The Rule of Law – Part 13

The human costs of excessive legal complexity.

Continuing this essay series on the rule of law, in this essay we’ll explore the human costs of excessive legal complexity, using Supreme Court Justice Neil Gorsuch’s book Over Ruled: The Human Toll of Too Much Law.

As Gorsuch writes:

In preparing for the [Constitutional] Convention, [James] Madison compiled a list of “vices” in state and colonial political systems that he hoped the nation might avoid when drafting a new constitution. High on his list were the twin “evil[ s]” of “multiplicity and mutability” in law. As he saw it, even in their “short period of independency,” some states already “ha[ d] filled as many pages [of law] as the century which preceded it”; laws had changed so quickly that they were sometimes “repealed or superseded ... even before a knowledge of them [could] reach[] the remoter districts within which they were to operate.” As he later argued in Federalist No. 62, a government that permits its laws to grow so exuberantly and change so often is nothing less than “poison[]” to “the blessings of liberty.” “The sagacious, the enterprising, and the moneyed few” may be able to track all the changes and even turn them to their benefit. But either way, they gain an “unreasonable advantage” over the “mass of the people.” And that is a path, he worried, sure to corrode and eventually shatter the “attachment and reverence” citizens hold for their institutions and law itself.

The dramatic rise in legal complexity we experience today takes a human toll. As Gorsuch writes:

By the government’s count (probably an underestimate), Americans today spend 9.78 billion hours a year completing federal paperwork. Harvard Law School Professor Cass Sunstein offers this way to think about that daunting figure: Suppose that we assembled every resident of Chicago and insisted that for the entirety of 2019, each one must work forty hours a week engaged in just one task: filling out federal forms. By the end of 2019, the 2.7 million citizens of Chicago will not have come within four billion hours of the annual paperwork burden placed on Americans. This paperwork burden has “massive negative effects,” Sunstein explains, making it difficult for people to “enjoy fundamental rights .., to obtain licenses and permits, to obtain life-changing benefits, or to avoid crushing hardship.” But who suffers the most? “As a practical matter,” Sunstein observes, “the answer is often the poorest among us.” The poor are less likely to have the resources and time to contend with the law’s complexities and its demands … The trouble, of course, runs much deeper than paperwork. By the time you get to filling out paperwork, you usually have a sense of the rules you must satisfy and the forms you must complete. But today just finding the relevant law, regulation, guidance, or form can pose a serious challenge … [A]nyone wanting to find the federal laws and rules that govern them must consult (at a minimum) the U.S. Code and the Code of Federal Regulations. Both sets of books are behemoths, unmanageable for any single person to read, though the latter is worse—more than 120,000 pages worse. Still, at least they are written down in a series of published volumes. The same isn’t true of guidance documents, which are scattered everywhere from blog posts to internal reference manuals. And it’s not hard to see who is most disadvantaged when law becomes so voluminous that just finding the relevant provisions becomes an ordeal … [T]he lawyer and author Philip K. Howard pointed out some years ago that, according to the Small Business Administration, small businesses face annual regulatory costs 36 percent higher per employee than those faced by larger firms. Other studies echo that finding. Close to half of small-business owners say they have halted or delayed an investment or opportunity because of uncertainty over the regulatory landscape. As an opinion piece in The Washington Post put it, “for decades, large businesses have been taking market share from small businesses, and the corporations at the top of the pyramid have been consolidating into ever-bigger megacorporations.” … Even the federal government has acknowledged research finding “that more heavily regulated industries experience fewer new firm births and slower employment growth than less heavily regulated industries, and ... small firms are more likely to exit an industry in response to regulation than large firms.” All this has had a predictably disproportionate impact on vulnerable communities and the less wealthy: In 2019, the Small Business Administration estimated that 99.9 percent of minority-owned businesses were small businesses, and a 2015 study indicated that middle-class families account for over half of all new business ventures.

