Category Archives: World Justice Project Rule of Law Index

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Access to Justice vs. Revenue: A Zero-Sum Game?

The last post talked about the World Justice Project Rule of Law Index. It focused, among other elements, upon the Index’s sub-factor 7.1, “people can access and afford civil justice.” The Rule of Law Index reveals an apparent paradox: some wealthy countries perform poorly with respect to this sub-factor, while at the same time some poor countries perform if not well then at least better than certain wealthy countries. An obvious example is the United States, which the Index classifies as a “high income” country, but which ranks 94th out of 113 countries with respect to accessible and affordable access to justice. A contrasting example is Kyrgyzstan, which the Index classifies as a “lower middle income” country, but which ranks 36th out of 113 countries for the same sub-factor. Consider also Hungary, which the Index classifies as a “high income” country, but which ranks 71st out of 113 countries, as compared to Malawi, classified as a “low income” country, but which ranks higher than Hungary at 66th.

The WJP emphasizes that its Rule of Law Index is not intended to establish causation. This task is left to others.

I recently came across research that steps up to that challenge. It shines a fascinating light on the paradox of the Index’s sub-factor 7.1. More specifically, it proposes a novel and highly intriguing explanation, at least in part, for why some wealthy countries struggle to assure access to justice for a significant proportion of their populations (namely their poor), while some poor countries succeed in providing access to justice for the large majority of their populations, regardless of a person’s wealth or income.

The research is a working paper by New York University PhD candidate Hannah Simpson, entitled “Access to Justice in Revenue-Seeking Legal Institutions.” In this paper, Simpson builds on the work of Marc Galanter, among others, and notably upon Galanter’s seminal work “Why the ‘Haves’ Come Out Ahead: Speculations on the Limits of Legal Change.” In this article, which was published in 1974 and is today one of the most cited law review articles of all-time, Galanter demonstrates how with respect to litigation in the United States, “repeat players,” and especially those that have the resources necessary to pursue long-term interests, have significant and in most cases decisive advantages over “one shotters,” and especially those of limited resources. Since the publication of Galanter’s article, legal scholars have viewed access fees combined with legal-institutional bias as key impediments to access to the court system in the United States and, more generally speaking, as key impediments to access to justice and to large-scale social change. (“Bias” meaning the degree to which a legal institution’s procedural requirements privilege attributes of the wealthy, like the need for and ability to hire a lawyer).

Simpson takes this vision further. She does this in two manners: (1) by examining the specific question of access fees, and, in particular, the use of a state’s legal system to generate revenue for the state, and (2) by expanding the examination to be global in scope. On the basis of her research, Simpson argues that, in any country, the state’s (that is, government’s) use of the legal system to generate revenue, interacting with other institutional and economic conditions, has a profound effect upon access to justice in that country, but that this effect is different depending upon whether the country is wealthy or poor, and, in wealthy countries, the effect is different for wealthy persons as compared to poor persons in the same country.

For Simpson, we have not paid enough attention to how states use their legal systems—which she refers to as their “property rights institutions”—to generate income. She cites as examples England and the United States, both of which have sought to fix court fees not with the intention to simply cover costs, but, instead, to take advantage of an “untapped increased willingness to pay more,” and with the intention of using the fees to fund other functions of government. Further, states’ “property rights institutions” generate income not only for courts, but also for “other segments of the state legal apparatus,” such as land and other property registrars and licensing agencies. Simpson notes diverse examples, such as India where property registration fees and stamp duties are the third largest source of income for many states, and France and Nigeria, where stamp duties are regularly raised to address revenue deficiencies.

In her paper Simpson seeks to answer this question: when a state uses its “property rights institutions” to generate revenue, what effect does it have both upon access to justice as well as upon competition from private legal services providers? Notably, what effect does it have when the state’s system is institutionally biased in favor of wealthy participants? She seeks to answer this question by developing a series of formal models that capture the interaction between “rights protecting institutions” and a population of citizens.

