The Problem of Biased Precedents

by Ronen Avraham* & Issachar Rosen-Zvi**

Volume 46 Issue 4

The full text of this article may be downloaded by clicking on the PDF link.

This Article addresses the problem of biased precedents, wherein sophisticated repeat players, often corporate and state entities armed with superior resources and a vested interest in shaping the law, manipulate legal proceedings to systematically establish self-advantageous precedents. Specifically, by strategically choosing to litigate cases they anticipate will lead to favorable precedents and settling those expected to produce unfavorable outcomes, these players systematically bias the law over time to their advantage, at the expense of one-shot parties and society at large. The problem of biased precedents challenges the commonly held view about the efficiency and fairness of the legal system and raises questions about the social benefits of settlements.

This Article introduces two innovative, implementable, market-based solutions inspired by the realm of insurance: judgment insurance (“JI”) and settlement insurance (“SI”). JI involves a third-party “insurer,” which could be an NGO, an interest group, or a state entity, that cares about the precedential value of a certain case and is willing to pay for it and provides the plaintiff a premium-free coverage for the expected judgment that the plaintiff is likely to receive. SI operates similarly to JI, but insures an existing or future settlement offer rather than an expected court judgment.

Both mechanisms aim to incentivize one-shot litigators to refrain from settling their cases and instead pursue them to a conclusion with a precedential court decision. They help level the legal playing field between powerful corporate entities and weaker individuals, ensuring that precedents are established in an impartial manner. After introducing JI and SI and demonstrating their superiority over existing legal mechanisms that could, in theory, tackle the problem of biased precedents, this Article explores potential obstacles and strategic challenges associated with JI and SI. It shows that both are doctrinally feasible and have the potential to restore justice to the legal system.

* Ronen Avraham is a Professor of Law at Tel Aviv University and Senior Lecturer at the University of Texas at Austin. **Issachar Rosen-Zvi is a Professor of Law and the Director of the Edmond J. Safra Center for Ethics at Tel Aviv University. We thank Tom Baker, Rachel Bayefsky, Hanoch Dagan, Avihay Dorfman, Alon Klement and Anthony Sebok for valuable comments. We are also grateful to the participants of the faculty seminar at Tel Aviv University for the lively and helpful discussion. Last but not least, we wish to thank Libby Weiss, Yael Meskin, Noam Shtruzman, and Shany Stiller for superb research assistance.