Besides government, they only people who benefit from excessive legal complexity are lawyers. As Gorsuch writes:

Making your way in a world filled with shifting laws is difficult without lawyers. Often you need a lawyer just to locate the relevant law and understand it. If an agency’s interpretation of the law is buried in a guidance document, you’ll hardly have a chance of finding it without the assistance of someone in the know. If the law is ambiguous, you cannot begin to guess how an agency might resolve it without the help of someone familiar with the regulators’ habits. And if you get caught up in an enforcement action over your septic system, farm, or casket business, who will you call? As laws proliferate in number and complexity, access to legal services becomes increasingly vital … Partners in high demand at big-city law firms can command more than $2,000 an hour. Even in places you might not expect, prices can be eye-watering: a 2017 report from Kansas put the median rate across the state at $225 per hour. Doubtless it’s higher now. These rates mean that any hope of vindicating legal rights in court is beyond the means of most people. A 2013 study pegged the median cost of real estate disputes taken through trial at around $66,000 and the median cost of employment disputes at around $87,000. To put these figures into perspective, the median household income in 2022 hovered around $70,000. Contributing to the costs are judicial delays and court backlogs. In civil cases, the time from filing a case to a scheduled trial date has nearly doubled since just the early 1990s.

Thinking of defending yourself without a lawyer? Think again:

[T]hose forced to represent themselves usually fare far worse than those with legal representation. All of this invites other predictable consequences: as two institutes working on access-to-justice issues put it, there is a “strong, almost linear relationship between household income and negative consequences associated with legal problems” and “certain socio-demographic and racial/ethnic groups are particularly disadvantaged in terms of access to justice.” Translation: Maybe those with considerable means can get the legal help they need, but most individuals are left to navigate by themselves—and good luck with that.

As Gorsuch points out, and as explored in previous essays in this series, the benefits to lawyers of excessive legal complexity are compounded by their own immunity from regulation by anyone but other lawyers:

We can already hear some of our friends at the bar warming up their reply. Yes, they will say, our hourly rates are high. But those rates are the product of market demand, and it’s unfair to blame us for charging what the market allows. On the surface, that reply might seem fair enough. But scratch the surface, and it falls apart. In the United States, we lawyers enjoy the privilege of regulating our own marketplace. And many of the regulations we insist upon artificially restrict the output of legal services, ensuring high market prices for our services while providing little in the way of compensating benefits to our clients.

And while lawyers get richer off excessive legal complexity, citizens become less free. As Gorsuch writes:

John Locke wrote that “the end of Law is not to abolish or restrain, but to preserve and enlarge Freedom”; “where there is no Law, there is no Freedom.” … [W]hen done well, our laws may constrain us in some ways, but without them we could not begin to pursue our own aspirations in life. To put the point more bluntly, most of us are happy to trade (say) the freedom to kill others in return for a law securing our own physical safety. The same goes for most age-old laws, like those against assault and theft. We know intuitively that the absence of laws such as these—or the failure to enforce them—would do more to impair than facilitate our ability to chart our way in the world. Admittedly, there’s a paradox in play. The freedoms we cherish cannot exist without some law, but they can also be imperiled by too much law. At that end of the spectrum, the risk does not come from bad men who would do us harm; it comes from those who would script the details of our lives in the name of better securing our safety, our happiness, or their own particular vision of progress.

Lessons can be learned from one of the chief architects of the modern regulatory state. As Gorsuch tells the tale:

