The Future of the Practice of Law: Can Alternative Business Structures for the Legal Profession Improve Access to Legal Services?

The Future of the Practice of Law: Can Alternative Business Structures for the Legal Profession Improve Access to Legal Services?

James M. McCauley, The Future of the Practice of Law: Can Alternative Business Structures for the Legal Profession Improve Access to Legal Services?, 51 U. Rich. L. Rev. Online (2016).

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James M. McCauley *

Nationwide, law school admissions have plummeted to levels not seen in years. From 2010 to 2015, applications were down by 38 percent and down by nearly one-half over the last eight years.[1] Excluding perhaps some first-tier law schools, on the average, law schools are only placing about half of their new graduates in jobs that require a law degree and a law license.[2] The American Bar Association (“ABA”) mandated disclosure policies which forced law schools to reveal that they pay stipends to graduates to work short-term jobs in an effort to beef up their placement statistics.[3]

Yet law schools are currently graduating 40,000 plus graduates per year[4] with well over 1.2 million lawyers already in the United States, which translates to four lawyers for every 1000 persons.[5] Notwithstanding these disturbing statistics, new law schools continue to come on line each year. At the same time, significant increases in law school tuition coupled with widespread reliance on student loans as the primary funding source has left many young lawyers looking for work while facing significant financial challenges.[6] Encouraging even more students to go to law school only to enter a shrinking legal job market places the legal profession in jeopardy of not being able to correct this course and self-regulate its membership.[7]

Notwithstanding the oversupply of lawyers and the shrinking opportunities for placement in the legal services market, the unmet legal needs of the poor and middle class continues to grow. While there is approximately one lawyer for every 265 persons living in the United States,[8] only one legal aid attorney is available for every 6415 low-income people.[9] It is ironic that the job market challenges facing lawyers is occurring at a time when a substantial segment of the population cannot afford to retain a lawyer when confronted with a situation in which legal assistance would be advantageous. Multiple state and federal studies show that 80 to 90 percent of low and moderate income-Americans with legal problems do not obtain legal representation.[10] In its final report, the Virginia State Bar’s Study Committee on the Future of Law Practice observed:

Research shows that legal services in civil matters for low and moderate income persons or families are an unmet need. One study reports that 80% of civil legal needs of the poor and up to 60% of the needs of middle-income persons remain unmet. The reasons for this are varied: funding for legal aid for the indigent has been substantially reduced (legal aid funding in Virginia has been reduced by 20% and IOLTA revenue decreased from $500,000 in 2006 to $50,000 today); the cost of private legal representation has increased; individuals often fail to recognize that a problem requires legal assistance; some want to avoid involvement in the legal system and resolve the issue another way; and funding for the court system to assist unrepresented litigants is limited. The decrease in federal funding resulted in a 20% reduction of legal aid attorneys and staff statewide. At the same time, the population in poverty increased by more than 30%. There is no question that the need to increase legal services to these groups exists now and will continue to exist in the future.[11]

A consequence has been an explosion in self-representation in both transactional and litigation work.[12] Numerous commentators have sounded the alarm that the organized bar and its regulators need to rethink the nature and provision of legal services.[13] Some commentators believe that if the legal profession fails to take heed and right its course, the profession and its self-regulation will become irrelevant.[14]

The Virginia State Bar’s Study Committee on the Future of Law Practice has identified some other forces or trends challenging the profession and the traditional means by which it delivers legal services:

(1) advances in technology that have changed the way lawyers practice, giving clients the expectation that lawyers will provide services more efficiently and cheaply, and giving consumers the belief that they can obtain legal information and handle many legal matters on their own; (2) increasing competition from non-lawyer service providers that offer legal information and legal documents to consumers; (3) generational pressures that are likely to impact law firm business models—estimates are that 70% percent of law firm partners are baby boomers, while millennials are expected to make up half the global workforce by 2020; (4) clients’ dissatisfaction with billable hour arrangements encouraging lawyers to offer fixed fees and other alternative billing arrangements; (5) increased insourcing of legal services by corporate clients, along with increased unbundling of tasks so that lawyers are only asked to complete the specific tasks that require legal judgment; and (6) accelerated globalization of legal services via both traditional models and technology, leading to an increase in multijurisdictional law practice and a decreasing relevance of geographical boundaries.[15]

As can be seen, some of the forces come from within the profession, i.e., law school policies and billing for legal services. Other forces, though, are external and are beyond the legal profession’s control. Further, some of these forces appear permanent in nature,[16] indicating that there will be no turning back to “the good old days,” and therefore the profession must determine how to retool and reinvent itself in this post-recession global market.[17]

Enforcement of unauthorized practice laws against nonlawyer service providers will not be a cost-effective solution to stem the stronghold taken by companies like LegalZoom, a billion dollar enterprise which has served more than one million customers with its legal document preparation service.[18] Companies like LegalZoom, Avvo and Rocket Lawyer are prepared to fight for their share of the consumer legal services market through litigation[19] and by lobbying state legislatures to pass bills protecting them from being charged with unauthorized practice of law (“UPL”).[20] Professional regulatory authorities, with limited resources, are not equipped to wage war with the growing number of competitive nonlawyer service providers. Moreover, an unsympathetic public, a large portion of which is finding their legal needs largely unmet by the legal profession, will only view the bar’s enforcement of the UPL rules as anti-competitive barriers to access to legal services.

Some organized bars in the United States, including the American Bar Association, and Law Societies in British Columbia and Ontario, Canada,[21] have been studying developments in the United Kingdom and Australia which now allow professional service firms composed of lawyers and nonlawyers to serve the public. In the United Kingdom and New South Wales, Australia, lawyers are permitted to practice as part of an alternative business structure (“ABS”) in which nonlawyers hold an ownership interest and participate in the delivery of law-related services or are passive investors in firms that deliver legal services. In 2001, New South Wales enacted legislation permitting legal practices to incorporate, share receipts, and provide legal services either alone or alongside other legal services providers who may, or may not, be legal practitioners.[22] In addition to nonlawyer ownership, an incorporated legal practice (“ILP”) may be listed on the public stock exchange in Australia and outside investors may provide capital.[23]

In England and Wales, under the Legal Services Act of 2007,[24] alternative business structures that have lawyer and nonlawyer management and ownership are permitted and may either provide only legal services or legal services along with non-legal services.[25] In October 2010, Scotland’s Parliament approved a Legal Services Act[26] that permits and regulates alternative business structures in which Scottish solicitors are permitted to partner with nonlawyers and to seek capital from outside investors, provided solicitors hold the controlling ownership of the firm.[27] Under this regime, privileged communications by and between solicitors or nonlawyers with clients of the firm are protected by law.[28] As in England and Wales, a nonlawyer participant in the ABS must meet a “good character” requirement.[29]

Multidisciplinary practices are now permitted in Ontario, British Columbia and Quebec.[30] Lawyers must maintain control over the services the firm provides. Multidisciplinary Practices (“MDP”) are now permitted in Germany, the Netherlands, and Brussels.[31]

The District of Columbia is the only United States jurisdiction that permits nonlawyers to hold an ownership interest in a law firm.[32] The ABA rejected MDP in 2000[33] and the Virginia State Bar’s Council rejected MDP in 2003. Since that time, no organized bar in the United States has reconsidered either MDP or ABS; however, the legal services market landscape has changed dramatically over the ensuing years making it desirable to reexamine what regulatory structures may need reform, and how to implement those changes without sacrificing the core values of the lawyer-client relationship and the profession’s role of serving the public.

While the “Big-5” accounting firms’ encroachment into legal services was the impetus for the MDP movement,[34] a paradigm shift has since occurred in both the domestic and foreign legal services market in which smaller, but far greater in number, nonlawyer providers are competing with lawyers and law firms. Unable to obtain regulatory reform in the United States, some United States firms are forming alternative business structures in the United Kingdom where up to 25 percent of the ownership of the firm may be held by nonlawyers.

A key component to regulating ABS in the United Kingdom and in Australia is called proactive management-based regulation (“PMBR”). This regulatory framework holds the firm or entity accountable for noncompliance with ethical requirements. Each firm must designate a practice manager that interacts with the regulator on an informal, collaborative, and proactive basis, including random audits by regulators and required self-assessments, to ensure that their systems and procedures meet ethical and regulatory requirements. While an individual lawyer may be subject to professional discipline, sanctions may also be imposed against the legal services firm for non-compliance. In contrast, attorney regulation in the United States is reactive, based upon lawyer misconduct having occurred. In most United States jurisdictions, a law firm cannot be sanctioned if one of its lawyers engages in professional misconduct. The system implemented in Australia, which the profession there has embraced, is credited with up to a 40 percent reduction in disciplinary complaints against regulated firms and lawyers.

However, the legal profession in the United States remains steadfastly opposed to any regulatory reform that would permit either ABS or MDP.[35] The ABA Commission on Ethics 20/?20 was tasked with looking at the effects of globalization on the practice of law in the United States. The Commission considered a proposal to permit a limited form of nonlawyer ownership. That proposal was put out for comment, but ultimately the Commission did not make any recommendation, concluding that there did not appear to be a sufficient basis for recommending a change to ABA policy on lawyer ownership of law firms.”[36]

The New York State Bar Task Force on Nonlawyer Ownership was charged with evaluating the nonlawyer ownership proposal of the Ethics 20/?20 Commission. The Task Force found in a survey of its membership that over 78 percent of the members were opposed to the change, with the largest majority representing solo and small firms.[37] In the end, the 2012 Task Force Report found that there was a “lack of meaningful empirical data about nonlawyer ownership of law firms and what its potential implications are for the future of the legal profession.”[38] Similarly, a study conducted by the Ontario Trial Lawyers Association concluded that there is “no empirical data to support the argument that [nonlawyer ownership] has improved access to justice” in England or Australia.[39]

In 2014, the ABA Commission on the Future of Legal Services (“ABA Commission”) was created and charged with examining how legal services are delivered in the United States and recommending innovations to improve the delivery of, and the public’s access to, those services.[40] The ABA Commission held open forums across the country and looked at different types of legal service providers authorized to perform clearly defined roles at the state and federal level. The closest they came to addressing ABS was a resolution, passed by the ABA House of Delegates in February 2016, that urged “each state’s highest court, and those of each territory and tribe, be guided by the ABA Model Regulatory Objectives for the Provision of Legal Services when they assess the court’s existing regulatory framework and any other regulations they may choose to develop concerning non-traditional legal service providers.”[41] That resolution, however, reaffirmed support for the long-standing ABA policy against nonlawyer ownership of law firms.[42]

In April 2016, the ABA Commission stoked the debate again by issuing a sixteen-page issues paper for public comment on whether it should ask the ABA House of Delegates to pass a resolution encouraging state courts to liberalize ethics rules forbidding nonlawyer ownership in law firms and multidisciplinary partnerships between lawyers and other professionals.[43] Ultimately, since no proposal was submitted before the deadline for consideration by the House of Delegates, no action will be taken this year.

Thus, after two years of studying the delivery of legal services in the United States, the ABA Commission issued its final report, finding that 80 percent of the poor and middle income populations do not get the legal help they need and recommending broad changes for improving the delivery and access to legal services. Paralleling much of what has been recommended in the Virginia State Bar’s report, the ABA Commission did not suggest how the profession might address the issues of nonlawyer ownership of law firms, nonlawyers giving legal advice, and the regulation of nonlawyer legal service companies such as LegalZoom, Rocket Lawyer and Avvo Legal Services. The ABA Commission acknowledged that the traditional law firm model inhibits innovations that could enhance, and make more cost-effective, the delivery of legal services but did not recommend any changes in regulation that would remove the ethical constraints on nonlawyer ownership and fee sharing with nonlawyers.

The practicing bar’s resistance to nonlawyer ownership in law firms has been soundly criticized by scholars who view such resistance as “lawyer exceptionalism” or “lawyer-centric” thinking, based on an overwrought fear that nonlawyer ownership and investment will erode the core values of the profession and lawyer independence.[44] Academics are challenging the practicing bar’s insistence that only lawyers can perform and deliver all aspects of legal services:

There is an insidious consequence of believing that lawyers are the best, or only, resource for all tasks: it is that it downplays and demeans the “non-lawyer” input, whether that is another person, technology, a process or management. It is not surprising that there is an “us and them” divide between lawyers and others, that inefficiencies persist, or that potential remains unrealized, when such an unhelpful and insulting attitude is prevalent.[45]

There are legitimate concerns about ABS. Lawyers worry that concerns over profits and nonlawyer influence will override the lawyer’s professional obligations to the client and to the public, i.e., rendering pro bono legal services to the indigent.[46] But a categorical ban on any nonlawyer ownership and investment in the delivery of legal services assumes that professional and entity regulation are incapable of addressing these problems. Professor Judith McMurrow aptly describes the debate which I have witnessed as a liaison to the Virginia State Bar’s Study Committee on the Future of Law Practice:

U.S. bar opposition remains in part due to an empirical standoff. In policy discussions and informal conversations, proponents of change point to the benefits of non-lawyer ownership and investment and ask for proof that new models will erode professional judgment; opponents question whether there are meaningful benefits and demand proof that the changes will not impair professional judgment.[47]

While there is a concern that ABS and nonlawyer ownership will impair the lawyer’s independent professional judgment, the ABS firm, like any law firm, must attract, satisfy, and keep its clients. This factor alone should motivate professionals in the firm to perform their work competently and diligently, protect clients’ confidential information, and avoid conflicts of interest. Moreover, the regulatory systems in the United Kingdom and Australia offer additional checks and client protection. What remains to be seen, however, is whether ABS will materially increase pro bono legal services and move the profession closer to meeting the unmet legal needs of low and middle income populations in the United States.

A primary factor cited for these changes in the United Kingdom and Australia was public dissatisfaction with the traditional law practice model and the professional regulation of lawyers.[48] The regimes in the United Kingdom and Australia have been in place now for eight years or longer, so there soon should be some experiential and empirical data to analyze regarding their impact on the legal profession, service to the public, lawyer regulation and public protection. In fact, the ABA Commission has cited to eight empirical studies that were published in 2014–2015, that support at least these conclusions.

  1. There is no evidence that ABS has caused any harm or any erosion of the “core values” of the legal profession.
  2. ABS has increased the availability of capital and funding for law firms to innovate.
  3. Those jurisdictions that have adopted ABS have not abandoned it.[49]

With globalization of legal services, rapidly advancing technology and growing acceptance of new business structures in other foreign countries, traditional United States firms may face stiff competition from their overseas competitors or be economically pressured to form new business alliances with those firms. United Kingdom-regulated ABS firms have the potential to open the legal services market worldwide.[50] Consequently, the legal profession in the United States may not have the luxury to sit back and wait too long to seriously consider ABS. Some commentators believe that ABS will become a reality in the United States whether the organized bar accepts or opposes it.[51]


*   Ethics Counsel for the Virginia State Bar, Richmond, Virginia. J.D., 1982, University of Richmond School of Law; B.A., 1978, James Madison University.

        [1].    “The number of applicants dropped from 87,900 for fall 2010 admission to 54,500 for fall 2015 admission—a 38 percent overall decrease in applicants, according to the Law School Admission Council.” Daniel Coogan, Drop in LSAT Scores Could Affect Applicants, U.S. News & World Rep. (May 3, 2016, 8:30 AM), http://www.usnews.com/education/blo gs/law-admissions-lowdown/articles/2016-05-03/drop-in-lsat-scores-for-law-students-could-affect-applicants.

The 202 ABA-approved J.D. programs reported that 39,675 full-time and part-time students began their law school studies in the fall of 2013. This is a decrease of 4,806 students (11 percent) from the fall of 2012 and a 24 percent decrease from the historic high 1L enrollment of 52,488 in the fall of 2010.

ABA Section of Legal Education Reports 2013 Law School Enrollment Data, ABA (Dec. 17, 2013), http://www.americanbar.org/news/abanews/aba-news-archives/2013/12/aba_section _of_legal.html. Also, law school enrollments fell for the fourth straight year according to statistics released by the ABA.

The number of first-year students who showed up on law campuses this fall declined by 4.4 percent compared with the previous year, which amounts to 1751 fewer students. That means new student enrollment is down by nearly 28 percent since its historic peak in 2010, when many flocked to law school during the economic recession.

Karen Sloan, Law School Enrollment Continues Historic Decline, Nat’l L.J. (Dec. 16, 2014), http://www.nationallawjournal.com/id=1202679988741/Law-School-Enrollment-Con tinues-Historic-Decline. “US law school applications are down by nearly half from eight years ago.” Richard Gunderman & Mark Mutz, The Collapse of Big Law: A Cautionary Tale for Big Med, The Atlantic (Feb. 11, 2014), http://www.theatlantic.com/business/ar chive/2014/02/the-collapse-of-big-law-a-cautionary-tale-for-big-med/283736/.