Wealthy Countries vs Poor

On the basis of Simpson’s models, the effect upon access to justice is as follows: in wealthy countries economic growth increases demand for access to the state’s legal system but decreases supply. This is because wealth and economic development in a wealthy country are liable to motivate the state to increase fees, on the grounds that the wealthy can and will pay them. However, those same fee increases are usually substantial enough to dissuade the poor from using the state’s system and thus there is an overall decrease in access to justice. The greater the “opportunities for commerce” (that is, economic growth) in the wealth country, the more this effect is compounded, Simpson observes. In contrast, in poor countries, economic growth increases not only demand for access to the state’s legal system but also supply. This is particularly the case when the state’s system is institutionally biased in favor of the wealthy, even though such a conclusion may appear counterintuitive. The explanation is that economic growth motivates elites to buy into an otherwise fragile and unappealing institutional framework. This participation increases the system’s effectiveness and thus its appeal, and also leads to reduced administrative costs, enabling the state to reduce its fees, thus increasing accessibility. Further, Simpson observes, the strength of this effect increases the more the state prioritizes the legal system as a revenue-generating mechanism (another counterintuitive observation).

Competition from a Private System

Also on the basis of Simpson’s models, the effect upon competition from private legal services providers (without distinguishing between informal or formal providers) is as follows: In either type of country (wealthy or poor), wealthy social groups are willing to pay hefty premiums for access to private legal institutions, whereas poor or disadvantaged groups will prefer private legal systems only if they are cheaper to access than the state’s. Indeed, poor/disadvantaged groups that have low access to state legal protections would, if offered a private group alternative, pay a premium to be able to continue to access the state’s system. The reason for this is the following: private legal institutions constructed by and for poor groups (examples include Sharia Councils, tribal elders, religious militias and even the mafia) face challenges in achieving the level of effectiveness of state legal institutions. More specifically with respect to private legal institutions constructed by and for poor groups, Simpson notes that that such institutions (or mechanisms) often lack substantial procedural protections, and rely instead upon cheap methods of enforcement, such as the use of violence and/or the use of volunteers that exert peer pressure. In contrast, private institutions constructed for a wealthy/advantaged group (examples include members of a particular industry) can easily exceed the state’s effectiveness, making it worthwhile for a member of the group to opt in even if the fees are higher.

Theoretically, competition from a private system should motivate the state to lower its fees. However, Simpson explains, this does not necessarily occur. To begin, Simpson explains, the wealthier an advantaged group, the higher the premium it is willing to pay to opt out of the state institution and into a private one. In other words, the state would need to develop a system that competes with the private one not on fees but on some other factor valued by the advantaged group. If the state were to succeed in this, then it would, likely, need to increase its administrative costs, and consequently its fees, rather than lower them. As for the state going in the other direction, and lowering its fees to the extent it can in order to attract less wealthy groups, Simpson argues that if the state is concerned with generating revenue, then it may find this to be more trouble than it is worth, especially if that less wealthy (but still wealthy enough to pay something) group is not large as compared to the rest of the population. Finally, there is a point below which the state cannot reduce its administrative costs and thus is simply unable to compete with private institutions constructed for poor groups. In those cases, Simpson explains, the state will simply cede to those private institutions. In sum, in situations where a state is able or obliged to compete with a private system, it doesn’t mean that it will necessarily choose to do so, or that it will make sense for it to do so, especially if the state prioritizes the generation of revenue over assuring wide access to justice.

