Academic journal article Fordham Journal of Corporate & Financial Law

Lecture: Are Federal Judges Competent? Dilettantes in an Age of Economic Expertise

Academic journal article Fordham Journal of Corporate & Financial Law

Lecture: Are Federal Judges Competent? Dilettantes in an Age of Economic Expertise

Article excerpt

JUDGE RAKOFF: The title of my little talk here tonight is "Are Federal Judges Competent?" This naturally raises the question of whether I am competent to answer that question. I put this question to myself, and, after careful consideration of both sides of the argument, concluded that I am competent to determine whether I am competent. As H. L. Mencken once said, "A judge is a law student who grades his own exams."

But the sub-title of my talk - "Dilettantes in an Age of Economic Expertise" - is more revealing of what this talk is about, which is whether generalist judges and courts of general jurisdiction still make sense in an era of ever greater economic specialization. With the advent of the administrative state in the twentieth century, much of the power of both legislatures and courts was ceded to administrative agencies - in the supposed interest of enhanced expertise. But for the most part it was courts of general jurisdiction, and no special expertise, that were the ultimate arbiters of whether the administrative agency had acted fairly and in accordance with its legislative mandate. Over the past some decades, however, there has been an accelerating trend toward creating specialized courts, that is, courts that specialize in specific subject matters. Although these courts vary widely, they are premised on the common assumption that limiting the subject matter of a court to a particular kind of controversy will bring an increased expertise to the resolution of such controversies.

In New York State, for example, you have the surrogate courts (dealing with probate matters), the housing courts, the family courts, the drug courts, and so forth. Although the trend is less pronounced at the federal level, even there you have the bankruptcy courts, the tax court, the court of international trade, and, of particular interest, two appellate courts that have a semi-specialized jurisdiction: the D. C. Circuit, which has exclusive jurisdiction over many, though not all, administrative appeals, and the Federal Circuit, which has exclusive jurisdiction over patent appeals. In a more diffuse sense, you also have the growth within administrative agencies of administrative law courts that are called upon to adjudicate certain controversies in their specialized areas.

Very recently, there has also been a trend in many states to create specialized courts to deal with corporate and business disputes. Part of the impetus for this development comes from the success of the Delaware Chancery Court, which, somewhat ironically, did not begin as a specialized court but has in some sense come to be viewed as one because it deals with so many corporate law issues in a state where most large U.S. corporations are incorporated. (Incidentally, Delaware's hegemony in this regard is now being challenged by such diverse places as Nevada and the Cayman Islands; but over sixty percent of Fortune 500 companies are still incorporated in Delaware.)

In any event, it is widely perceived that part of Delaware's attractiveness to business is not just its pro-business corporate laws themselves, but also the expertise of its courts in interpreting those laws, and the result has been that no fewer than nineteen other states have created specialized business courts. In New York State, for example, this takes the form of the Commercial Part of the New York State Supreme Court, where complex commercial cases are sent for expedited treatment.

While it may be too soon to judge these new business courts, so far they seem to have been well received. But partly this is because the judges who have been assigned to them are often the most experienced and best regarded judges from the courts of general jurisdiction; so it is difficult to tell whether the success is the result of specialization or of simply staffing these courts with the best generalist judges. Still, it has been suggested that even these very good generalist judges, when called upon to limit their focus to sophisticated business cases, develop an enhanced expertise that makes them better able to understand the financial, economic, and commercial complexities of these cases, and thus better able to render more informed and fairer decisions. …

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