        [2].    Jordan Weissman, The Jobs Crisis at our Best Law Schools is Much, Much Worse Than You Think, The Atlantic (Apr. 9, 2013), http://www.theatlantic.com/business/arch ive/2013/04/the-jobs-crisis-at-our-best-law-schools-is-much-much-worse-than-you-think/27 4795/ (“Nine months after graduation, just 56 percent of the class of 2012 had found stable jobs in law—meaning full-time, long-term employment in a position requiring bar passage, or a judicial clerkship.”). See Most People Attend Law School to Obtain Jobs as Lawyers, Above the Law: Top 50 Law Schools 2014, http://abovethelaw.com/careers/2014-law-sch ool-rankings/ (reporting 43 percent of graduates failed to secure a job in law in 2013) (last visited Nov. 17, 2016).

        [3].    The Price of Success, The Economist (Mar. 15, 2014), http://www.economist.com/ news/business/21599037-some-american-law-schools-are-paying-many-their-graduates-sal aries-price-success. Even leading law schools like University of Virginia and George Washington University were paying many of their newly graduated stipends or salaries to work in private law firms, non-profit organizations, and government. Id. For example, GWU paid salaries to 22 percent of its graduating class of 2012 and UVA paid salaries to 17 percent in order to pump up their job placements statistics for rankings in U.S. News & World Report. Id.

        [4].    Eric Posner, The Real Problem with Law Schools, Slate (Apr. 2, 2013, 2:50 PM), http://www.slate.com/articles/news_and_politics/view_from_chicago/2013/04/the_real_prob lem_with_law_schools_too_many_lawyers.html (indicating median starting salaries have declined from $72,000 in 2009 to only $60,000 in 2012).

        [5].    “In other words, one lawyer for every 265 Americans.” Stephen J. Harper, The Lawyer Bubble: A Profession in Crisis 4 (2013); see also ABA National Lawyer Population Survey, 10-Year Trend in Lawyer Population by State (2016), http:// www.americanbar.org/content/dam/aba/migrated/marketresearch/PublicDocuments/2011_national_lawyer_by_state.autocheckdam.pdf.

        [6].    See Gunderman & Mutz, supra note 1 (noting that 85 percent of law graduates carry at least $100,000 in debt).

        [7].    As Eric Posner notes:

The figures are grim, and the human cost is real. Ninety-two percent of 2007 law school graduates found jobs after graduation, with 77 percent employed in a position requiring them to pass the bar. For the class of 2011 (the latest class for which there are data), the employment figure is 86 percent—with only 65 percent employed in a position that required bar passage. Preliminary employment figures for the class of 2012 are even worse. The median starting salary has declined from $72,000 in 2009 to $60,000 in 2012. A while back, the Bureau of Labor Statistics estimated that 218,800 new legal jobs would be created between 2010 and 2020. As law professor Paul Campos points out, because law schools graduate more than 40,000 students per year, those jobs should be snapped up by 2015—leaving only normal attrition and retirement spots left for the classes of 2016 to 2020. Meanwhile, tuition has increased dramatically over the last several decades. Students who graduate from law school today with $100,000 or more in debt will default on their loans if they cannot get high-paying work in the law.

Posner, supra note 4.

        [8].    See Harper, supra note 5, at 4.

        [9].    Legal Services Corp., Documenting the Justice Gap in America 21 (2007), http://www.lsc.gov/sites/default/files/LSC/images/justicegap.pdf.

      [10].    See Robert Ambrogi, Washington State Moves Around UPL, Using Legal Technicians to Help Close the Gap, ABA J. (Jan. 1, 2015, 5:50 AM), http://www.abajournal.com/m agazine/article/washington_state_moves_around_upl_using_legal_technicians_to_help_clo se_the_gap. The author attributes failure to retain a lawyer to the cost of legal services. Id. “The economics of traditional law practice make it impossible for lawyers to offer their services at prices these people can afford.” Id.

      [11].    Va. State Bar, Report: The Committee on the Future of Law Practice 13 (Sept. 24, 2016), http://www.vsb.org/docs/FINAL_Report_of_the_Study_Committee.pdf.

      [12].    Mark Andrews, Duties of the Judicial System to the Pro Se Litigant, 30 Ala. L. Rev. 189 (2013) (“Across the United States, an increased number of litigants have chosen to forego attorneys and instead represent themselves in court, particularly in civil matters.”); see also Madelynn Herman, Pro Se Statistics, Nat’l Ctr. for State Courts (June 21, 2006), https://www.nacmnet.org/sites/default/files/04Greacen_ProSeStatisticsSumma ry.pdf.

      [13].    See generally Richard Susskind, The End of Lawyers: Rethinking the Nature of Legal Services 7 (2010) (explaining that more efficient techniques for delivering legal services are emerging and lawyers should be encouraged to use them); Harper, supra note 5 (explaining the current culture of the legal profession).

      [14].    See, e.g., Susskind, supra note 13, at 7 (discussing the sustainability of the traditional lawyer’s role in today’s legal marketplace).

      [15].    Va. State Bar, supra note 11, at 1.

      [16].    Jeff Jacoby states:

Only some of [these forces] is cyclical. The legal profession, like so many others, has been permanently disrupted by the Internet and globalization in ways few could have anticipated 10 or 15 years ago. Online legal guidance is widely accessible. Commercial services like LegalZoom make it easy to create documents without paying attorneys’ fees. Search engines for legal professionals reduce the need for paralegals and junior lawyers.

Jeff Jacoby, U.S. Legal Bubble Can’t Pop Soon Enough, Bos. Globe (May 9, 2014), https: //www.bostonglobe.com/opinion/2014/05/09/the-lawyer-bubble-pops-not-moment-too-soon/q AYzQ823qpfi4GQl2OiPZM/story.html.

      [17].    As Noam Scheiber explains:

There are currently between 150 and 250 firms in the United States that can claim membership in the club known as Big Law, the group of historically profitable firms that cater to the country’s largest corporations. The overwhelming majority of these still operate according to a business model that assumes, at least implicitly, that clients will insist upon the best legal talent instead of the best bargain for legal talent. That assumption has become rickety. Within the next decade or so, according to one common hypothesis, there will be at most 20 to 25 firms that can operate this way—the firms whose clients have so many billions of dollars riding on their legal work that they can truly spend without limit. The other 200 firms will have to reinvent themselves or disappear.

Noam Scheiber, The Last Days of Big Law, New Republic (July 21, 2013), https://newre public.com/article/113941/big-law-firms-trouble-when-money-dries.

      [18].    Robert Ambrogi, Latest Legal Victory Has Legalzoom Poised For Growth, ABA J. (Aug. 1, 2014, 8:00 AM), http://www.abajournal.com/magazine/article/latest_ legal_victory_ has_legalzoom_poised_for_growth/. LegalZoom had provided services to about two million customers as of August 2012, according to a prospectus it filed with the U.S. Securities and Exchange Commission in advance of a planned, but still postponed, initial public offering. Id. In 2011, LegalZoom’s revenues reached $156 million and it was on track to bring in almost $200 million in 2012. Id.

      [19].    Va. State Bar, supra note 11, at 10.

LegalZoom does business in all 50 states and has delivered online legal document preparation since 2001. Efforts by regulatory bars to enjoin or shut down LegalZoom have not met with success. In 2014 the Supreme Court of South Carolina approved a settlement agreement in which it was stipulated that LegalZoom’s business model is not the unauthorized practice of law. On October 22, 2015, the North Carolina Bar and LegalZoom settled their case by a consent order, permitting LegalZoom to continue operating in North Carolina subject to some conditions[.] In June 2016, lawmakers ended the long-running dispute between the North Carolina State Bar and LegalZoom by passing legislation that allows online services to provide legal documents in that state.

Id.

      [20].    See id.

      [21].    See Canadian Bar Ass’n, Futures: Transforming the Delivery of Legal Services in Canada 34, 41 (Aug. 2014), http://www.cba.org/CBAMediaLibrary/cba_na/ PDFs/CBA%20 Legal%20Futures%20PDFS/Futures-Final-eng.pdf.

      [22].    See Slater & Gordon Ltd., Submission to the American Bar Association Commission on the Future of Legal Services (Dec. 29, 2014), http://www.american bar.org/content/dam/aba/images/office_president/slater_and_gordon_submission.pdf. Australia commenced an expansive approach to ABS that began in 1994 with the development and growth of Incorporated Legal Practices (ILPs). ABA Comm’n on Ethics 20/20 Working Grp. on Alt. Bus. Structures, Issues Paper Concerning Alternate Business Structures 7–8 (Apr. 5, 2011), http://www.americanbar.org/content/dam/aba/ administrative/ethics_2020/abs_issues_paper.authcheckdam.pdf [hereinafter ABS Issues Paper]. There were over 2000 ILPs reported in 2010 and their number is growing rapidly. Id. There are around seventy known multidisciplinary practice (“MDPs”) and, as of the Working Group’s report in 2011, at least 20 percent of the lawyers in New South Wales were working in non-traditional business practices, including thirty MDPs. Id.

      [23].    Slater & Gordon Ltd., supra note 22.

New South Wales (NSW) was the first jurisdiction in Australia and indeed the rest of the (common law) world to permit external and non-lawyer ownership of law firms. This occurred on July 1, 2001 with the enactment of legislation permitting legal practices to incorporate, share receipts and provide legal services either alone or alongside other legal service providers who may, or may not be legal practitioners. Since the enactment of this legislation more than 3,000 law firms in Australia have altered their practice structures through incorporation (representing 30% of law firms). These law firms are known as “incorporated legal practices” (ILPs).

Id.

      [24].    Legal Services Act 2007, c. 29 (Eng.), http://www.legislation.gov.uk/ukpa/2007/29/ contents.

      [25].    ABS Issues Paper, supra note 22, at 13.

      [26].    Legal Services Act 2010, c. 2, § 49 (Scot.), http://www.legislation.gov.uk/asp/2010/ 16/section/49.

      [27].    Id.; ABS Issues Paper, supra note 22, at 15.

      [28].    ABS Issues Paper, at 16. The rule states:

The legal professional privilege applies to communications made to or by licensed providers in the course of providing legal services for any of their clients, as well as to or by others employed by the licensed entity who are acting in connection with the provision of legal services or who are working at the direction or under the supervision of a solicitor.

Id. (citing Legal Services Act 2010, c. 2, § 75 (Scot.)).

      [29].    ABS Issues Paper, supra note 22, at 11.

      [30].    Id. Some provinces have permitted nonlawyer ownership and/or MDP for some time. In Quebec, nonlawyers may own up to 50 percent of law practices, and law firms may engage in multidisciplinary practice. British Columbia permits MDPs. Id. at 6, 11.

      [31].    Id. at 16.

      [32].    See id. at 2.

      [33].    See id.

      [34].    Id. at 5; see also James M. McCauley, The Delivery of Legal Services Through Multidisciplinary Practices, Va. State Bar, http://www.vsb.org/site/regulation/legal-services-multidisciplinary-practices (last visited Nov. 17, 2016).

      [35].    Except for the District of Columbia, all U.S. jurisdictions have adopted versions of ABA Model Rule 5.4, which prohibits lawyers from sharing legal fees with nonlawyers and working in a firm in which nonlawyers have an ownership interest or hold positions of authority or control. See McCauley, supra note 34; Model Rules of Prof’l Conduct 5.4 (Am. Bar Ass’n 2016).

      [36].    See ABA Comm’n on Ethics 20/20, Introduction and Overview 8 (Feb. 2013), http://www.americanbar.org/content/dam/aba/administrative/ethics_2020/20121112_ethics_20_20_overarching_report_final_with_disclaimer.authcheckdam.pdf.

      [37].    N.Y. State Bar Ass’n, Report of New York State Bar Task Force on Nonlawyer Ownership 43 (Nov. 12, 2012), https://www.nysba.org/WorkArea/Download Asset.aspx?id=26682.

      [38].    Id. at 72.

      [39].    Memorandum from Jasminka Kalajdzic to Linda Langston, Ontario Trial Law Ass’n, ABS Research (Dec. 1, 2014), http://www.canadianlawyermag.com/legalfeeds/in dex.php?option=com_k2&Itemid=101&id=47&lang=en&task=download&view=item.

      [40].    See ABA Comm’n on Future of Legal Services, Issue Paper on the Future of Legal Services (Nov. 3, 2014), http://www.americanbar.org/content/dam/aba/images/offi ce_president/issues_paper.pdf.

      [41].    ABA Comm’n on Future of Legal Services, Report on the Future of Legal Services in the United States 69 (Feb. 8, 2016), http://www.americanbar.org/content/ dam/aba/images/abanews/2016FLSReport_FNL_WEB.pdf.

      [42].    See id.

      [43].    See ABA Comm’n on Future of Legal Services, Issues Paper Regarding Alternative Business Structures 1–5 (Apr. 8, 2016), http://www.americanbar.org/con tent/dam/aba/images/office_president/alternative_business_issues_paper.pdf.

      [44].    See Judith A. McMurrow, UK Alternative Business Structures for Legal Practice: Emerging Models and Lessons for the US, 47 Geo. J. Int’l Law 665, 673  (2016) (citing Sung Hui Kim, Lawyer Exceptionalism in the Gatekeeping Wars, 63 SMU L. Rev. 73, 74–76 (2010)); see also Leslie C. Levin, The Monopoly Myth and Other Tales About the Superiority of Lawyers, 82 Fordham L. Rev. 2611, 2612–14 (2014); Bridgette Dunlap, Anyone Can “Think Like a Lawyer”: How the Lawyers’ Monopoly on Legal Understanding Undermines Democracy and the Rule of Law in the United States, 82 Fordham L. Rev. 2817, 2818–19 (2014).

      [45].    McMurrow, supra note 44, at 673 (citing Stephen Mayson, Restoring a Future for Law 5 (Oct. 2013), http://stephenmayson.files.wordpress.com/2013/10/mayson-2013-restoring-a-future-for-law.pdf).

      [46].    See, e.g., Lawrence J. Fox, Accountants, The Hawks of the Professional World: They Foul Our Nest and Theirs Too, Plus Other Ruminations on the Issue of MDPs, 84 Minn. L. Rev. 1097 (2000); Cindy Alberts Carson, Under New Management: The Problem of Non-lawyer Equity Partnership in Law Firms, 7 Geo. J. Legal Ethics 593 (1994). A lawyer is supposed to render at least two percent of his or her professional time to pro bono legal services. Va. Rules of Prof’l Conduct 6.1(a) (Va. State Bar 2016). It is estimated that actual hours of pro bono service rendered is far below this aspirational goal. Va. Access to Justice Comm’n, Final Proposal to Adopt Pro Bono Reporting for Virginia Lawyers 2 (July 1, 2016), http://www.vsb.org/docs/access-reporting-2016/VATJ-VSB-prop-probono-report-070116.pdf. However, since there is no required reporting or recordkeeping it is difficult to determine how the bar is measuring up to its aspirational goal. Moreover, the organized bar is resistant to any regulatory measures that would require recordkeeping and reporting of pro bono hours an attorney has worked. Peter Vieth, Bar Won’t Back Pro Bono Reporting, Va. Law. Wkly. (Oct. 17, 2016).

      [47].    McMurrow, supra note 44 at 675.

      [48].    Id. at 707.

      [49].    ABA Comm’n on Future of Legal Services, supra note 43, at 11–15. New South Wales, Australia has now had ABS for fifteen years, and after witnessing the positive experience in New South Wales, all other jurisdictions in Australia decided to permit ABS. Id. at 5.

      [50].    For example, LegalZoom and Jacoby & Meyers are registered as ABS firms in the United Kingdom. Both firms have a long-term strategy to export their work product worldwide. Laura Snyder, Flexing ABS, 101 ABA J. 62, 68–70 (2015).

      [51].    Richard Susskind, Tomorrow’s Lawyers: An Introduction to Your Future 122–31 (2013) (predicting new business structures to employ lawyers, such as global accounting firms, major legal publishers, legal know how providers, legal process outsourcers, high street retail businesses, legal leasing agencies, new-look law firms, online legal service providers, and legal management consultancies).

Some Thoughts Raised by Magna Carta: The Popular Re-Election of Judges

Some Thoughts Raised by Magna Carta: The Popular Re-Election of Judges

W. Hamilton Bryson, Some Thoughts Raised by Magna Carta: The Popular Re-Election of Judges, 51 U. Rich. L. Rev. Online 49 (2016).

Click here to download PDF.


W. Hamilton Bryson *

I take as my text and begin with Chapter 29 of the final version of Magna Carta of 1225,[1] which reads as follows:

No free man shall be taken or imprisoned or disseised of any freehold or of liberties or free customs . . . except by the lawful judgment . . . of his peers or by the law of the land . . .  to no one shall we sell, to no one deny or delay right or justice.[2]

This is said to be one of only three parts of the Great Charter still in force in Great Britain. But this is rightly so, for it is the heart and soul of the statute.[3]

This text ensures that a person’s property, body, and reputation will not be taken away before and without a trial in a court of law in which the judge observes the law and the due process thereof. This requires hearing the evidence and the arguments of all of the parties, after which, the judge applies the law to the facts of a case in order to reach a decision.[4]

This is the rule of law. This is the foundation of civilization.