Simpson continues: when any group, wealthy or poor, opts out of the state system in favor of a private one, the state system suffers in effectiveness. This is because the effectiveness of a state legal institution depends in large part upon the number of citizens that have recourse to it. This negative effect is compounded when the exit is by a poor group, because in that case the state will also raise fees. Thus, when a poor group exits the state system, the remaining population is unequivocally worse off because the state system becomes both less effective and more expensive. In contrast, the exit by a wealthy group presents a paradox: the remaining population theoretically could benefit from the wealthy group’s exit, but only under certain conditions: when there is lower economic growth (that is, there are fewer economic opportunities in society or returns on investment are not increasing) and when income inequality is increasing. (This is because these are the conditions under which the state is most likely to lower its fees in response to the exit of the wealthy group). However, Simpson explains, wealthy groups are not motivated to exit the state system in favor of a private one under those conditions; they are motivated to do so under the opposite conditions, that is, when there is higher economic growth (that is, there are greater economic opportunities in society or returns on investment are increasing) and when income inequality is decreasing. (This is because these are the conditions under which a wealthy group is more likely to benefit from participation in a private system rather than a public one, and the group is willing to pay a higher premium to do so). Thus, if a wealthy group is motivated to exit the state system in favor of a private one, its exit is unlikely to benefit the remaining population because the same conditions that motivate the wealthy group to exit the state system are the same conditions that discourage the state from lowering its fees.

This is a complex discussion with many moving parts. On top of that, Simpson’s research is new and, as yet, exists only in the form of an evolving working paper. As she moves past her preliminary work towards something more definitive, her argumentation and her conclusions will in all likelihood continue to evolve. Nevertheless, her work thus far is highly intriguing and it already merits attention.

A future post will consider what some of the important implications of Simpson’s research may be.

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Blog, World Justice Project Rule of Law Index

WJP Rule of Law Index: Rankings for Four Sub-Factors

Recently someone contacted me with questions about the World Justice Project Rule of Law Index. The questions were good ones, and they got me thinking that it’s a topic worth a blog post.

First, what is the World Justice Project (WJP)? It was created in 2006 as a presidential initiative of the American Bar Association (ABA). In 2009 it became an independent 501(c)(3) non-profit, with offices located in Washington, DC and Seattle, Washington. Former ABA President William Neukom is its CEO, and another former ABA President, William Hubbard, is its Chairman.

One of the principal activities of the WJP is the preparation of an annual (or nearly so) Rule of Law Index. The WJP’s website describes its Rule of Law Index as measuring “how the rule of law is experienced and perceived by the general public across the globe. It is the world’s leading source for original, independent data on the rule of law.”

The Index is prepared on the basis of polls of a country’s general population and of questionnaires submitted to in-country experts. The WJP’s process and criteria for assessing adherence to the rule of law have evolved since the organization’s founding. Today its process uses 47 indicators that are organized around nine wide-ranging themes, referred to as “factors:” constraints on government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice, criminal justice, and informal justice. The 2009 Index assessed 35 countries; the 2016 Index (the most recent) assessed 113 countries.

The Index provides an overall score and ranking for each country based upon all of the factors, and also provides each country’s score for each specific sub-factor. Unfortunately, however, for most sub-factors the Index does not provide a ranking of each country by its score for that individual sub-factor. This is understandable in that it would make the already lengthy report unwieldy (the 2016 Index is already 209 pages plus a separate excel file) . At the same time, it is unfortunate as the sub-factor rankings reveal information about a country that is not evident on the basis of its overall score and rank.

Accessible and Affordable Civil Justice

Let’s take the United States, for example. In 2014, the United States’ overall rank (that is, based upon all sub-factors combined) was 19th out of 98 countries. In 2015, it again ranked 19th, this time out of 102 countries. In 2016 its overall ranking went up slightly, to 18th out of 113 countries. While those rankings are not stellar, they are respectable. But what if we dig deeper and look, most notably, at sub-factor 7.1: “people can access and afford civil justice?” This sub-factor appeared for the first time in the 2012-13 Index; that Index explains that this sub-factor combines what had previously been three different sub-factors, namely that: (i) people are aware of available civil remedies, (ii) people can access and afford legal advice and representation, and (iii) people can access and afford civil courts. In sum, the multi-component sub-factor 7.1 measures how easy (or difficult) it is for the average citizen of a country to assert and protect his/her rights and to understand his/her duties under civil (as opposed to criminal) law.