James M. Landis [was] one of the leading architects of the administrative state. As one biographer put it, “In the history of regulation in America, few names loom larger than that of James M. Landis.” President Roosevelt asked his friend and Harvard Law School Professor Felix Frankfurter for help drafting new federal securities legislation. In turn, Frankfurter called on his former student. Landis happily agreed to assist with the project. He arrived with his mentor at Washington, D.C.’s, Union Station on a Friday, intending to stay the weekend. He wound up staying four years. During that period, he not only helped draft seminal legislation granting agencies vast new powers. He also served as a commissioner of the Federal Trade Commission and later as chairman of the Securities and Exchange Commission—nicknamed “Landis’s New Commission” for the role he played in creating it. Eventually, Landis returned to Harvard, this time as the youngest dean in its history. There he embarked on a series of public lectures defending the regulatory state and the power of experts. To Landis, the administrative state was the answer to what he perceived as the “inadequacy of a simple tripartite form of government to deal with modern problems.” It was a Wilsonian ideal. For a time, he served as a commissioner at the Civil Aeronautics Board (CAB), an agency vested with broad powers to regulate the airline industry. Much of Landis’s private practice involved appearing before his former agency, the CAB. The experience proved to be eye-opening. “Some years ago,” he noted, “I wrote a fairly popular book defending the administrative process on the ground that it would be expeditious and less costly than going to court. After this experience and several others with the CAB I almost feel it a moral duty to revise my estimate of that process made before my acquaintance with the organization.” In time, Landis got the chance to formalize his critique. When John F. Kennedy, the son of his old friend, won the presidency, he asked Landis to undertake a comprehensive survey of federal regulatory practices. Accepting the assignment, Landis launched himself feverishly into the project. Six weeks later, he was done. “In a sense, I’ve been working on this report all my life,” he told reporters. As one biographer later put it, “the Landis report was breathtaking in its critique” and “stunned” the academic and legal community “by both its verve and far-reaching implications.” Another called it “a merciless dissection of the [agencies’] failures, informed not only by the author’s years of study and experience but also by a bitter sense of the historical betrayal of the regulatory ideal.” The report highlighted the growing scope and impact of federal regulatory agencies and the broad delegations Congress had afforded them. As Landis summarized, “The scope of responsibility entrusted to these agencies is enormous, exceeding in its sweep, from the standpoint of its economic impact perhaps, the powers remaining in the Executive and the Legislative.” Furthermore, he wrote, “these delegations, once made, are rarely recalled or retracted.” Instead, “the tendency is to expand them as more and more complex problems arise. The legislative standards under which the delegations are made are similarly increasingly loosened so that not infrequently the guide in the determination of problems that face the agencies is not much more than their conception of the public interest.” Beyond that, Landis identified at least ten more particular problems with agency practices. These included excessive costs and delays in securing answers from agencies; incompetent personnel, rather than the experts he had once anticipated; insufficient interagency coordination; and flawed decisional processes. He noted, for example, that “it is a general belief, founded on considerable evidence, that briefs of counsel, findings of hearing examiners, relevant portions of the basic records, are rarely read by the individuals theoretically responsible for the ultimate decision.” He observed, too, that “the combination of the functions of prosecutor and judge” in administrative adjudication had “developed a belief that elements of fairness were too frequently absent.” The report Landis handed in … made seismic waves in Washington. One of the chief authors of the Administrative Procedure Act hailed it as “the voice of one crying out in the wilderness,” and agency officials, hearing of President Kennedy’s enthusiasm for the report, rushed to “scrounge up copies.”

A decade or so later the nation saw bipartisan efforts toward major regulatory reform. As Gorsuch writes:

When he arrived in 1974 to lead the staff of the relatively obscure Subcommittee on Administrative Practice and Procedure of the Senate Judiciary Committee, which Senator Kennedy chaired, [Stephen] Breyer suggested to his new boss two initiatives he might consider pursuing: airline deregulation or Watergate-inspired procedural reforms. The Senator chose the first option … At the time, “no interstate air carrier could operate without” a hard-to-come-by “certificate of public convenience or necessity” from the agency. The agency also strictly regulated airline fares and routes. Virtually “any change an airline wanted to make in its fare or route structure required a formal application ... and lengthy and complex administrative hearings and appeals, often followed by court proceedings.” In 1978, the Airline Deregulation Act became law. It eliminated the Civil Aeronautics Board and encouraged competition among airlines rather than regulation by agency officials. As always with change, there were winners and losers. But a few things stood out: In the forty years before the Act’s passage, not a single new company had entered the market to provide passenger air service on a large scale. Within six years after the Act’s passage, 134 new airlines were formed. Not all survived, of course, and no little disruption followed. But those who have studied the industry report that, thanks to enhanced competition, many new routes and drastically lower fares emerged. In fact, between 1978 and 2011, base ticket prices dropped by almost 40 percent in inflation-adjusted terms. As a result, millions of people flocked to the skies for the first time. An activity that had once belonged largely to elites became one that many Americans more or less take for granted, one that has opened new vistas of opportunity, reconnected families, and allowed so many to experience for themselves new ideas and ways of life. The sweeping regulatory reform Edward Kennedy and Stephen Breyer helped achieve on a bipartisan basis in 1978 can serve as an inspiration and model for similar initiatives. And though the prospects for change of the sort they achieved may sometimes seem daunting, there is also reason for hope. Just consider: Both Presidents Obama and Trump championed regulatory reform. Both emphasized the importance of predictable, stable regulations that are accessible to ordinary Americans. Both also took notable actions in that direction.

In the next essay in this series, we’ll explore the question as to whether or not federal judges themselves can be subject to regulation.