Consider the opposite of the rule of law. It is the rule of force. The rule of force is tyranny by the powerful, not by the just. It is where the big fish eat the little fish and it is simply because they can; they have the power to do it. The rule of law is that right makes might. Without the rule of law, there can be no human rights. Human rights are the rights of an individual asserted against everyone else, if needed, such as the freedom of religion and of no religion. By contrast, if might makes right, society slips into anarchy as power moves from one person or group of persons to another. Anarchy is the opposite of freedom for these reasons. I hope that we can agree that anarchy is bad and that the rule of law is good. And I hope that we can agree that the rule of tyrants who are above the law is bad and the rule of law is good.

Consider another opposite of the rule of law. It is the rule of no law, anarchy. Anarchy is where the tyrants who are powerful do whatever they please because they can. It is unpredictable, and, therefore, not even the tyrants are safe. Anarchy is the opposite of civilization.

The rule of law requires access to the courts of law, and Chapter 29 of Magna Carta requires it.[5] The courts enforce the rule of law by putting it into effect by their due process, i.e., procedures for hearing the evidence and arguments of the parties before it. The procedure of the courts is the skeleton of the substantive law; the substance is the muscle of right.

The courts of law cannot function properly to administer the rule of law if they are not independent, independent not only of the political branches of the government but also of the will of the people. Human rights are not to be taken away by popular opinion or votes. Human rights are often unpopular with the majority of the people as well as with tyrants. A popular majority can act tyrannically and sometimes does.

The independence of the judiciary can be destroyed by financial corruption and by political intimidation. The focus of the remainder of my remarks is political control of judges. This is evil because it destroys the ability of the judges to administer the rule of law. Our federal and state constitutions all have checks and balances to prevent, or at least minimize, the political control of the judges. But most states provide for the popular election and re-election of the judiciary,[6] and this power of control has no limitation whatsoever. The abuses come from the power to reelect or not to reelect a sitting judge.

The power of popular election and re-election of judges was not intended to oppress the judiciary. The original idea was that, as we have popular election of the other branches government, so there should be a democratic election of the judiciary as well. Historically, this system worked satisfactorily because, as a matter of professional courtesy, no one ran in opposition to the re-election of a sitting judge. However, since about forty years ago, this convention has no longer been observed.

The sad, shocking result has been the intimidation of judges by the press and by the general public. If a judge’s application of the law in a particular lawsuit will cost votes and result in not being re-elected, this strikes at the independence of the judiciary, the foundation of due process and the rule of law.

Here are some examples of why the popular re-election of judges has become an evil thing.

One of the most notorious examples of judicial intimidation by the press was the prosecution of Dr. Samuel H. Sheppard of Cleveland, Ohio, for the murder of his socialite wife.[7] The judge in the case was due for an immanent re-election, and the prosecutor was running for election to a different judgeship.[8] Therefore, both needed the support of the press, and the press corp had decided that the defendant was guilty.[9] The United States Supreme Court eventually set aside of the conviction because the public pressure of the press corp on the judge had denied the defendant his fundamental right of due process in an impartial court of law.[10]

There is another recent United States Supreme Court case that illustrates this problem. In a recent trial in West Virginia, the defendant corporation was ordered to pay the plaintiff $50 million.[11] The defendant was going to and did appeal to the Supreme Court of Appeals of West Virginia.[12] Before the appeal was to be heard, one of the justices of that court came up for re-election.[13] A lawyer challenged that justice’s retention, running a campaign for his seat on the court. The challenger and his re-election committee received several million dollars from one person, the chief executive officer and president of the defendant-appellant in the case mentioned.[14] This was by far more money than from any other contributor to either judicial candidate and more than from all of the other contributors to both of them. The sitting judge was removed from the bench and the challenger was elected by a small majority.[15] Shortly thereafter, the appeal by the major contributor’s company, his employer, came before that court and before that new judge on a request for a reversal. The new judge refused to recuse himself. The court then, on a three to two vote, reversed the $50 million verdict, the new judge casting the tie-breaking vote to reverse this large verdict and judgment against his benefactor’s company.[16] Had he recused himself, the verdict and judgment would not have been reversed. The United States Supreme Court set the West Virginia judgment aside on the ground that the failure to recuse allowed that judge to influence the outcome of the litigation in favor of his financial supporter and denied the appellee due process of the law because it appeared that the court was not neutral.[17] The United States Supreme Court’s holding was by a vote of five to four.[18] An appellate court judge from Virginia said to me in a private conversation that she was shocked that it was not a unanimous decision, being such an egregious breach of judicial ethics.

A former student of mine who practices law in Richmond, Virginia, recounted to me that he was trying a case in West Virginia, and, during a recess, the bailiff said that the judge wished to see counsel in his chambers. When they went to see the judge, he asked for a contribution to his re-election fund. My friend refused to name the judge or say what he and the opposing counsel did.

Another student of mine from Texas told me that her father was a trial court judge there. In one case, he ruled against a lawyer’s motion in a completely routine case, and the lawyer went into a rage and started a campaign to defeat her father’s re-election. The ground of the campaign was that he abused his children and was soft on criminals. His daughter, my student, said that this was totally false as to any abuse and, in fact, he sat in a civil court that lacked criminal jurisdiction. However, in spite of the falsehoods, the good judge was not reelected.

When driving through the state of Maryland, one sees huge, expensive billboards urging the re-election of someone as judge of a particular court. One knows that the judge cannot afford to pay for the billboard; so one wonders who did and why. The speculation does not lead to confidence in the judicial system in the state of Maryland.

There was a recent campaign for a judicial position in Maryland near the District of Columbia. One of the candidates campaigned with the promise that, if elected, she would impose the maximum sentence on every person convicted of drunk driving. A very distinguished judge from Northern Virginia opined in a presentation to a meeting of the Richmond Bar Association that, if this judicial candidate were elected, then she must recuse herself from every drunk driving case because she had committed herself to the sentence before hearing argument on its appropriateness. I do not know the outcome of the election, but the campaign promise itself impugned the integrity of the judicial process.

Justice Penny J. White, while a member of the Supreme Court of Tennessee, ruled against the death penalty as applied in a particular case.[19] Her position was highly unpopular with the law and order and victims’ rights element of her state; they clearly did not understand the subtle distinctions of the law that Justice White was applying. She was not reelected because of the legal position she had taken, even though she was part of a majority of the judges in the court’s decision and her opinion was entirely rational.[20]

Here are some random examples from Ohio, West Virginia, Texas, Maryland, and Tennessee. I am sure many others can be easily found elsewhere.

The desire to influence the outcome of litigation in one’s own favor is, of course, only natural. It is, in fact, the purpose and goal of every lawyer’s argument in court. But this is done according to the due process of the court. However, to attempt to influence the judge’s decision, not by argument and evidence presented in open court, but by an appeal to the judge’s sympathy for an unfortunate person or to corrupt the legal process by bribing him or her or appealing to a fear of not being reelected, this is the problem. All judges will be tempted to unworthy behavior, as they live in the same world as the rest of us; they should resist temptation to do evil, as we all should. Fortunately, they usually do. But we need to make it as easy as possible for them to do so. The one thing that can and should be done is to remove the fear that an upright and honest judge has in an insecure system of judicial tenure that requires re-election by a popular vote, which must be subject to irrational political pressures. Where popular re-election of the judiciary interferes with a judge’s application of the law, the rule of law itself is defeated.

The problem, therefore, is to find a workable way of protecting the good judges and of removing the bad ones. The solution of the English and the American federal systems is to have judges sit during good behavior, which means in effect for life because it takes a judicial proceeding in a court of law to prove bad behavior. Virginia and some few other states protect sitting judges by having the periodic re-election done by the legislature. This provides an effective shield against misdirected popular opinion. However, the popular vote for re-election of sitting judges is the norm for state judiciaries.

The conclusion that comes to mind to correct this is to amend the thirty-nine state constitutions that require the popular re-election of judges to find another method of removing bad judges. While it may be unpalatable to the press corps, the politicians, and petty tyrants, it is necessary to preserve the rule of law, which is the foundation of our liberty. This is the requirement of the spirit of Magna Carta.

Democracy, freedom, and the rule of law we have, more or less, but we need to make things better for ourselves and for our nation. We must strive for improvement, and we cannot take for granted what we have.


* Blackstone Professor of Law, University of Richmond School of Law. LL.D., 2013, University of Cambridge; Ph.D., 1972, University of Cambridge; LL.M., 1968, University of Virginia School of Law; LL.B., 1967, Harvard Law School; B.A., 1963, Hampden-Sydney College.

This essay was first presented at the Magna Carta anniversary symposium of the Baronial Order of Magna Charta on April 16, 2015, at The Cosmos Club, in Washington, D.C.

        [1].    The original version of 1215 was immediately repudiated by King John with the consent of the pope. See W.H. Bryson, Papal Releases from Royal Oaths, 22 J. of Ecclesiastical Hist. 19, 21–22 (1971).

        [2].    Sir J. Baker, The Legal Force and Effect of Magna Carta, in Magna Carta: Muse & Mentor 65, 70 (Randy J. Holland ed., 2014).

        [3].    See generally id. at 70–84 (discussing why chapter 29 is the key surviving provision of Magna Carta).

        [4].    See id. at 71–75.

        [5].    See id. at 84.

        [6].    See Fact Sheet on Judicial Selection Methods in the States, Am. Bar Ass’n, http:// www.americanbar.org/content/dam/aba/migrated/leadership/fact_sheet.authcheckdam.pdf (last visited Oct. 21, 2016) (noting thirty-nine states total hold partisan, nonpartisan, or uncontested retention elections for trial courts of general jurisdiction).

        [7].    Paul Holmes, The Sheppard Murder Case 3–8 (1961); Cynthia L. Cooper &  Sam Reese Sheppard, Mockery of Justice: The True Story of the Sheppard Murder Case 14–19 (1995); James Neff, The Wrong Man: The Final Verdict on the Dr. Sam Sheppard Murder Case 56–57(2001).

        [8].    Sheppard v. Maxwell, 384 U.S. 333, 341–42 (1966).

        [9].    Id. at 362.

      [10].    Id. at 362–63.

      [11].    Caperton v. A.T. Massey Coal Co., Inc., 556 U.S. 868, 872 (2009).

      [12].    Id. at 873.

      [13].    Id.

      [14].    Id.

      [15].    Id.

      [16].    Id. at 874.

      [17].    Id. at 889–90.

      [18].    Id. at 871, 890.

      [19].    Dan Levine & Kristina Cooke, Uneven Justice: In States With Elected High Court Judges, A Harder Line On Capital Punishment, Reuters (Sept. 22, 2015, 2:00 PM), http:// www.reuters.com/investigates/special-report/usa-deathpenalty-judges/.

      [20].    State v. Odom, 928 S.W.2d 18, 33 (Tenn. 1996).

Virginia Executioner to Wear a Cloak: Diversion from the Real Controversy

Virginia Executioner to Wear a Cloak: Diversion from the Real Controversy

Paul G. Gill, Virginia Executioner to Wear a Cloak: Diversion from the Real Controversy, 51 U. Rich. L. Rev. Online 43 (2016).

Click here to download PDF.


Paul G. Gill *

Recent amendments to Virginia law made confidential and exempt from the Freedom of Information Act identifying information for those who contract with the Commonwealth to compound drugs necessary to carry out an execution by lethal injection.[1]

The amendments were not without controversy.[2] But debating whether to identify or cloak those who help an execution take place deflects attention from the real legislative question about capital punishment: Does it have benefits which outweigh its costs, financial and otherwise? This article briefly explores that question, suggesting that if execution is examined by evidence-based standards we otherwise commonly apply to sentencing, the answer is clear.

I. Penology Warrants an Evidence-Based Rationale for Sentencing

“Certainty is missing the point entirely,” opined one author about religious faith.[3] Americans enjoy tremendous freedom to select and practice our faith as we see fit.[4] Apologetics aside, we do not generally require a person’s faith to be rational.

But penology is not religion. Striving for certainty, at least, makes sense. Sentencing practices should be informed by evidence that they advance legitimate goals of penology. State legislatures seem to agree, based on their laws mandating evidence-based practices in one or more aspects of criminal justice.

II. Existing State and Federal Practices for Non-Capital Cases Reflect this Principle

Alabama requires the use of evidence-based practices in the supervision, treatment, and providing of services to criminal offenders.[5] Arkansas defines evidence-based practices as “policies, procedures, programs, and practices proven by scientific research to reliably produce reductions in recidivism.”[6] The Alaska Criminal Justice Commission has the immodest task to evaluate whether sentencing laws provide for public protection, community condemnation of the offender, rights of crime victims and accused, restitution, and the principle of reformation.[7] It must also consider the efficacy of evidence-based restorative justice initiatives on convicted persons, their victims, and the community.[8]

Evidence-based practice mandates exist in many other states.[9] This is consistent with the 2007 resolution of the Conference of Chief Justices and the Conference of State Court Administrators for states to adopt sentencing and corrections policies and practices “based on the best research evidence of practices shown to be effective in reducing recidivism,” including the use of actuarial tools to identify particular factors related to recidivism.[10]

Federally, the United States Sentencing Commission’s guidelines are supposed to “reflect, to the extent practicable, advancement in knowledge of human behavior as it relates to the criminal justice process.”[11] The Commission is also to develop “means of measuring the degree to which the sentencing, penal, and correctional practices are effective in meeting the purposes of sentencing.”[12]

III.  Decades of Research Fail to Demonstrate that Capital Punishment Deters Capital Crime

Even if one perceived evidence-based practices as more relevant for less serious cases than capital ones, the question remains: What evidence, actuarial or otherwise, supports the use of capital punishment on grounds that it deters violent crime?[13] The
most definitive recent response comes from a 2012 report which summarized more than thirty years of research as follows:

The committee concludes that research to date on the effect of capital punishment on homicide is not informative about whether capital punishment decreases, increases, or has no effect on homicide rates.[14]

Put another way, executions have not consistently demonstrated marginal effect on homicide rates that is not achieved by life or long-term imprisonment.[15]

Accepting this proposition, it is hardly radical to suggest capital punishment “offers no practical benefits to weigh against its social costs.”[16] Those costs include the execution or long-term imprisonment on death row of innocent people;[17] the direct financial (and other) costs of drawn out death penalty litigation;[18] and the indirect costs of a capital punishment system that continues to struggle with how to confidently and fairly make and implement a sentencing decision unlike any other.

IV. Let Us at Least Debate the Right Question

At least two of our current slate of eight Supreme Court justices would rather go beyond debating death penalty implementation, to “ask for full briefing on a more basic question: whether the death penalty violates the Constitution.”[19] That is a debate worth fearlessly having anew, as is the cost-benefit debate in state and federal legislatures. The resolution of those debates could make moot whatever controversy exists over “hooded executioner” bills.

  *     Assistant Federal Public Defender, Richmond, Virginia. J.D., 1990, University of Richmond School of Law; B.A., 1983, University of Virginia. The author has tried or otherwise resolved federal capital cases in which pursuit of the death penalty was authorized.

        [1].    Act of Apr. 20, 2016, ch. 747, 2016 Va. Acts __ (codified as amended as Va. Code Ann. § 53.1-234 (Cum. Supp. 2016).

        [2].    See, e.g., Editorial Board, Virginia’s False Choice on the Death Penalty: Barbarism or Secrecy, Wash. Post (Apr. 13, 2016), https://www.washingtonpost.com/opinions/virgin ias-false-choice-on-the-death-penalty-barbarism-or-secrecy/2016/04/13/d438b3e4-0022-11e 6-9203-7b8670959b88_story.html?utm_term=.00b9a9455387. See generally Ellyde Roko, Executioner Identities: Toward Recognizing a Right to Know Who is Hiding Beneath the Hood, 75 Fordham L. Rev. 2791 (2007) (advocating such a right).

        [3].    Anne Lamott, Plan B:  Further Thoughts on Faith 257 (2005).

        [4].    See, e.g., U.S. Const. amend. I; James Madison, Madison Papers, The Founder’s Constitution 85 (P. Kurland & R. Lerner eds., 1987) (“[N]o man shall be compelled to frequent or support any religious worship, place, or ministry whatsoever.”).

        [5].    Ala. Code § 15-18-174(8), -(9) (LexisNexis 2016).

        [6].    Ark. Code Ann. § 16-93-101(4) (2016).

        [7].    Alaska Stat. § 44.19.645(a) (2015).

        [8].    Id. § 44.19.646(2)(L). Oversimplifying greatly, restorative justice focuses on the healing of victims, acceptance of responsibility by offenders, and reconciliation between them through apology, forgiveness, and mutual understanding. See, e.g., Kristen F. Gurnewald & Priya Nath, Defense-Based Victim Outreach: Restorative Justice in Capital Cases, 15 Cap. Def. J. 315, 316–17 (2003). It has long had application to death penalty cases, where it has facilitated agreed dispositions of a sentence other than death. See id. at 315–16, 333–52.