If we look at the rank of the United States specifically with respect to sub-factor 7.1, we see a very different picture as compared to the country’s overall ranking. With respect to this specific sub-factor, in both 2014 and 2015, the US ranked 65th. And in 2016 its ranking for this sub-factor plummeted to 94th. This ranking places the United States behind countries like Albania, Belarus, Bulgaria, Kazakhstan, Kyrgyzstan, Moldova, Myanmar, Russia, Venezuela and Zimbabwe. To be clear—this means that the persons living in those countries have better access to civil justice than Americans do. In most if not all aspects of their lives, they are better able to learn their rights and obligations, and better able to assure their rights and obligations are respected. Let’s repeat that list: Albania, Belarus, Bulgaria, Kazakhstan, Kyrgyzstan, Moldova, Myanmar, Russia, Venezuela and Zimbabwe all have better civil justice systems as compared to the United States.

This is not a respectable outcome. To the contrary, it is an unqualified disaster—for American citizens and for the country as a whole. Yet you’d never realize the full extent of this fundamental problem with the rule of law in the United States if you only considered the country’s overall score.

Freedom from Discrimination in Civil and Criminal Justice

Some of the other sub-factors also merit a closer look. Sub-factor 7.2 measures the extent to which a country’s “civil justice is free of discrimination.” With respect to this sub-factor, in 2014 the US ranked 69th of 99 countries, and in 2015 the US ranked 67th of 102 countries. In 2016, the US ranking also plummeted (albeit not as far as its rank for 7.1) falling to 84th of 113 countries. Some of the countries that rank higher than the US with respect to this sub-factor include Burkina Faso, Colombia, Romania, Sierra Leone, South Africa, and Uzbekistan. That means that the civil justice systems of those countries are less discriminatory than that of the United States.

Moving from civil to criminal justice, sub-factor 8.4 measures the extent to which a country’s “criminal system is impartial” and non-discriminatory. For this sub-factor, in 2012-13, the US ranked a low 76th out of 97 countries. In 2014, its rank jumped up to 47th out of 99 countries. However, in 2015 it fell again, to 64th out of 102 countries, and 2016 showed little improvement with a rank of 61st out of 113 countries. With respect to this sub-factor, the US ranks behind Albania, Belarus, Nigeria, Romania, South Africa, Ukraine and United Arab Emirates. That means that the criminal justice systems of those countries are less discriminatory than that of the United States.

Effective Guarantee of Labor Rights

A final sub-factor that merits attention is 4.8, which measures the extent to which a country’s “fundamental labor rights are effectively guaranteed.” The 2016 Index explains that this sub-factor includes the right to collective bargaining, the prohibition of forced and child labor, and the elimination of discrimination with respect to employment and occupation. For this sub-factor, in 2012-13 the US ranked 52nd out of 97 countries. In 2014 its rank shot up, to 32nd out of 99 countries, and its rank went higher still in 2015, to 28th out of 102 countries. However, in 2016 its rank for this sub-factor fell sharply, to 59th out of 113 countries. With respect to this sub-factor, the US ranks behind Côte d’Ivoire, Romania, Russia, Senegal, Ukraine and Uzbekistan. The US ranking behind Uzbekistan is particularly noteworthy given that the very government of Uzbekistan has implemented and strictly enforces over its own population a system of forced labor.

Download Rankings for Four Sub-Factors (All Countries Indexed)

Below you can view as well as download an excel file that contains the full rankings for these four sub-factors, from 2012-13 through 2016. The data in this excel file was obtained from the World Justice website “Current & Historical Data Download.” The file includes all the countries indexed by the WJP for the year in question. For ease of analysis and comparison, the file below highlights data for these five countries: United States, United Kingdom, Canada, Australia and France.

The next post will focus on sub-factor 7.1: “people can access and afford civil justice.” In particular, it will consider a newly proposed and highly intriguing explanation for why the United States as well as certain other wealthy countries face such challenges when it comes to accessible and affordable civil justice.

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