that government intervention in that instance would have raised the social benefit for all involved. Even accepting Arnold’s assertion that none of the men opposing government intervention owned stock in the railroad, and ignoring that the businessmen had a legitimate reason to be skeptical of what would be the result of government intervention (Cardozo’s fact skepticism informs us here), Arnold’s analysis fails to appreciate what these men had at stake. Having grown up in a society that taught men to seek success in old style American business, these men had not only conformed, but had excelled, pouring their wit and their labor into the activities society had encouraged. For them the specter of government intervention in private business was more than a “violation of a principle;” it was tantamount to changing the rules of the game halfway through, potentially decreasing the control over industry they had earned and presenting great uncertainty at what could come next. In an act of government they saw a threat to their livelihoods – not merely a violation of a “principle.” The fact that change creates winners and losers is not an argument against change. Undoubtedly society needs to adjust to crisis, changes in preferences, or in the world. But we must be cognizant that the transitions on our horizons inevitably will leave us with some “losers,” who lost through no fault of their own. For instance, when the government invests in Citigroup, there’s a potential that current shareholders will see their ownership interest diluted; when we advocate a lessening of intellectual property protection, we are taking legal rights and security away from someone who worked hard to develop something that, at one time, society thought was worth protecting; when we change the way grading is done at this law school we could be punishing someone who deserved a better grade their 1L year. Of course, recognizing that there’s a problem is only half the endeavor. Finding ways to deal with justice in the transition is the bigger issue – far larger than this paper. Nevertheless, our readings do give us some foundation of what must inform our treatment of losers. First, Arnold informs us that the appearance of choice in social institutions is a nullity. Men are born into them and espouse the principles, even if the principles have little to do with corresponding action. Thus, it’s inappropriate to punish someone for having conformed or even excelled in conforming to those rules (assuming ethical conformity). Second, we know from Arthur Leff that when men are forced to leave a social structure (con or not) that they need a degree of “cooling out”—a weaning off, or way of saying goodbye. Although these principles are broad, they do point to an important conclusion. When we want to change the world, we better understand who wins and who loses, and once we’ve done that we had better nice to those losers who played the old game fairly. It wasn’t their fault they played the game well, and without due concern, we might treat them unjustly.

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