        [9].    See, e.g., Ariz. Rev. Stat. § 8-807(B) (LexisNexis 2016); Cal. Penal Code § 17.5(4) (Deering 2016); Ga. Code Ann. §§ 42-2-11(c)(2)(A)(i)–(ii)(B) (2016); Ky. Rev. Stat. Ann. § 439.3103(1)(a) (LexisNexis 2016); Md. Code Ann., Pub. Safety § 1-401(g)(6) (LexisNexis 2016); Mich. Comp. Laws 791.408(4)(c) (LexisNexis 2016); 61 Pa. Cons. Stat. Ann. §§ 6131(a)(13)-(14), -(d) (LexisNexis 2016); Wash. Rev. Code Ann. § 13.40.0357 (Option B)(1)(a) (LexisNexis 2016).

      [10].    Jennifer K. Elek et al., Nat’l Ctr. for State Courts’ Ctr. for Sentencing Initiatives, Using Risk and Needs Assessment Information at Sentencing: Observations from Ten Jurisdictions 1 (2015), http://www.ncsc.org/~/media/microsites /Files/CSI/RNA%20Guide%20Final.ashx (quoting Con. of Chief Justices & Conf. of St. Ct. Adm’rs., Nat’l Ctr. for St. Cts., Resolution 12 In Support of Sentencing Practices that Promote Public Safety and Reduce Recidivism (2007), http://ccj. ncsc.org/~/media/Microsites/Files/CCJ/Resolutions/08012007-SupportSentencing-Public-Sa fety-Reduce-Recidivism.ashx).

      [11].    28 U.S.C. § 991(b)(1)(c)(2012).

      [12].    Id. at § 991(b)(2).

      [13].    A prison term of life without parole should logically be as effective as a death sentence at satisfying sentencing goals of protecting the public and preventing the defendant’s further crimes. Cf. Bureau of Justice Statistics, Mortality in Local Jails and State Prisons, 2000–2010—Statistical Tables 6, 14 (Dec. 2012), http://www.bjs.gov/ content/pub/pdf/mljsp0010st.pdf (noting homicide rate consistently at five or fewer per 100,000 in state prisons and jails); Brian Palmer, Which is Safer: City Streets or Prison? Slate  (June 19, 2013, 2:29  PM), http://www.slate.com/articles/news_and_politics/explain er/2013/06/murder_rate_in_prison_is_it_safer_to_be_jailed_than_free.html (noting this rate is lower than the national non-prison average, and less than one-tenth the prison rate in 1980). Life in prison permits rehabilitative efforts; death obviously limits those, and related restorative justice goals. Retribution and punishment remain the top rationale for death penalty supporters in the general public. See Art Swift, Americans: “Eye for an Eye” Top Reason for Death Penalty (Oct. 23, 2014), http://www.gallup.com/poll/178799/america ns-eye-eye-top-reason-death-penalty.aspx.

      [14].    Nat’l Acad. of Sci. Comm. on Deterrence & the Death Penalty, Deterrence and the Death Penalty 2 (Daniel S. Nagin & John V. Pepper eds., 2012).

      [15].    This is consistent with the long-supported view that certainty and/or swiftness of punishment may have deterrent value, but “[i]maginable increases in severity of punishments do not yield significant (if any) marginal deterrent effects.” Michael Tonry, Purposes and Functions of Sentencing, 34 Crime & Just. 1, 28–29 (2006).

      [16].    John Lamperti, Does Capital Punishment Deter Murder? A Brief Look at the Evidence, at 1 n.2 (2010), https://www.dartmouth.edu/~chance/teaching_aids/books_articles/ JLpaper.pdf.

      [17].    See id.; see also Samuel R. Gross, et al., Rate of False Conviction of Criminal Defendants Who are Sentenced to Death, Proc. of the Nat’l Acad. of Sci. (Apr. 5, 2013), http://www.pnas.org/content/111/20/7230.full.pdf (offering “conservative estimate” that “if all death-sentenced defendants remained under sentence of death indefinitely, at least 4.1% would be exonerated”).

      [18].    See Jeffrey A. Fagan, Capital Punishment: Deterrent Effects & Capital Costs, Colum. L. Sch. (2006), https://www.law.columbia.edu/law_school/communications/reports/ summer06/capitalpunish (noting that Florida spent $25 to $50 million more per year on capital cases than it would have if the death penalty was not at issue, and Indiana bore $37.1 million added expenses); Noah Berlinger et al., Deterrent Value and Cost of Death Penalty, U. Vt. Leg. Res. Shop (Apr. 2001), http://www.uvm.edu/~vlrs/doc/deathpenal ty.htm (summarizing research on death penalty’s marginal costs of up to six times that of prosecuting and incarcerating for life). Federally, median defense costs alone for capital crimes in which the death penalty was authorized by the Department of Justice exceeded $353,000, increasing to $465,602 for cases that were tried. The median was only $44,809 for federal capital cases not authorized, in a survey of cases from 1998 to 2004. See Jon B. Gould & Lisa Greenman, Report to the Committee on Defender Services Judicial Conference of the United States Update on the Cost and Quality of Defense Representation in Federal Death Penalty Cases 24–25 (2010), http://www.us courts.gov/services-forms/defender-services/publications/update-cost-and-quality-defense-representation-federal (follow “report” hyperlink to download pdf).

      [19].    Glossip v. Gross, 135 S. Ct. 2726, 2755 (2015) (Breyer, J., dissenting).

Why the World Should Act Like Children: Using the Building Blocks Method to Combat Climate Change, Beginning with Methane

Why the World Should Act Like Children: Using the Building Blocks Method to Combat Climate Change, Beginning with Methane

Eileen Waters, Comment, Why the World Should Act Like Children: Using the Building Blocks Method to Combat Climate Change, Beginning with Methane, 51 U. Rich. L. Rev. Online 26 (2016).

Click here to download PDF.


Eileen Waters*

Introduction

In 2013 the Intergovernmental Panel on Climate Change (“IPCC”) released an assessment report which stated the “warming of the climate system is unequivocal.”[1] This certainty reflects years of data showing the global average surface temperature has been steadily increasing, and the past decade has been the warmest on record.[2] This rise in temperature has been linked to a myriad of catastrophic current and future events that will negatively affect the world we live in. Just a few of these impacts, recognized by the IPCC, are: the dropping of agricultural yields, the spreading of diseases, the displacement of people living on coastlines, and the increase of weather related disasters.[3]

The main causes of climate change result from human activity, primarily through the burning of greenhouse gases (“GHGs”).[4] The six main gases identified in the Kyoto Protocol as the largest contributors to climate change are: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride.[5] Nations need to collaborate on a way to limit the amount of these gases in the atmosphere to curb the rising average surface temperature.

In November to December of 2015 in Paris, a Conference of the Parties under the United Nations Framework Convention on Climate Change (“UNFCCC”) met to discuss the importance of a complex global convention combating climate change.[6] The stated goal was to stabilize greenhouse gas concentrations “at a level that would prevent dangerous anthropogenic (human induced) interference with the climate system,” a goal the UNFCCC website itself described as “lofty.”[7] The negotiations resulted in the world’s first successfully negotiated pledge and universal climate change deal.[8] Scientists predict the deal will not solely solve global warming but aim to cut GHG emissions by “about half enough as is necessary to stave off an increase in atmospheric temperatures of 2° C.”[9] It is praised as an important framework on global cooperation to tackle climate change, but whether or not it is successful will depend on how countries follow through with their commitments.[10]

In this comment, I will argue the current system under the UNFCCC regime is complicated and too difficult for worldwide participation. Any regime attempting to encompass multiple GHGs thus far has not been successful. The earth continues on its dangerous trajectory and the international political system has been unable to come to an agreement on how to mitigate the problem. I will argue that separate agreements which focus on smaller chunks of the climate change issue at a time will be more successful. These smaller conventions will allow more concrete limitations and allow countries to adapt while reducing emissions of GHGs. I will focus this comment on a global convention on methane, one of the six major contributors to climate change, and how this convention would be more successful than a larger international convention.

Part II of this comment will analyze the difficulties in reaching a broader climate change agreement. After pointing out flaws in previous attempts at conventions under the UNFCCC umbrella, I will use the building blocks theory to argue smaller conventions addressing chunks of the climate change problem are better suited for this issue.

In Part III, I will give an overview of the nature of methane and why it is considered an important GHG as it relates to climate change. I will briefly explain the five main sources of methane emissions: agriculture, coal mining, municipal solid wastewater, oil systems, and gas systems. Methane is an international issue which will require international cooperation, and this section will highlight that fact.

Part IV will explore the idea of sectoral climate change treaties as blueprints for a convention on methane, particularly the Montreal Protocol. This part will explore what a treaty on methane could look like. There are many moving parts in any international agreement, regardless of scope, such as: sectors that need to be controlled, countries that must be involved, and emissions limits that need to be set. This part will also address some of the counter arguments to this thesis. I will conclude, however, a global convention dealing solely with methane would be more successful in the long run than attacking climate change on a larger scale.

Difficulties in Reaching a Broader Climate Change Agreement

Twenty-five years of international climate change negotiations have been largely ineffective. The negotiation strategy, described as the “global deal,” had five elements: creating top-down policies based on general principles, trying to develop targets and concrete ways to mitigate climate change, attempting to be universal in application, presenting as universal in the negotiation process, and seeking to be legally binding.[11] This approach requires resulting treaties to either be non-binding or run the risk of lack of cooperation from major international players. The Copenhagen Accord was a failure, because the parties bargained over every element proposed to curb climate change, and “[r]ather than promote a global solution in the interest of climate protection, the major powers focused narrowly on securing their own national interest and avoiding costly commitments.”[12] The Paris Agreement attempts overcome Copenhagen’s failures, but until countries begin to make progress on their plans the success of Paris will be unknown.

A great impediment in this system is the divergence of goals between wealthier countries and poorer countries: wealthier countries aim to mitigate emissions, while poorer countries aim for adaptation assistance.[13] The inequalities of the international system are generally referred to as “common but differentiated responsibilities,” but what is reflected are “very different visions for how the burdens and benefits of collective action should be allocated, as well as divisive views on the overall level of action required.”[14] The Paris Agreement tried to overcome this, but still there was disagreement regarding a binding provision that rich countries provide $100 billion to help poor countries mitigate and adapt.[15] The poorer countries were able to get this language in the Paris decision, but not in the text of the actual Paris Agreement, and the pledge is not legally binding.[16]

The Paris Agreement requires every party to create and publish a plan detailing how that country will cut carbon emissions through 2025 or 2030.[17] The treaty itself does not have binding language on the parties to actually limit emissions, because countries like the United States would never be able to ratify such an agreement.[18] This means the success of this agreement depends substantially on the willing participation of the parties.[19] There is no enforcement mechanism ensuring parties follow through with their published plans to curb emissions.[20] As prominent climate
change scientist James Hansen said, the Paris Agreement contains “no action, just promises.”[21]

Aside from the lack of an enforcement mechanism, future political changes also make the success of the Paris Agreement precarious. The United States, in particular, may find it difficult to meet its published goals once President Obama is out of office.[22] Lack of legally binding language means a regime change in which successors decide not to honor the published plan could derail a country’s participation. The more influential the country, the more likely a situation like this will affect the success of the Paris Agreement.

Considering these difficulties, the building blocks method would be a better strategy, in which countries develop smaller “elements of climate governance in an incremental fashion and embed[] them in an international political framework.”[23] Conventions using this approach might limit the number of participants, include non-state actors, focus on specific types of activities, or utilize different modes of governance, while providing benefits to those participating.[24] These smaller conventions would provide flexibility for participants and a more simplified negotiating process. While there are many theories within the building blocks approach, this comment promotes the “low hanging fruit” strategy: countries aim to agree on conventions that resolve easier climate change problems first.[25] Progress may be incremental, but the international community can find footing with smaller agreements.

A Look at Methane

An attractive GHG for a smaller convention addressing climate change is methane. By studying ice cores, scientists have discovered that current levels of methane in the atmosphere have more than doubled since the industrial revolution.[26] Concentrations of methane are much lower than carbon dioxide but pose a much higher risk to climate change.[27] Regardless of its shorter lifetime in the atmosphere, methane is much more efficient at trapping radiation, increasing its potency as a GHG.[28] Compared to carbon dioxide, methane’s impact on climate change is more than twenty-five times greater over a 100-year period.[29] It is estimated that methane emissions are responsible for one-third of anthropogenic global warming, making it a good focus for a smaller convention targeting climate change.[30]

Sources of Methane Emissions

Methane emissions result from a mixture of natural and anthropogenic sources. However, over 60 percent of emissions can be traced from human activities through the sources briefly described in this section.[31]

Agriculture

Agriculture is the primary source of methane emissions internationally.[32] Factors include: livestock management, management of animal waste, rice cultivation, and crop residue burning.[33] One of the largest contributors to methane production in this sector is manure management, as methane is emitted from decomposing livestock manure and agro-industrial wastewater.[34] Methane emitted from manure management systems can be recovered, or captured, using anaerobic digestive technology, making these emissions more manageable than other GHGs.[35]

Coal Mining

Methane emissions from coal mines (CMM) occur from “active and abandoned underground mines and surface mines, and as a result of post-mining activities including coal processing, storage, and transportation.”[36] In 2010, the highest CMM emitters were China, the United States, and Russia.[37] Overall, CMM contributed to 8 percent of the total global methane emissions.[38] Recent studies have found that recovered CMM can be used for profitable projects including electric power production, district heating, coal drying, and vehicle fuel, making CMM an economically beneficial emission to regulate.[39]

Municipal Solid Waste (Landfills)

Methane is produced by the process of organic material decomposing in wastewater and, under anaerobic conditions, in landfills.[40] “Globally, landfills are the third largest anthropogenic source of methane, accounting for approximately 11 percent of estimated global methane emissions.”[41] The United States leads landfill methane emissions by a large margin, but countries with growing consumer economies have been steadily increasing.[42] Landfill gas, however, can be captured and used as an energy source in place of conventional fossil fuels.[43] As an energy source, these emissions are even more appealing as they are renewable, since landfill methane gas is generated constantly from wastes deposited in landfills.[44]

Oil and Gas Systems

This source of methane comes from the “production, processing, transmission, and distribution of oil and natural gas” and makes up the second largest anthropogenic source of methane internationally.[45] Emissions result from “normal operations, routine maintenance, and system disruptions in the oil and natural gas industry,” and “account for approximately 20 percent” of international methane.[46] Relatively cost effective opportunities to reduce emissions from this source can come from operational changes, updating industry equipment, and improving system procedures.[47]

Methane as an International Issue

According to data collected in 2010, 134 countries produced methane emissions.[48] China emitted far more than any other country, but India, Russia, the United States, and Brazil were also high contributors.[49] With such a large amount of contributing countries, curbing methane clearly requires international cooperation.

The Global Methane Initiative, created in 2004 by fourteen countries, including the United States, committed members to advance cost-effective, near-term methane recovery and use as a clean energy source.[50] The goal is for governments and private actors to work together on methane reduction projects internationally.[51] An announcement in 2010 noted that around 170 projects were already underway in different countries.[52] Notably, the United States has been incredibly influential in this process, pledging more than $50 million since it started in 2004.[53] The Initiative stated lofty goals, but has not updated its website to show any specific recorded reductions in methane.[54] The website states that “by 2015, the Initiative had the potential to deliver estimated annual methane emission reductions” but does not state whether any goals were achieved.[55]

Regardless of the apparent lack of success of the Initiative thus far, this level of global cooperation on a small scale supports the theory that a convention on methane is not only possible but likely to be successful. If projects are at least underway to limit the emissions of methane worldwide under this initiative, some infrastructure already exists to support such a convention. The cooperation of the United States, European Union, Russia, India, Brazil, and China also bodes well for future collaboration.

Apart from its involvement in the Global Methane Initiative, the United States has also announced a unilateral plan to drastically reduce domestic emissions of methane.[56] The EPA proposed the first U.S. federal regulation which would require the oil and gas industry to reduce methane emissions.[57] The new EPA regulation amends the new source performance standards (“NSPS”) for certain equipment, processes, and activities across the oil and natural gas source category for methane.[58] Prior to this rule, methane was unregulated by the EPA under NSPS, therefore this regulation will affect every major oil and gas company.[59] Industry officials are criticizing these regulations as unnecessary and costly, claiming that companies already take such actions voluntarily.[60] However, many natural gas companies approve of these regulations, because cutting methane emissions would leave such companies with more gas to sell.[61] The EPA announced its final rule on May 12, 2016.[62] The regulations are expected to reduce emissions by 40 to 45 percent.[63]

A Treaty on Methane

Sectoral Climate Change Treaties

The argument for sectoral climate change treaties is largely theoretical, as the “global deal” strategy has been the primary vehicle for climate cooperation thus far. However, the world found success with the Montreal Protocol, which focused only on a few pollutants and attacked solely the issue of ozone. A sectoral climate change treaty on methane could take a variety of shapes, but ultimately should resemble the Montreal Protocol: a convention involving all counties of the world, that is more narrow and specific, focused on a relatively smaller issue that all countries will find less complicated and more flexible to comply with.

