Why Is Privatized Procedure So Rare?

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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4 Responses

  1. Anono says:

    Why are arbitration clauses not private contract clauses governing procedure? Instead of creating a bespoke procedure for each deal, can you not achieve the goal of opting out of the governmentally prescribed procedures by adopting a pre-cut arbitral process in line with your goals? I’m not seeing why arbitration clauses are not a subset of the larger category, but if there is an explanation as to why they are not I am interested in learning.

  2. Dave Hoffman says:

    The paper talks about this a bit — my view is that it’s a fundamentally different thing to contract out of procedure (and court) and into arbitration v. contracting around procedure but staying in court. Different for legitimacy reasons, different in terms of social costs, and different in terms of enforceability.

  3. shg says:

    While I’m probably one of the last people you would expect to offer a comment, here goes anyway:

    There is always a concern that privatized rules, which are mutual to the parties, will work great under certain circumstances, but come back to bite a party in the butt under others. The combination of mutuality and uncertainty as to how the relationship might crash leads to reliance on the default rules. They may not be better, but they aren’t worse either, and if a suit follows, no one will be responsible for screwing it up by including a special rule that turns out to be suicidal.

    Thus, unless a party is absolutely positive a rule will inure to its benefit (and not the other side’s, or at least not the other side alone), it’s just a matter of CYA. Nobody ever got fired for sticking with the default.

  4. Bruce Boyden says:

    I haven’t been following the scholarly debate here, but it does not seem surprising to me that there are few clauses modifying rules of civil procedure or of evidence, as I don’t think anyone should expect that, outside of the waivable defenses like personal jurisdiction, the parties could bind the court to any agreement. The most they could do is, e.g., agree to recommend certain discovery procedures in their Rule 26(f) report. If courts won’t be bound, it removes the incentive to spend a lot of time crafting limiting language.