The Montreal Protocol

The Montreal Protocol on Substances that Deplete the Ozone Layer, an agreement to protect the ozone layer by eliminating the use of ozone depleting substances, entered into force on January 1, 1989.[64] All United Nations (UN) member states universally ratified the protocol.[65] The protocol regulates nearly 100 chemicals, and in twenty-five years of service, it has decreased those chemicals by almost 100 percent.[66] All of the phase-out schedules for
these chemicals were adhered to in most cases, and some were even completed ahead of schedule.[67] Kofi Annan stated in 2003 that the protocol is “[p]erhaps the single most successful international agreement to date.”[68]

There are several reasons why the Montreal Protocol is so successful. First, it relies on a “basket” strategy allowing member states flexibility in the reduction of ozone depleting substances.[69] The treaty also incentivizes participation and discourages free riding by calling for tough trade measures and prohibiting parties from importing and exporting controlled substances from non-parties.[70] The protocol aids developing countries by creating a Multilateral Fund which provides money for the development and purchase of technology and products not harmful to the ozone layer.[71] Arguably the most important element of the protocol is the requirement to assess and review international controls at least every four years in order to reflect changing technologies and emerging pollutants.[72] All of these elements work together to form the most successful environmental agreement to date.

The Benefits of the “Building Blocks” Approach

The theory behind this strategy supports the UNFCCC regime, but would be completely different in execution. These smaller, or partial, agreements still require international cooperation and would need to eventually fit together to form a larger political framework.[73] Scholars see the potential benefit of this strategy, as increased participation and agreement among countries to commit to binding international agreements.[74] One factor is smaller agreements would simplify the GHG reduction process to a concrete number of pollutants and target only a portion of economic interests.[75] This makes the economic burden more feasible to participating countries and therefore enhance participation.

Another factor is more psychological: building blocks may break the current international environmental stalemate and build trust and cooperation among countries that could translate to other areas of climate change.[76] Individually, these agreements may not mitigate the total effect of climate change substantially, but cumulatively they would have a substantial effect on GHG emissions. Having widespread commitment, even on a convention only addressing a smaller aspect of climate change, would improve the atmosphere of international cooperation in future agreements.

Methane would work nicely as the first building block, as it can serve as the “low-hanging fruit” the international community can pick off. It is not as important as carbon dioxide, but a huge reduction in methane emissions would present immediate effects. The Arctic Monitoring and Assessment Programme predicts reducing emissions of short-lived pollutants like methane could reduce expected global warming by 0.2 degrees Celsius.[77] It would make a dent in global warming, with the added benefit of showing skeptics that concrete action against climate change is feasible.[78]

Factors Involved in a Methane Treaty

Creating any international convention is a complicated process regardless of the scope. The negotiating process often involves many different factors, negotiators, priorities, and drafts over the course of months or years. While it would be impossible to touch on all of the possible factors which might arise, the following sections outline potential elements of a treaty concerning methane.

Limiting Emissions

The benefit of a global convention concerning only methane is that targets can be simplified, much like with the Montreal Protocol. The Montreal Protocol utilized a “basket approach” toward regulating emissions: each party was designated an ozone depleting potential rating, which was the basis for calculating annual production of emissions, including imports and exports.[79] Parties then calculated consumption by subtracting exports from production and imports, which created a “basket” from which reduction targets were determined.[80] A methane treaty could use the same strategy, in which countries create a “basket” of methane consumption and determine reduction targets. Then countries would have the flexibility to determine which of the four main sectors of methane emissions reductions would least impact the economy.[81]

The Montreal Protocol also notably had strict provisions and mechanisms built in to re-evaluate and amend regulations as new technology arose or as countries began hitting their targets faster than expected.[82] These amendments were determined by Meetings of the Parties and, once approved, took effect automatically without further ratification from the parties to the treaty.[83] This process would be very important to a methane treaty because stringent emissions limitations will be very technology dependent, as many types of methane emissions can be captured and repurposed.[84] A treaty on methane will need a strict time table for reevaluation every certain number of years or when the need arises because there has been a major technological advancement.

Country Involvement

For a methane treaty to substantially limit emissions of methane in the atmosphere, with no danger of increases in the future, it would need to be international. However, that does not mean that every country will have the same roles or limitations.

Countries that would have to sign on to this treaty in order for its success are: China, India, Russia, the United States, and Brazil, as these countries are the largest contributors to methane emissions worldwide.[85] The strictest emissions limitations would have to be placed on these parties. The United States, luckily, has already taken steps domestically to reduce emissions in the oil and gas sectors through EPA regulations.[86] However, if methane emissions were eliminated or captured from only coal mines in only China, the United States, and Russia, 8 percent of total global methane emissions would be reduced immediately.[87] With the basket strategy, these countries will be able to reduce emissions flexibly in the sectors they choose, but their cooperation will be most vital to the success of a methane treaty.

Developing countries that do not produce nearly the same percentage of methane emissions as those countries in the paragraph above will still need to be involved in this treaty as well. As a state’s economy develops, without any limitations on methane emissions, it follows that such emissions will increase gradually. For example, landfill methane emissions account for 11 percent of global methane emissions,[88] but this number will steadily increase as developing countries’ consumer economies increase.[89] For a treaty on methane to be successful, it will need as close to universal participation as much as possible.

Fund for Technology

A very important element in any convention aimed at limiting GHG emissions is a multilateral fund to aid developing countries. The Montreal Protocol was the first environmental treaty to not only provide a fund for developing countries, but create a “financial mechanism with language that is direct, definite, and obligatory.”[90] The fund specifically covers incremental costs developing countries incur while fulfilling their obligations under the Protocol and is funded voluntarily by developed parties.[91] Agreement to a multilateral fund will be integral to a methane treaty and perhaps any climate change agreement in the future. It is the best way to ensure compliance by developing countries, and put responsibility for such compliance directly on developed countries.[92]

Aid for developing countries in the Montreal Protocol is not only monetary, but also provides for the “transfer of technologies,” so that developing parties can comply with the treaty.[93] Article 10A of the Protocol ties the technology transfer with the treaty’s financial mechanism, and states that “[e]ach party shall take every practicable step . . . to ensure that the best available, environmentally safe substitutes and related technologies are expeditiously transferred” to developing countries.[94] This will be an important provision to use as a blueprint for a methane treaty, because technological advancements will be necessary to aid developing countries in hitting any emissions goals set by the treaty.

Counter Arguments

The Paris Agreement is seen as a landmark agreement, in which representatives of 195 nations committed to lower GHG emissions in order to curb climate change, and is an example of the global deal strategy.[95] To many experts, this agreement “represent[s] the world’s last, best hope of striking a deal that would begin to avert the most devastating effects” of climate change.[96] The general attitude is that there is “no plan B” to this agreement.[97] Going backwards now to begin combating climate change
piecemeal, using the building blocks strategy, may prove more harmful to the cause than beneficial.

Paris may not have legally binding language for emissions reductions, but it does have very strong reporting requirements for governments to stick to their published plans and a process for tracking progress.[98] “[I]ndividual countries’ plans are voluntary, but the legal requirements that they publicly monitor, verify and report what they are doing” will create a “name-and-shame” system of accountability.[99] Most countries recognized that the universal goal must be to reduce the global temperature increase to 1.5°C, reflected in the IPCC’s Fifth Assessment Report.[100] This overall agreement of developed and developing nations to create the Paris Agreement is indicative of the potential future success of the Paris Agreement, and hence the global deal strategy.

Conclusion

While it is necessary for the world that the Paris Agreement be successful, the fact remains that the current climate pledges from 188 of the 196 parties do not yet correlate with a 1.5 degrees Celsius rise in global temperature.[101] Nothing can be concluded until the individual plans are set in motion and the reporting process begins, but the agreement is starting off with current pledges predicted to result in reaching an average global temperature of 2.7 degrees Celsius, not the stated temperature goal.[102] There is the possibility the agreement will not be as stringent or effective as the world, particularly small island states, need it to be.

The Paris Agreement did, however, make it obvious climate change is now regarded as an international issue that 196 countries are willing to make a priority. Even if doesn’t prove as fruitful as people hope now, the building blocks theory can augment this agreement in the future. The building blocks theory and the UNFCCC do not have to be mutually exclusive. Within the framework of UNFCCC there is the possibility of creating the individualized agreements described in this comment. To boost GHG reductions in order to make a bigger impact on climate change worldwide, a convention on methane would be the perfect starting point.


       *        J.D., 2016, University of Richmond School of Law. B.A., 2010, James Madison University. I would like to express my utmost gratitude to the University of Richmond Law Review for all of the hard work the staff and editors put into this article. I would also like to thank Professor Noah M. Sachs for providing an inspiring classroom experience and for guiding this piece to the final product. Also, a huge thanks to my family and friends for the unwavering support that pushes me to be a better person.

[1].    Intergovernmental Panel on Climate Change, Summary for Policymakers, Climate Change 2013: The Physical Science Basis 4 (Mar. 2014), http://www. ipcc.ch/pdf/assessment-report/ar5/wg1/wg1ar5_spm_final.pdf (explaining that since the 1950s, the “atmosphere and ocean have warmed, the amounts of snow and ice have diminished, sea level has risen, and the concentrations of greenhouse gases have increased”).

        [2].    See id. at 5; Past Decade Warmest on Record According to Scientists in 48 Countries, Nat’l Oceanic & Atmospheric Admin. (July 28, 2010), http://www.noaanews.no aa.gov/stories2010/20100728_stateoftheclimate.html.

        [3].    See Feeling the Heat: Climate Science and the Basis of the Convention, U.N. Framework Convention on Climate Change, http://unfccc.int/essential_background/ the_science/items/6064.php (last visited Sept. 15, 2016).

        [4].    See Causes of Climate Change, U.S. Envtl. Prot. Agency, https://www3.epa.gov/ climatechange/science/causes.html (last visited Sept. 15, 2016).

        [5].    See Kyoto Protocol to the United Nations Framework Convention on Climate Change, Annex A (1998), http://unfccc.int/resource/docs/convkp/kpeng.pdf.

        [6].    See Meetings, U.N. Framework Convention on Climate Change, http://un fccc.int/meetings/paris_nov_2015/meeting/8926.php (last visited Sept. 15, 2016).

        [7].    First Steps to a Safer Future: Introducing the United Nations Framework Convention on Climate Change, U.N. Framework Convention on Climate Change, http://un fccc.int/essential_background/convention/items/6036.php (last visited Sept. 15, 2016).

        [8].    See Paris Pledge for Action Boosts Paris Climate Agreement, U.N. Climate Change Newsroom (Dec. 16, 2015), http://newsroom.unfccc.int/unfccc-newsroom/paris-pledge/.

        [9].    Coral Davenport, Nations Approve Landmark Climate Accord in Paris, N.Y. Times (Dec. 12, 2015), http://www.nytimes.com/2015/12/13/world/europe/climate-change-accord-paris.html?_r=0.

      [10].    See id.

      [11].    Robert Faulkner, Hannes Stephan, & John Vogler, International Climate Policy After Copenhagen: Towards a ‘Building Blocks’ Approach, 1 Glob. Pol’y 252, 253 (2010).

      [12].    Id. at 256.

      [13].    See David G. Victor, Int’l Centre for Trade & Sustainable Dev., The Case for Climate Clubs 2 (2015) http://e15initiative.org/wpublications/the-case-for-climate-clubs/.

      [14].    Id.

      [15].    See Davenport, supra note 9.

      [16].    Robinson Meyer, A Reader’s Guide to the Paris Agreement, The Atlantic (Dec. 16, 2015), http://www.theatlantic.com/science/archive/2015/12/a-readers-guide-to-the-paris-ag reement/420345/.

      [17].    See Davenport, supra note 9.

      [18].    See id.

      [19].    See id.

      [20].    See id.

      [21].    Oliver Milman, James Hansen, Father of Climate Change Awareness, Calls Paris Talks ‘A Fraud,’ The Guardian (Dec. 12, 2015), http://www.theguardian.com/environment /2015/dec/12/james-hansen-climate-change-paris-talks-fraud.

      [22].    See, e.g., id.

      [23].    Faulkner, supra note 11, at 252.

      [24].    See Richard B. Stewart, Michael Oppenheimer, & Bryce Rudyk, Building Blocks for Global Climate Protection, 32 Stan. Envtl. L.J. 341, 344 (2013).

      [25].    Faulkner, supra note 11, at 259.

      [26].    See Dave Reay, Pete Smith, & Andre van Amstel, Methane Sources and the Global Methane Budget, in Methane & Climate Change 1, 1 (Dave Reay, Pete Smith, & Andre van Amstel eds., 2010).

      [27].    See id. at 2.

      [28].    Overview of Greenhouse Gases, U.S. Envtl. Prot. Agency, http://www3.epa.gov/ climatechange/ghgemissions/gases/ch4.html (last visited Sept. 15, 2016).

      [29].    See id.

      [30].    See Global Methane Emissions and Mitigation Opportunities, Glob. Methane Initiative (Apr. 2011), https://www.globalmethane.org/documents/analysis_fs_en.pdf.

      [31].    See Overview of Greenhouse Gases, supra note 28.

      [32].    See id.

      [33].    U.S. Energy Info. Admin., Emissions of Greenhouse Gases in the U.S. 2009 38 (2011), http://www.eia.gov/environment/emissions/ghg_report/pdf/0573%282009%29.     pdf.

      [34].    See Glob. Methane Initiative, Agricultural Methane: Reducing Emissions, Advancing Recovery and Use Opportunities 1–2 (2011), http://globalmethane.org/ documents/ ag_fs_eng.pdf.

      [35].    See id. at 2.

      [36].    Global Methane Emissions and Mitigation Opportunities, supra note 30, at 3.

      [37].    Glob. Methane Initiative, Coal Mine Methane: Reducing Emissions, Advancing Recovery and Use Opportunities 2 (2011), https://www.globalmethane.org/ documents/coal_fs_eng.pdf.

      [38].    Id. at 1.

      [39].    See id. at 2.

      [40].    See Global Methane Emissions and Mitigation Opportunities, supra note 30, at 3.

      [41].    Glob. Methane Initiative, Landfill Methane: Reducing Emissions, Advancing Recovery and Use Opportunities 1 (2011), http://globalmethane.org/docu ments/landfill_fs_eng.pdf.

      [42].    Id. at 2.

      [43].    See id.

      [44].    See id.

      [45].    See Glob. Methane Initiative, Oil and Gas Systems Methane: Reducing Emissions, Advancing Recovery and Use 1 (2011), http://globalmethane.org/documents /oil-gas_fs_eng.pdf.

      [46].    Id.

      [47].    See id. at 2.

      [48].    Methane Emissions (kt of CO2 Equivalent)—Country Ranking, IndexMundi, http: //www.indexmundi.com/facts/indicators/en.atm.meth.kt.ce/rankings (last visited Sept. 15, 2016).

      [49].    See id.

      [50].    Glob. Methane Initiative, Global Methane Initiative Fact Sheet 1–2, https: //sustainabledevelopment.un.org/content/documents/usa_annex2.pdf (last visited Sept. 15, 2016).

      [51].    See id.

      [52].    Karin Rives, Global Initiative Seeks to Curb Methane Pollution, U.S. Dep’t of State IIP Digital (Oct. 15, 2010), http://iipdigital.usembassy.gov/st/english/article/2010/ 10/20101015143326nirak0.9236109.html#axzz4Ack5uHWz.

      [53].    See id.

      [54].    See, e.g., About the Initiative, Glob. Methane Initiative, https://www.globalme thane.org/about/index.aspx (last visited Sept. 15, 2016).

      [55].    Id.

      [56].    See Gardiner Harris & Coral Davenport, E.P.A. Announces New Rules to Cut Methane Emissions, N.Y. Times (Aug. 18, 2015), http://www.nytimes.com/2015/08/19/us/epa- announces-new-rules-to-cut-methane-emissions.html.

      [57].    See id.

      [58].    See Oil and Natural Gas Sector: Emission Standards for New and Modified Sources, 80 Fed. Reg. 56593 (proposed Sept. 18, 2015).

      [59].    See id. at 56594.

      [60].    Amy Harder & Erin Ailworth, EPA Proposes Cutting Methane Emissions From Oil, Natural-Gas Drilling, Wall St. J. (Aug. 18, 2015, 7:08 PM), http://www.wsj.com/arti cles/epa-proposes-cutting-methane-emissions-from-oil-natural-gas-drilling-1439915525.

      [61].    See id. (explaining that natural gas is primarily composed of methane).

      [62].    Press Release, U.S. Environmental Protection Agency, EPA Releases First-Ever Standards to Cut Methane Emissions from the Oil and Gas Sector (May 12, 2016), https: //www.epa.gov/newsreleases/epa-releases-first-ever-standards-cut-methane-emissions-oil-and-gas-sector.

      [63].    Id.

      [64].    Pamela Wexler, Protecting the Global Atmosphere Beyond the Montreal Protocol, 14 Md. J. Int’l L. & Trade 1, 1 (1990).

      [65].    Ozone, CFCs and the Montreal Protocol, Earth Journalism Network, http:// earthjournalism.net/resources/ozone-cfcs-and-the-montreal-protocol (last visited Sept. 15, 2016).

      [66].    Mario Molina & Durwood J. Zaelke, Opinion, A Climate Success Story to Build On, N.Y. Times (Sept. 25, 2012), http://www.nytimes.com/2012/09/26/opinion/montreal-proto col-a-climate-success-story-to-build-on.html?_r=0.

      [67].    International Day for the Preservation of the Ozone Layer, United Nations, http://www.un. org/en/events/ozoneday/background.shtml (last visited Sept. 15, 2016).

      [68].    Id.

      [69].    See David Hunter et al., International Environmental Law & Policy 552 (4th ed. 2011).

      [70].    See id. at 553.

      [71].    See James M. Patlis, The Multilateral Fund of the Montreal Protocol: A Prototype for Financial Mechanisms in Protecting the Global Environment, 25 Cornell Int’l L.J. 181, 182 (1992).

      [72].    See Hunter, supra note 69, at 554.

      [73].    U.N. Envtl. Programme, A Success in the Making: The Montreal Protocol on Substances That Deplete the Ozone Layer 4 (2007).

      [74].    See Stewart, supra note 24, at 344.

      [75].    See id.

      [76].    See Faulkner, supra note 11, at 260.

      [77].    See Low-Hanging Dirt, The Economist (Oct. 3, 2015), http://www.economist.com/ news/international/21669884-cutting-emissions-methane-and-soot-could-bring-swift-benef its-low-hanging-dirt.

      [78].    See Victor, supra note 13, at 2.

      [79].    See Bryan A. Green, Lessons From the Montreal Protocol: Guidance for the Next International Climate Change Agreement, Envtl. L. (Jan.1, 2009), http://www.thefreelibra ry.com/Lessons+from+the+Montreal+Protocol%3A+guidance+for+the+next. . .-a01967289 97.

      [80].    See id.

      [81].    See supra Part III.

      [82].    See id.

      [83].    Mario Molina et al., Reducing Abrupt Climate Change Risk Using the Montreal Protocol and Other Regulators Actions to Complement Cuts in CO2 Emissions, Inst. for Governance & Sustainable Dev. (Aug. 31, 2009), http://www-ramanathan.ucsd.edu/ files/pr169.pdf.

      [84].    See infra Part IV.

      [85].    See Methane Emissions, supra note 48.

      [86].    See Harris & Davenport, supra note 56.

      [87].    See Coal Mine Methane, supra note 37, at 1.

      [88].    See Landfill Methane, supra note 41, at 1.

      [89].    See id. at 2.

      [90].    Patlis, supra note 71, at 195.

      [91].    See Green, supra note 79.

      [92].    See Patlis, supra note 71, at 196.

      [93].    Id. at 197.

      [94].    The Montreal Protocol on Substances that Deplete the Ozone Layer, art. 10A, Jan. 1, 1989, 1522 U.N.T.S. 35–36.

      [95].    See Davenport, supra note 9.

      [96].    Id.

      [97].    Id.

      [98].    Thomas Day et al., What The Paris Agreement Means for Global Climate Change Mitigation, NewClimate Inst. (Dec. 14, 2015), http://newclimate.org/2015/12/14/what- the-paris-agreement-means-for-global-climate-change-mitigation/.

      [99].    Davenport, supra note 9.

    [100].    See Day, supra note 98.

    [101].    See id.

    [102].    See Day, supra note 98.

 

Through the Lens of Complex Systems Theory: Why Regulators Must Understand the Economy and Society as a Complex System

Through the Lens of Complex Systems Theory: Why Regulators Must Understand the Economy and Society as a Complex System

James Giudice, Comment, Through the Lens of Complex Systems Theory: Why Regulators Must Understand the Economy and Society as a Complex System, 51 U. Rich. L. Rev. Online 7 (2016).

Click here to download PDF.


James M. Giudice *

Introduction

Complex systems are constantly creating unpredictable phenomena that change and shape the world around us. These systems are comprised of relatively simple components whose interactions, controlled by no central authority, are guided by simple rules that give rise to complex behavior patterns and adaptation.[1] Historically, scientists used reductionism as the primary means of understanding complex problems. This method attempts to make sense of the whole by dividing it into its smallest components, studying them from simplest to most complex, and putting them back together until the complete picture is seen. Over the past century, scientists began to realize the limits of the reductionist method when it became apparent that not all systems are linear. Results in a non-linear system could not be predicted using reductionism because the whole can be greater than the sum of its parts.[2] Through an appreciation and basic understanding of complex systems theory, lawmakers and regulators can more efficiently and effectively ensure harmony in the world they seek to order, while simultaneously avoiding the costly pitfalls of overly complicated regulatory schemes.

Society, the economy, the immune system, and even ant colonies are a few examples of complex systems. The very air we breathe is a key element of one of the most complex systems currently under scientific scrutiny—the Earth’s climate. Nature provides limitless examples of complex systems where simple and advanced social organisms come together to create elegant and elaborate structures.[3] These communities work together to increase the survivability of the population as a whole. Out of these interactions occurrences develop that are difficult if not impossible to predict. As explored in more detail below, society and the economy are complex systems that exhibit such evolutionary behavior. The science of complex systems is an interdisciplinary approach to understand these interactions and the systems they create.[4]

A key characteristic of complex systems is the existence of “large networks of individual components . . . following relatively simple rules with no central control or leader.”[5] With respect to the economy, individuals and businesses seek to maximize their profitability by adapting to the environment around them with no central authority dictating their actions. To achieve public policy goals and exert a degree of control over these systems, government imposes various regulatory schemes. These regulatory systems impact our lives every day, permeating every aspect of society,[6] and are among the most powerful drivers of individual and system-wide adaptation.

Effective regulation of the collective actions of free individuals requires an understanding of what complex systems are, how they work, how they can be studied, the impact internal and external stimuli have on the system as a whole, and how our regulatory agencies can be better suited to dealing with a complex world. There is a prolific body of legal scholarship discussing the substantive characteristics and purpose of government regulation;[7] that is not the focus of this article. The purpose of this article is to illustrate the value complex systems theory could create if applied to the regulatory decision making process.

Part I provides a basic introduction to complex systems theory to establish a foundation from which to discuss its application to modern regulatory problems. This part will also differentiate between simple, complicated, and complex problems and how to deal with them. The utility of modern computer modeling is discussed to show the potential direction and application of complexity theory in the social sciences. Finally, it will briefly define and explore the characteristics of regulatory systems and their role in providing stability and predictability.

In Part II we will shift to a discussion of the Tax Code as a complicated regulatory system. The Tax Code was chosen because of the average reader’s familiarity with this system, and also because it provides prime examples of complicated legal rules and their unintended consequences.

Part III will bring the concepts of complexity theory to bear on the modern regulatory process to offer very broad observations of how to simplify the Code. Furthermore, it discusses how regulators can achieve their desired end states at the lowest possible cost; to not just solve a problem, but to solve it efficiently and find the “elegant solution.”[8]

Part IV concludes that looking at these problems through the lens of complexity theory will provide a broader understanding of complex problems and lead to better regulatory decisions after weighing the costs and benefits of complicated rules. Lawmakers should weave the complex systems approach into the fabric of the regulatory process.

Complex Systems Theory: “A High-Level Primer”[9]

For over 400 years reductionism was the leading approach to understanding the world around us.[10] This method of scientific inquiry is quite simple: divide the problem into its smallest parts, study them from the simplest to the most complex, and gradually build until you have a complete picture and understanding of the issue.[11] In the 1940s and 1950s scientists began to acknowledge that for systems in which individual actors have free will and the ability to reason, interactions led to many unpredictable results for which reductionism provided insufficient answers.[12] It appeared the reductionist method had found its limits until modern technology allowed the use of computers to aid in the study of complex systems.[13]

Even with modern supercomputers, there are still systems such as climate, disease, adaptive living organisms, and the world economy that cannot be understood through the application of reductionism alone.[14] To move beyond these limits and find a deeper understanding of these types of systems, scientists began to realize an interdisciplinary approach was needed to develop a scientific foundation to attack these problems.[15] Though it has gone by several different titles in the past, today this discipline is widely known as the science of complexity theory.[16]

Complexity theory is an attempt to understand the structure and behavior of complex systems, with particular focus on the cooperative interactions of individual components that give rise to unpredictable outcomes and events.[17] “Complex systems is the study of how interesting emergent phenomena arise from the interactions of low-level building blocks.”[18] To fully grasp what is meant by “emergent phenomena,” a brief discussion of linear versus non-linear systems is warranted. “[I]f [an] interaction is linear, the whole is just the sum of the parts.”[19] “This is the realm of the known” where cause and effect are clearly understood and therefore A always leads to B.[20] However, if the results from the interactions of the parts are non-linear, the whole becomes more than the sum of its parts.[21] Situations emerge in which outcomes are qualitatively different than the sum of the parts. Such outcomes are characterized as emergent phenomena.[22] Complex systems are environments where the collective actions of individual parts generate outcomes that are difficult, if not impossible, to foresee or predict.[23] These systems have the ability to adapt and change over time with stimuli from their environment.[24] Some illustrations from nature will help to visualize these phenomena. Three classic examples of such systems are ant colonies, flocking birds, and the economy.[25]

Examples of Complex Emergent Behavior in Nature

Ant colonies provide a great example of unsophisticated organisms, collectively engaged in complicated decision-making and complex problem solving, with no apparent central authority guiding them.[26] Take for example how these colonies work together in search of food. Each individual ant leaves the nest in a random search for food.[27] When a food source is found, the ant returns to the nest, laying down a chemical trail that attracts its fellow foragers.[28] Each ant that uses the trail reinforces the scent, which leads the colony as a whole to efficiently gather food in the absence of any centralized planning or decision-making.[29] Each ant performing its tasks in accordance with very simple rules leads the colony to surprisingly sophisticated accomplishments.[30]

Flocking birds are another example of sophisticated emergent behavior brought about by simple rules. A flock of starlings, called a murmuration, is an astonishing sight. Such a flock can contain thousands of birds flying at incredible speeds, making abrupt and extreme turns, yet able to avoid all collisions.[31] On the level of the individual bird, three simple rules govern behavior: steer to avoid flock mates, steer towards the average heading of the group, and steer to move towards the average position of the group.[32] Following these simple rules starlings perform incredibly complex aerial maneuvers, all in the absence of central leadership or control.

The complex behavior of free market economies emerges from choices made by individuals, households, companies, and other organizations seeking to maximize their self-interests.[33] Driven by these key individual components acting in pursuit of their own maximum benefit, consumption and production patterns seek equilibrium[34] allowing the economy as a whole to move towards a more efficient state.[35] This concept is commonly understood as the “invisible hand” of the market, a phrase coined by the renowned economist Adam Smith.[36]

An ant colony, flocking birds, and the economy are each complex systems that seem quite different on the micro level, but on the macro level have several key properties in common.[37] First, each system exhibits complex collective behavior that arises from large networks of individual actors following simple rules.[38] Second, this behavior is accomplished in the absence of any central authority exerting control over the network.[39] Third, each of these systems is adaptive and will change over time by reacting to internal and external stimulus from their environments.[40] How this emergent behavior comes about is the central question complexity science seeks to answer.[41] But before we further explore the applicability of complexity theory to government regulation we must delve deeper into what is meant by complexity.

Simple, Complicated, and Complex Problems: What’s the Difference?

There is no consensus within the scientific or academic community on the precise meaning of complexity,[42] but to better understand the applicability of complexity theory to the design of regulation, we must draw a distinction between simple, complicated, and complex problems.[43] Simple problems can be solved and their outcomes predicted with great precision because the individual components can be understood, they are usually few in number, and the results of their interactions are consistent over time.[44] Furthermore, a non-expert can achieve uniform results if she accurately follows a set formula because, in the realm of simple problems, “cause equals effect.”[45]

Formulas are equally critical in solving complicated problems,[46] but, unlike simple problems where a layperson can achieve similar results, a high level of expertise is required to ensure success.[47] The challenge of complicated problems is found not only in the sheer number of the component parts, but also by the scale of the problem itself.[48] While complicated problems contain many subsets of simple problems, they are more than a mere assembly of the simpler components.[49] However, once a complicated problem has been solved, it will generally remain solved.[50]

For the most part, when solving simple and complicated problems, we are in the realm of knowns where cause equals effect. Complex problems exist in the realm of unknowns where a given cause does not always lead to the same predictable effect.[51] It is this unpredictable nature that government regulators must understand to achieve public policy goals in complex systems like society and the economy. Unfortunately, regulatory schemes are often found wanting, because they force complicated solutions on complex problems. These solutions are ill-equipped to cope with the adaptive nature of complex systems, and the complex problems they seek to address. Table 1 below provides an example and a side-by-side comparison of some key features of these different types of problems.

 

Table 1. Simple, Complicated, and Complex Problems[52]

Simple Complicated Complex
Following a Recipe Launching a Rocket Raising a Child
Recipe is easily replicated. One successful launch increases likelihood of future success. Formulae have limited or no application.
A standardized product can be produced by a non-expert. High level of expertise required across an array of disciplines. Experience is valuable, but does not ensure future success.
Good results can be expected every time. Each launch is similar in fundamental ways. Each child is unique and must be approached individually.
  High degree of certainty in outcome once original issues are solved. Uncertainty of outcome remains.

 

Studying Complex Systems in the Age of Super Computers

The advent of modern computer technology has allowed for more realistic modeling of systems as complex as the economy. Complex systems can finally be studied through the collection of large amounts of data, the creation of ever more accurate simulations, and the solicitation of expertise from a wide array of disciplines.[53]

Pulling from the examples discussed above, imagine creating a computer model of an ant colony. Each individual ant would be programed to follow a simple set of rules, which in turn would lead to the complex and sophisticated decision-making behavior of the colony.[54] Because the rules of interaction, such as the use of chemical trails to lead other workers to food sources, are well understood, their behavior can be more clearly studied and predicted.[55] But this example begs the question, “What about more sophisticated organisms like humans who make emotional decisions, have free will, and disparate interests?” This is where modern computing power may be the key that unlocks our ability to create accurate and reliable models for systems like the economy by realistically replicating human behavior in computer based simulation.[56]

As the speed of computers has increased, it has allowed researchers in both the natural and social sciences to use models to better understand cooperation between self-interested individuals.[57] Computers have quite literally revolutionized the way we understand and study the natural sciences by their ability to simulate complex systems.[58] They have not only increased the amount of data that can be gathered and stored, but also revolutionized the speed at which people can collaborate.[59] Prior to the rise of this technology, non-linear problems generally could not be solved, and the testing of such problems was limited to crude models that provided poor analogies for the real world.[60] Today, computer models are indispensible to scientific inquiry in a broad array of disciplines including “weather, traffic, epidemics, fluid turbulence, general relativity, earthquakes, and neural systems.”[61] Now and in the future, computer-based simulations will be critical to understanding complex systems because they allow the principles of reductionism to be brought to the study of complexity.[62] As such, regulatory agencies should work hand-in-hand with computer scientists, social scientists, and economists to create accurate models to better understand potential ramifications of regulatory decisions. Modern computers have given regulators the ability to churn out increasingly numerous and complicated rules and regulations. To properly apply complexity theory and realize its true value, it is critical that these complex systems are studied before the implementation of wide reaching and complicated government regulation.

The Need for Stability and Flexibility in Regulatory Systems

To regulate is to bring order, hold to a constant standard, and provide a degree of control and predictability.[63] Regulation is not limited exclusively to the sphere of government. Markets also exhibit self-regulating behavior.[64] However, the focus here will be on government regulation. A regulatory system is a specialized sub-system designed to monitor, influence, and control behavior of the broader system.[65] Government is a prime example of a regulatory system in action.

One goal of government regulation is to provide a safe and stable environment that allows society and the economy to function harmoniously.[66] As an example, economic and financial regulations seek to create a stable system through which individuals and businesses are free to enter into voluntary and mutually beneficial agreements. In the modern world of fast paced technology and rapidly changing conditions, government regulation must not only create stability, but must also be flexible so it can adapt and respond to changes in the systems it seeks to control.[67] To complicate matters further, government regulation does not have the sole aim of stability. Rather, it also tries to encourage and discourage certain behaviors. The three mechanisms needed for a regulatory system to function properly are sensors, actuators, and a controller.[68]

 

The sensor monitors the underlying system for changes and communicates information to the controller.[69] Armed with up-to-date information, the controller, as “the brains of the operation,” uses the information to make decisions that will be acted upon by the actuator.[70] It is important for each of these components to work together harmoniously for the regulated system to remain under control and for the regulatory system to be agile enough to react to changes in the environment.[71] Finally, it is critical for the regulatory system to be governed by a set of instructions that allow it to function effectively.[72] The information processing structures of government agencies are beyond the scope of this paper; rather, the complicated set of instructions, statutes, rules, and regulations will be the focus.

The Tax Code: Forcing Complicated Regulation on a Complex Problem

The modern Tax Code is one of the most powerful control systems used by the government to shape and influence society. Since its inception, the income tax regime, particularly corporate income tax, has been used as a tool to incentivize certain behaviors.[73] It has been lauded by past presidents such as William Howard Taft for its ability to achieve “supervisory control of corporations which may prevent a further abuse of power.”[74] Moreover, it has been said that “[t]ax complexity is itself complex,”[75] and is born through the various sets of complicated statutes, rules, and regulations that comprise the Tax Code.[76]

The overarching purpose of the Tax Code is to raise revenue for the government, but that is not its only purpose.[77] One driver—arguably the key driver—of complexity in the Code is the government’s use of the Tax Code as a vehicle to achieve other redistributive and regulatory goals.[78] These two functions are employed to “reduc[e] the unequal distribution of income and wealth . . . [and] to steer private sector activity in the directions desired by governments.”[79] Some well-known examples of the Tax Code being used to encourage certain behavior are deductions for charitable giving,[80] deductions for personal mortgage interest,[81] and the beneficial tax treatment of investment accounts related to saving for college tuition.[82]

It is so widely accepted that the Tax Code is “extraordinarily complex”[83] that it need not be expounded upon here, but understanding why it is so complex is important. The sources of tax complexity can be difficult to pinpoint.[84] To facilitate our conversation we will begin by establishing a common understanding of the criteria by which taxes are evaluated. Equity, efficiency, and simplicity are widely recognized as the customary standard used to evaluate taxes.[85] The equity principle states similarly situated taxpayers should be treated similarly, and differently situated taxpayers should be treated differently.[86] This principle is primarily concerned with the fairness of a given tax.[87] The efficiency principle demands a given tax impact behavior and the market as little as possible.[88] This standard exists almost exclusively in theory, because all taxes affect behavior in one way or another.[89] Finally, simplicity, which is often viewed as a sub-category of both equity and efficiency, states that complex rules are inherently unfair because they allow more sophisticated taxpayers to manipulate the complexities to their advantage.[90]

Sources of Complexity[91]

Governments enact regulation in an attempt to bring order, create harmony, and right wrongs in society. This revered quest for justice creates a latent demand for the ever-elusive perfect solution to every problem.[92] This pursuit of perfection has led to a significant increase in the number of legal rules and their complexity. It also ignores one of the fundamental teachings of complexity science—that sometimes the most complicated systems are governed by the simplest rules.[93] As complexity increases, so do opportunities for individuals to game the system and gain an unfair advantage through the exploitation of loopholes.[94] It is this adaptation on the individual level that makes society a fluid and ever-changing system, requiring economists to move away from deterministic models focused on equilibrium and embrace the subject as inherently complex.[95]

Individuals in every society must compete against each other for scarce resources.[96] Because resources are scarce, each individual actor is led to act in his own self-interest, putting himself and those he cares about first.[97] This self-interest has good qualities such as high achievement in the arts, sciences, and business but may also be the source of crime, fraud, and abuse.[98] Laws and regulations generally seek to reinforce the good aspects of individual competition while punishing and counteracting dangerous human impulses.[99] As discussed earlier, complex systems are adaptive in nature, and society is constantly changing because these impulses lead to evolving behavior and unpredictable outcomes.

Key metrics of the complexity of legal rules is the extent to which “processes, institutions, and supporting culture possess four features: density, technicality, differentiation, and indeterminacy or uncertainty.”[100] Focusing primarily on density and technicality, the more numerous and encompassing a set of regulations, the more dense they are.[101] A regulation is technically complex if special expertise is required to understand and apply it.[102] According to Deborah Schenk, Professor Emerita at New York University School of Law and Editor-in-Chief of the Tax Law Review,[103] “the complexity of the U.S. Tax Code leads many filers to make . . . serious mistakes.”[104] Furthermore, she points to Congress’s inclination to use the Tax Code as a vehicle to provide incentives as one of the key drivers of its complexity.[105] The Code provides an excellent example of a set of rules that is complex from both a density and technical standpoint.[106]

The National Taxpayer Advocate (“NTA”) is a non-partisan organization that is required to submit an annual report to the IRS and Congress, identifying the most serious problems facing taxpayers and making administrative and legislative recommendations to mitigate them.[107] In its 2010 Annual Report to Congress, the NTA identified the “overwhelming complexity” of the Tax Code as a key challenge facing the IRS in the decade ahead.[108] Furthermore, in that same report, the NTA identified the complexity of the Tax Code as the most serious problem facing taxpayers.[109] The compliance burden of these rules is staggering.
“[T]axpayers and businesses spend 6.1 billion hours a year complying with tax-filing requirements” which is equivalent to the annual work hours of three million full-time employees.[110]

An entire industry has formed around complying with the tax code. Paid professionals prepare 60 percent of tax returns, and 29 percent of taxpayers use software programs to file their returns.[111] Beyond the compliance burden placed on U.S. taxpayers and businesses, perhaps the most harmful effect of the Tax Code is its discriminatory effects on individuals.[112] In pursuit of equitable wealth distribution in society, Congress has chosen to use the Tax Code to achieve its redistributive and regulatory goals.[113] Unfortunately, in many instances the outcome has been the polar opposite, because more sophisticated taxpayers are able to effectively understand and manipulate the tax rules.[114] Generally the most sophisticated taxpayers happen to be wealthier individuals and corporations that can use the ambiguities and complicated rules to reduce their tax liability.[115] The effect of complexity not only benefits those most able to pay, it also penalizes honest taxpayers who diligently attempt to comply with the code. Typically, these are people without knowledge or financial means to take advantage of loopholes.[116] Tax simplification is an effective way to mitigate these harmful effects,[117] and viewing this issue as a complex problem will equip regulators with the insight to make better, more efficient regulatory decisions.

One of the unifying characteristics of complex systems is they have no central controller and follow a simple set of rules.[118] Regulatory systems, such as the Tax Code, must also have simple rules that ensure not only stability but also agility to respond to a changing world.[119] A main driver of the increasing complexity found in modern legal rules is the pursuit of “perfect justice” and the idea that law must account for and address every possible scenario in society.[120] In the pursuit of perfect justice, regulators are trying to account for every possible situation. In so doing, they create ever more complicated rules in an attempt to exert control over a non-linear complex system, resulting in costly, unintended consequences.

Resetting the Balance: The Pursuit of an Elegant Solution

Complexity in the Tax Code is not inherently evil, but when it begins to undermine the core values of equity, efficiency, and simplicity it becomes so.[121] If government regulators want to achieve their desired end state at the lowest possible cost, and also avoid the harmful unintended consequences of overly complex regulation, they must seek the “elegant solution.”

[The term] elegant solution is used in mathematics, engineering, and software development to refer to a solution that solves the problem in the simplest and most effective manner. In many cases, it is possible for developers to create code that is more complicated than it needs to be. In such cases, this less-than-elegant solution is more likely to cause other issues. For most developers, finding an elegant solution is a greater challenge than simply solving a problem.[122]

Finding such a solution is no easy task, but it is what the tax-paying citizen deserves. It is more difficult than simply solving the problem—an elegant solution solves the problem efficiently, effectively, and at the lowest possible cost. Those in search of such a solution must first understand the characteristics of the problem they wish to solve, which is why complexity theory brings great value to the regulatory process.

Regulatory System that Works

Viewing regulatory issues through the lens of complexity facilitates the application of the principles discussed above. Doing so allows government regulators to better understand who is doing what and why.[123] With that knowledge in hand, they can draft regulations that bring about the desired results while avoiding unforeseen pitfalls. In order to put the practices in place, regulators must be able to monitor an ever-changing society, use that information to make decisions, have a mechanism to take action, and follow a set of standards that guide this process.

The Tax Code did not become a behemoth overnight, nor will it be fixed in a day, but viewing the problem through the lens of complex systems theory could lead to simplification over time. While it is clear that the complexity of modern society has caused regulators to react with an ever more complicated Tax Code, sometimes the opposite is true and a complicated code increases complexity in the system unnecessarily. Complicated regulation encourages free-willed individuals and businesses to change their behavior, sometimes in undesirable ways, to maximize their own benefit and reduce compliance costs.[124] The aims of regulation are usually noble, and may be accomplished more effectively by adopting simple rules that are easy to comply with.[125]

The corporate income tax is a prime example of an overly complicated regulatory scheme that has led to unintended and undesirable consequences.[126] When corporations determine they can better return value to shareholders by leaving the country, they go through a process called a corporate inversion.[127] A corporate inversion is accomplished by operation of law when a company decides to switch its citizenship.[128] Post-inversion, corporate operations remain unchanged, but the company will pay income tax in accordance with the law of its new place of incorporation.[129] Put simply, inversions are about saving money on taxes.[130]

The pace of inversions has increased significantly since 2010,[131] and as Judge Learned Hand explained there is nothing illegal or inherently “sinister in so arranging one’s affairs as to keep taxes as low as possible.”[132] Moreover, restructurings of this kind are no simple undertaking, but when the compliance burden becomes great enough, it makes sense for large U.S. multi-national corporations to seek more beneficial tax treatment.[133] In their pursuit to increase corporate tax revenue, regulators have created an environment in which corporations will go through the inversion process to reduce these burdens. Proposing a specific solution to this issue is beyond the scope of this paper, but corporate inversions are just one example of an overly complicated tax scheme that has led to unintended consequences. However, there are some common sense ways to begin the process of simplification.

Attack One Problem at a Time

The complexity of the Tax Code has been discussed ad nauseam[134] and is a hot topic in every major election cycle,[135] but few feasible plans have been put forward. The question of how to raise revenue incites passionate debate from both sides of the aisle, therefore the issues of revenue generation and Code simplification should be dealt with separately. The NTA proposes a two-step process.[136] First, Congress and regulators should focus on
simplifying the code itself, and then address revenue needs by adjusting tax rates.[137] By separating the quest of simplification into these two distinct steps, its chances of success will increase.

Conclusion

A foundational understanding of complexity theory holds important lessons for legislators and regulators. Those who author statutes, rules, and regulations must better understand the ramifications of complicated rules applied to a complex system. Looking at these problems through the lens of complexity theory will give them a broader understanding of the complex problems they are trying to solve and lead them to make different regulatory decisions after weighing the costs and benefits of complicated rules. Lawmakers should ensure the complex systems approach becomes central to the regulatory process.

Transformation of the regulatory process is not likely to occur quickly, but over time, if an interdisciplinary approach is taken, it is possible to weave complex systems analysis into the framework of our regulatory process. Professor Schuck said it best, “[a]s we learn more about legal complexity’s consequences, we should infuse that learning into the political economy of complexity, reminding anyone who will listen about the elusive virtues of simplicity in law.”[138] If lawmakers can find the humility to realize perfect justice is an illusion, the pursuit of which often leads to costly unintended consequences, they may be able to find the elegant solution ensuring the spread of harmony and prosperity.

 

*        J.D. Candidate 2017, University of Richmond School of Law. B.S., 2009, The Ohio State University Fisher College of Business. Captain United States Marine Corps Reserve. I wish to express my sincere gratitude to Professor Clark Williams for his mentorship, substantive feedback, and stimulating conversations that brought focus to my thoughts and clarity to this project. I also wish to thank the members of the University of Richmond Law Review for their time and effort preparing this comment for publication. Finally, I wish to give special thanks to my lovely wife who has supported me in all of my endeavors and challenges me to be my best in all that I do, I couldn’t do it without you.

        [1].    See discussion infra Part I.

        [2].    Id.

        [3].    See discussion infra Part I.A.

        [4].    See J. Doyne Farmer, Economics Needs to Treat the Economy as a Complex System, Inst. for New Econ. Thinking 1, 4 (2012), http://ineteconomics.org/uploads/ papers/farmer_berlinpaper.pdf.

        [5].    Melanie Mitchell, Complexity: A Guided Tour 12 (2009).

        [6].    See Joseph P. Tomain & Sidney A. Shapiro, Analyzing Government Regulation, 49 Admin. L. Rev. 377, 378 (1997) (discussing the pervasive nature of modern government regulation).

        [7].    Id.

        [8].    See discussion infra Part III.

        [9].    The idea for this section title came from Eric L. Talley, Corporate Inversions and the Unbundling of Regulatory Competition, 101 Va. L. Rev. 1649, 1658 (2015).

      [10].    See Mitchell, supra note 5, at ix.

      [11].    See id.

      [12].    See, e.g., Mitchell, supra note 5, at x (discussing several examples of complex systems that have stymied the reductionist method); see Sean Snyder, The Simple, the Complicated, and the Complex: Educational Reform Through the Lens of Complexity Theory 11 (OECD, Education Working Paper No. 96, 2013), http://dx.doi.org/10.1787/5k3 txnpt1lnr-en.

      [13].    See Farmer, supra note 4, at 4.

      [14].    Mitchell, supra note 5. at x.

      [15].    Id.

      [16].    See id.

      [17].    Pedro Ferreira, Tracing Complexity Theory, Research Seminar in Engineering Systems 1 (2001); see Eberhard Bodenschatz, Complex Systems, Research Perspectives of the Max Planck Society 56 (2010).

      [18].    Farmer, supra note 4, at 2.

      [19].    Id.

      [20].    Snyder, supra note 12, at 7.

      [21].    Farmer, supra note 4, at 2.

      [22].    Id.

      [23].    What are Complex Systems?, Complex Sys. Soc’y, http://cssociety.org/about-us/what-are-cs (last visited Aug. 8, 2016).

      [24].    See Murray Gell-Mann, Simplicity and Complexity in the Description of Nature, 51 Eng’g & Sci. 2, 8 (1988).

      [25].    See Mitchell, supra note 5, at 4–13 (“Complex systems researchers assert that different complex systems in nature, such as insect colonies, immunes systems, brains, and economies, have much in common.”); Michael Dubakov, Simple Rules, Complex Systems and Software Development, Target Process, https://www.targetprocess.com/blog/ 2009/03/simple-rules-complex-systems-and/ (last visited Aug. 8, 2016) (illustrating how systems based simple rules can lead to complex and intelligent behavior).

      [26].    See Balaji Prabhakar et al., The Regulation Of Ant Colony Foraging Activity Without Spatial Information, 8 PLOS Computational Biology 1, 6 (2012).

      [27].    See id.

      [28].    Dubakov, supra note 25.

      [29].    Mitchell, supra note 5, at 4; Dubakov, supra note 25.

      [30].    Mitchell, supra note 5, at 4. For an in-depth discussion of how dynamical networks like ant colonies produce sophisticated collective behavior, see generally Prabhakar et al., supra note 26, and Deborah Gordon, The Emergent Genius of Ant Colonies, TED (2003).

      [31].    See Brandon Keim, The Startling Science of a Starling Murmuration, Wired (Nov. 11, 2011) http://www.wired.com/2011/11/starling-flock/.

      [32].    Dubakov, supra note 25.

      [33].    See Mitchell, supra note 5, at 10.

      [34].    Id at 9–10; Ferreira, supra note 17 at 16.

      [35].    Mitchell, supra note 5, at 10.

      [36].    Id.

      [37].    Id. at 4.

      [38].    Id. at 12.

      [39].    Id.

      [40].    Id. at 13.

      [41].    Id.

      [42].    Mitchell, supra note 5, at 13–14 (exploring the struggle to establish foundational definitions in the evolving science of complexity); Snyder, supra note 12, at 6. See generally Murray Gell-Mann, What is Complexity? Remarks on Simplicity and Complexity by the Nobel Prize-Winning Author of The Quark and The Jaguar, 1 Complexity, (1995) 161, 16–19 (discussing the various qualitative and quantitative factors scientists have used in an attempt to define complexity).

      [43].    See Snyder, supra note 12, at 7.

      [44].    Eberhard Bodenschatz, Complex Systems 1 (2009), http://www.mpg.de/36885/ cpt08_ComplexSystems-basetext.pdf.

      [45].    Snyder, supra note 12, at 7.

      [46].    Sholom Glouberman & Brenda Zimmerman, Comm’n on the Future of Health Care in Can., Complicated and Complex Systems: What Would Successful Reform of Medicare Look Like? 2 (2002).

      [47].    Id.

      [48].    Id. at 1.

      [49].    Id.

      [50].    Id. Snyder, supra note 12, at 7.

      [51].    Id. at 7–8.

      [52].    Glouberman & Zimmerman, supra note 46, at 2 (adapting chart from Zimmerman); Snyder, supra note 12, at 7.

      [53].    What are Complex Systems?, supra note 23.

      [54].    See Mitchell, supra note 5, at 147 (providing an example of individual light bulbs working in a system).

      [55].    See Farmer, supra note 4, at 11 (explaining how reductionism makes studying complex systems easier).

      [56].    See Alex Pentland & Andrew Liu, Modeling and Prediction of Human Behavior, 11 Neural Computation 229, 229 (1999) (proposing that human behavior can be accurately simulated by using dynamic models that can create realistic human behaviors by sequencing decisions together in networks).

      [57].    Mitchell, supra note 5, at 212.

      [58].    Farmer, supra note 4, at 11.

      [59].    See id. (referencing how computers permit scientists to study complexity by breaking systems down into low level building blocks).

      [60].    Id.

      [61].    Id.

      [62].    Id.

      [63].    Howard Baetjer, Jr., Regulating Regulators: Government vs. Markets, 35 Cato J. 627, 627 (2015).

      [64].    Id.

      [65].    Regulatory Systems, Complexity Acad. (Jul. 15, 2015), http://complexityacad emy.io/regulatory-systems/.

      [66].    See id.

      [67].    Andreas Duit et al., Governance, Complexity, and Resilience, 20 Glob. Envtl. Change, 363, 366–67 (2010).

      [68].    Regulatory Systems, supra note 65.

      [69].    Id.

      [70].    Id.

      [71].    Id.

      [72].    Id.

      [73].    Reuven S. Avi-Yonah, The Three Goals of Taxation, 60 Tax L. Rev. 1, 22 (2006).

      [74].    Id. (citing 44 Cong. Rec. 3, 3344 (1909) (statement of President Taft)).

      [75].    Deborah L. Paul, The Sources of Tax Complexity: How Much Simplicity Can Fundamental Tax Reform Achieve?, 76 N.C. L. Rev. 151, 153 (1998).

      [76].    See id. at 154.

      [77].    Avi-Yonah, supra note 73, at 3.

      [78].    Id.; see also Stephanie J. Willbanks, Simplifying the Internal Revenue Code Through Reallocation of Decisionmaking Responsibility, 6 Am. J. Tax Pol’y 257, 258 (1987) (citing Congress’s use of the Tax Code as a vehicle for non-tax objectives as a source of complexity).

      [79].    Avi-Yonah, supra note 73, at 3.

      [80].    26 U.S.C. § 170 (2012) (allowing an itemized deduction for qualified charitable contributions).

      [81].    26 U.S.C. § 163 (2012) (allowing the taxpayer to deduct interest expenses from a loan obtained for a qualified residence).

      [82].    26 U.S.C. § 529 (2012) (creating an exemption for qualified tuition programs).

      [83].    Michael J. Graetz & Deborah H. Schenk, Federal Income Taxation: Principles and Policies 30 (6th ed. 2008); see also Gregory Korte, Even the IRS Chief Says Tax Code is Too Complex, USA TODAY (Apr. 3, 2014, 8:56 AM), http://www.usatoday .com/story/news/politics/2014/04/02/irs-commissioner-urges-congress-to-simplify-tax-code/7 215107/.

      [84].    See Paul, supra note 75, at 153.

      [85].    Graetz & Schenk, supra note 83, at 29–31.

      [86].    Id. at 28.

      [87].    Id. at 28–29.

      [88].    Id. at 29.

      [89].    Id.

      [90].    Id. at 30.

      [91].    For an in-depth discussion of some of the key drivers of complexity in the Tax Code, see generally Willbanks, supra note 78.

      [92].    Richard A. Epstein, Simple Rules for a Complex World 38 (1995).

      [93].    Dubakov, supra note 25.

      [94].    Epstein, supra note 92, at 38–39.

      [95].    See M. Mitchell Waldrop, Complexity: The Emerging Science at the Edge of Order and Chaos 37–38 (1992) (discussing the difference in approaches of the “old and new” economics, differentiated by the view of the economy as a complex system).

      [96].    See Epstein, supra note 92, at 22.

      [97].    Id.

      [98].    Id.

      [99].    Id.

    [100].    Peter H. Schuck, Legal Complexity: Some Causes, Consequences, and Cures, 42 Duke L.J. 1, 3 (1992).

    [101].    Id.

    [102].    Id. at 4.

    [103].    NYU Law, Faculty Profiles: Deborah Schenk, https://its.law.nyu.edu/faculty profiles/index.cfm?fuseaction=profile.overview&personid=20265 (last visited Aug. 8, 2016).

    [104].    Schenk Tells NPR that the U.S. Tax Code is so Complex that Most Filers Make Mistakes, NYU L. http://www.law.nyu.edu/news/schenk_npr (last visited Aug. 8, 2016); see generally Filing Taxes: It Shouldn’t be so Hard, The Economist: Democracy in America (Apr. 2, 2013, 2:01 PM), http://www.economist.com/blogs/democracyinamerica/2013/04/fil ing-taxes (discussing the compliance burden and costs of tax complexity of U.S. taxpayers).

    [105].    Schenk Tells NPR that the U.S. Tax Code is so Complex that Most Filers Make Mistakes, NYU L. http://www.law.nyu.edu/news/schenk_npr (last visited Aug. 8, 2016), supra note 104.

    [106].    26 U.S.C. (2012); Schuck, supra note 100, at 4.

    [107].    26 U.S.C. § 7803(c)(2)(B)(ii) (2012).

    [108].    Nat’l Taxpayer Advoc., 2010 Annual Report to Congress viii (2010).

    [109].    Id. at 2.

    [110].    Id.

    [111].    Id.

    [112].    See id.

    [113].    Avi-Yonah, supra note 73, at 3.

    [114].    Graetz & Schenk, supra note 83, at 30.

    [115].    See id.

    [116].    See id.

    [117].    Nat. Taxpayer Advoc., supra note 108, at 2 (2010).

    [118].    Mitchell, supra note 5 at 12.

    [119].    See Duit et al., supra note 67, at 367.

    [120].    See Epstein, supra note 92, at 38 (exploring the diminishing returns of ever increasing legal complexity in the pursuit of “perfect justice”); Willbanks, supra note 78, 258–59 (identifying tax provisions that try to cover every conceivable situation as a major source of complexity in the Code).

    [121].    Willbanks, supra note 78, at 259.

    [122].    Elegant Solution,Techopedia, https://www.techopedia.com/definition/14357/elega nt-solution (last visited Aug. 8, 2016) (emphasis added).

    [123].    Waldrop, supra note 95, at 332.

    [124].    See Chester S. Spatt, Complexity of Regulation, 3 Harv. Bus. L. Rev. Online 1 (2012), http://www.hblr.org/wp-content/uploads/2012/06/Spatt-Complexity-of-Regulation. pdf (discussing the cost of complicated regulation of the financial industry and how complicated regulation leads to modified behavior seeking to reduce compliance costs). “Financial regulation benefits from an emphasis on simple rather than complicated rules that avoid creating needless distortions, undertake serious cost-benefit analyses, use transparent rule-making processes, and emphasize disclosure and incentives.” Id. at 9.

    [125].    Id. at 1.

    [126].    Martin Lobel, Simplifying the Tax System Will Help Our Economy, Tax Analysts 66 (2009).

    [127].    James Mann, Corporate Inversions A Symptom of a Larger Problem, The Corporate Income Tax, 78 S. Ca. L. Rev. 521 (2005); Mathew Lee, The Recent Wave of Tax Inversions and Implications of the Corporate Income Tax, Dev. in Banking L. 93 (2015).

    [128].    Mann, supra note 127, at 521–22.

    [129].    Id. at 524.

    [130].    Id. at 523; Corporations are taxed based upon their location of incorporation, which means that U.S. corporations can be put at a significant disadvantage relative to their foreign competitors due to U.S. corporate income tax. Id. at 524.

    [131].    Lee, supra note 127, at 97.

    [132].    Comm’r v. Newman, 159 F.2d 848, 850–51 (2d Cir. 1947) (Hand, J., dissenting).

    [133].    See Yariv Brauner, An International Tax Regime in Crystallization, 56 Tax L. Rev. 259, 305 (2003).

    [134].    “Unfortunately, the Internal Revenue Code—our nation’s tax law—is extraordinarily complex.” Graetz & Schenk, supra note 83, at 30. See generally Comparing the 2016 Presidential Tax Reform Proposals, Tax Foundation (2016), http://taxfoundation. org/comparing-2016-presidential-tax-reform-proposals (citing tax policy as a major issue in 2016 presidential campaigns); Tax Reform in America: Simpler, Fairer, Possible, The Economist (July 13, 2013), http://www.economist.com/news/leaders/21581738-imperfect-proposal-could-still-improve-americas-awful-tax-code-back-it-mr-president-simpler (discussing the need for tax reform in the U.S. Tax Code); William Gale & Benjamin Harris, Tax Simplification: What are the Benefits of Simpler Taxes?, Tax Pol’y Ctr. (Dec. 14, 2007), http://tpcprod.urban.org/briefing-book/improve/simplification/benefits.cfm (discussing key ways in which simpler taxes could improve the Tax Code).

    [135].    See, e.g., Eliza Collins, Rand Paul Takes a Chainsaw to the Tax Code, Politico (July 7, 2015, 2:07 PM), http://www.politico.com/story/2015/07/rand-paul-tax-code-chain saw-120416.

    [136].    Nat’l Taxpayer Advoc., supra note 108, at 3.

    [137].    Id.

    [138].    Schuck, supra note 100, at 52.

Commencement Remarks of FBI Director James Comey to University of Richmond School of Law Class of 2016

Commencement Remarks of FBI Director James Comey to University of Richmond School of Law Class of 2016

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Commencement Remarks of FBI Director James Comey to University of Richmond School of Law Class of 2016

James Comey *

It is an honor and a thrill to be back here in a community I love at a school that made such a difference in my life and that still feels like home to me.

I want to offer just very briefly one reflection from my career in government, then a piece of advice about public service.

When I think about the successful people I have known, whether they were lawyers, or physicians, or business leaders, or government leaders, there was an overwhelmingly common attribute, which is judgment. Judgment is different than intelligence. Intelligence is actually fairly common, judgment is very rare. Intelligence is the ability to solve a riddle, to master an equation, to nail a set of facts. Lots of people can do that. Judgment is the ability to circle, to orbit that answer, and see it as it might be seen through the eyes of others; to move the answer in place and time; to try and see how it might be seen a year from now in Congress, five years from now in a newspaper editorial office. How might other people experience this? Judgment is the ability to say what something means. When you are graphing something, very intelligent people can master a data set and show you the answer on a graph. People of great judgment can look at that and say, “That’s what it says. Let me tell you what it means.”

So where does this come from, this ability to orbit a situation and see it through the eyes of others and move it in place and time? I think it comes mostly from the way you were raised. It comes from screwing up, from doing things that tick people off and then remembering that, “Aha, that’s how people see that, that’s how they experience it.” It is mostly a gift to you, and it is nurtured along the way, that gift is protected and nurtured.

Now, think about what you have just done for the past three years—and I know it is early and maybe a little raw right now—but think about what you have practiced doing for three years. You have practiced, with the help of these great people, taking a situation and moving it in your mind, asking yourself and being asked, in a very demanding way, “So how would that be different in this place or that place? How would it be different if we changed the facts? How would it be different if we changed some of the assumptions? And by the way, what are your assumptions? How sure are you of what you just said? And how would that change if I changed this little thing?”

Believe it or not, you were being drilled in the practice of judgment, to take an answer, to take a situation and see it from different perspectives, move it around and experience it through the eyes of another. That is an extraordinarily valuable gift to you. It requires, as your student speaker said, a measure of humility, because it is very, very difficult to escape the trap that is each of us: I can only experience the world through the experience of an awkward, six-foot eight-inch white person from the New York metropolitan area. Almost nobody else experienced the world the same way I do, and so how do I get in their heads and see it the way they see it, so I can be a better leader, a better lawyer, a better husband, a better person? Judgment is the answer: being intentional about fostering my ability to ask myself, “How could it be seen differently?”

So you have just spent three years practicing that. That is necessary but not sufficient. It will not shock you to know there are those people who have gotten out of law school and not demonstrated great judgment in the rest of their lives. You have to stay after it. How do you do that?

I have two slightly weird pieces of advice. The first is, sleep. Sleep. Sleep is not a moral failing. I always knew it was really important, now I have got all kinds of science to support me. What is going on while you sleep? Your brain is engaging in a neuro-chemical ballet to map the data that you took in during the day, and make connections. It is laying down judgment in your head while you sleep.

 

My second slightly weird piece of advice is, you have got to keep a life. One of the things that nurtures and protects judgment is physical distance from whatever is dominating your life. In most of your cases, that will be work. You have got to step away from the work, and I do not know whether it is kickboxing or stamp collecting or dancing. You must keep doing that. Because that physical distance from the work fosters and protects your ability to orbit a situation and see it through different perspectives. Get away from this work.

And as you do that, you have got to love somebody. This hall, and I hope this world, is full of people called loved ones, because you are supposed to love them. There is a danger, especially in the life of a lawyer, and it is called “get-back-itis.” It is the idea that, “I have got to do this important thing, I have got this really important matter to handle. I will get back to ‘fill in the blank.’” My mother, my father, my girlfriend, my boyfriend, my siblings, my friends, it does not matter. I will get back to that while I do this.

One of the challenges of my job is I see a lot of bad things every day. There is no getting back. You will turn, and they will not be there. I have five children. I have experienced an extraordinary array of loved ones because they change each year as they get older—my wife does not change at all, by the way. They change each year as they get older. There is no experience in the world like feeling the pounding and hearing the pounding of a two-year-old’s footsteps as you come in the door at the end of the day. Be there for that. There is no getting back to that. It requires a fight, an actual fight, to maintain that sort of health in your life, because the get-back-itis will be overwhelming to you. Fight for that balance in your life. It is the right thing to do, but it will protect your judgment.

So I want you to nurture judgment by sleeping and loving somebody—and sometimes those go together in appropriate circumstances, and that is fine. I believe the FBI director just said something like that, so I am going to move on.

Judgment is the attribute of successful people in this world. Do not let them tell you it is IQ. IQ is kind of a cover charge. Judgment is what makes the difference. That is my piece of advice from my career.

Now let me make a pitch for public service. I have left government service twice, and both times it left a hole in my heart. It took me a while the first time to figure out what was going on. And it happened when we moved from New York to Richmond in 1993, and I was a federal prosecutor in New York, and I wanted to be a federal prosecutor in Richmond. But there was a hiring freeze which got in the way of that transition within the government. And so I went to a big law firm, a great law firm, great people. And they gave me matching furniture, which I had not had in my government career yet—I actually had drapes that matched the furniture. I had a parking space, they paid me well. I had interesting issues, colleagues I really liked. But something was missing. And it was my amazing wife, Patrice, who noticed it first. She said one day, “What’s wrong with you?” something she says in lots of different contexts. But she said, “What’s wrong with you? We have a five-bedroom Colonial we paid $252,000 for. We live in this amazing community of Richmond, Virginia. The kids love it here. What is wrong with you?” I said, “You know what it is? I think I miss getting up in the morning and being part of trying to do something good every day. I actually miss work with moral content, as obnoxious as that sounds, I really miss it.”

And so three years later—because thank goodness one of your great professors left government service to come to a different kind of service—I took John Douglass’ job at the U.S. attorney’s office, and I was not as smart, I was not as good looking, I was not as funny, but I had the job. And so I was back in public service, and I was a very happy person. Once you have done that kind of work—service work, it does not have to be in the government, but doing something that is not about you and it is not about money—it is addictive, and when you leave it, it leaves a hole in your heart.

The challenge of being successful lawyers is, often times, the things that are siren songs of prestige and money draw you in a different direction. I know it can be hard to do public service work. It is hard on your credit cards, it can be very hard to do for an entire career. But I actually ache for my law school classmates from thirty years ago who have never even tried. Because here is what I worry. Professor Bacigal quoted Albert Einstein, I will quote him again. Einstein urged young people, “Try not to be people of success. Try to be people of value.” If you have never taken the time to try and be part of doing something of moral content as part of your work, you will have missed something. Augustin said, “Human honor is but smoke which has no weight.” There is a danger, as you get to the end of a life and realize you have accumulated the smoke of success but nothing of real value.

So here is my most depressing piece of advice for you, and I will close with this uplifting message. Occasionally you need to do something weird, and close your eyes and imagine yourself at the end of your life—I told you this would not be an uplifting moment. I hope you are old and gray at that point—I so hope I am old and gray at that point. But close your eyes, be old and gray, and look back, and ask this question from that vantage point: Who do I want to have been? Because if you ask it that way, the smoke is cleared, the things that get in the way when you only live life forward—houses, cars, money, human honor, the next “big thing”—all that stuff is stripped away. At the end of your life, who cares about that stuff? What will matter in a real sense will come into view. Everybody’s answer will be different in a different way. My answer is I want to have been somebody who was a great husband and father and friend. I want to know my children, their children, and God-willing, their children. And I want to have been somebody who, with whatever ability I had, I took some time to do something for people who needed me.

I hope you will work hard to take the amazing education you have gotten here, where you have been taught judgment, where you have been exposed to the world, to important issues, to the challenges so many people in our communities and our country face; I hope you will take the time to answer that question now, and let it guide the way you live your life. Be people of value. I hope at the end of this life, you are people who look back and say, “I did something I loved. I was part of something that meant a great deal to me.” And I hope you remember that this education began what I hope will be a remarkable and fulfilling journey. You are very, very lucky. Congratulations!

 

        *  James Comey is the Director of the Federal Bureau of Investigation. This is the text of a speech he recently gave at the University of Richmond School of Law Commencement Ceremony on May 7, 2016.

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