Local Legal Culture Research Articles

Globalization, Decentralization, and the Subnational Debt Problem

According to the World Bank, decentralization of government is a pivotal force that will shape global development policy in the 21st Century. Subnational debt restructuring has emerged, however, as one of decentralization's most difficult problems. Financially troubled municipalities face many of the same concerns, for example, as financially troubled nations: holdout creditors can stymie collective attempts at debt restructuring, and reliance on politically-motivated lenders of last resort (the International Monetary Fund in the case of troubled nations, the central government in the case of troubled municipalities) can foster moral hazard. In a recent article, I argued that an international convention for sovereign debt restructuring based on several fundamental principles of bankruptcy reorganization law can effectively address these concerns for nations. In this article, I argue that similar principles can even more easily be applied to the financial problems of subnational governments. To this end, I propose a model law based on these principles that might form the foundation for national laws, informed by local political and legal culture. Then, using the Japanese municipal crisis as an example, I show that countries enacting such a law can prudently and equitably resolve their subnational debt burdens.

Global Decentralization and the Subnational Debt Problem

According to the World Bank, decentralization of government is a pivotal force that will shape global development policy in the twenty-first century. Subnational debt restructuring has emerged as one of decentralization’s most difficult problems. Financially troubled municipalities face many of the same concerns, for example, as financially troubled nations: holdout creditors can stymie collective attempts at debt restructuring, and reliance on politically motivated lenders of last resort (the International Monetary Fund in the case of troubled nations, the central government in the case of troubled municipalities) can foster moral hazard. In a prior article, I argued that an international convention for sovereign debt restructuring based on several universal principles of bankruptcy reorganization law can effectively address these concerns for nations. In this Article, I argue Copyright © 2002 by Steven L. Schwarcz. † Professor of Law, Duke University School of Law; Faculty Director, Duke University Global Capital Markets Center; Professor (Adjunct) of Business Administration, Fuqua School of Business. E-mail: schwarcz@law.duke.edu. The author thanks Michael Byers, Hang-do Choi, Wilson Freyermuth, David Gelfand, Clayton P. Gillette, Malcolm Grant, W. Bartley Hildreth, Shinsaku Iwahara, Martin Loughlin, Ernfred Olsen, Daniel Tarullo, Jacob Vigdor, and the participants in a Global Capital Markets Center interdisciplinary workshop at Duke University for helpful comments on drafts of this Article, and Susan Z. Jorgensen, Stephen E. Smith, and Youngsung Suh for research assistance. The author is indebted to Ernfred (“Ernie”) Olsen for confirming the importance of this topic and to Financial Security Assurance, Inc., Standard & Poor’s Ratings Group, and Moody’s Financial Services, Inc. for providing invaluable background information and sources. SCHWARCZ.DOC 03/01/02 1:16 PM 1180 DUKE LAW JOURNAL [Vol. 51:1179 that similar principles can be applied even more easily to the financial problems of subnational governments. To this end, I propose a model law based on these principles that might form the foundation for national laws, informed by local political and legal culture. Then, using the Japanese municipal crisis as an example, I show that countries enacting such a law can prudently and equitably resolve their subnational debt burdens.

A Theory of Legal Strategy

By the conventional view, case outcomes are largely the product of courts' application of law to facts. Even when courts do not generate outcomes in this manner, prevailing legal theory casts them as the arbiters of those outcomes. In a competing strategic view, lawyers and parties construct legal outcomes in what amounts to a contest of skill. Though the latter view better explains the process, no theory has yet been propounded as to how lawyers can replace judges as arbiters. This article propounds such a theory. It classifies legal strategies into three types: those that require willing acceptance by judges, those that constrain the actions of judges, and those that entirely deprive judges of control. Strategies that depend upon the persuasion of judges are explained through a conception of law in which cases and statutes are almost wholly indeterminate and strategists infuse meaning into these empty rules in the process of argumentation. That meaning derives from social norms, patterns of outcomes, local practices and understandings, informal rules of factual inference, systems imperatives, community expectations, and so-called public policies. Constraint strategies operate through case selection, record making, legal planning, or media pressure. Strategists deprive judges of control by forum shopping, by preventing cases from reaching decision, or by causing them to be decided on issues other than the merits. The theory presented explains how superior lawyering can determine outcomes, why local legal cultures exist, how resources confer advantage in litigation, and one of the means by which law evolves.

Consumer Bankruptcy in the United States: A Study of Alleged Abuse and of Local Legal Culture

This paper describes certain central aspects of the operation of the consumer bankruptcy system in the United States. It combines government data with the investigators' empirical data from two large studies done over a decade to explore two types of questions. The first area of investigation relates specifically to bankruptcy policy. The object is to identify the categories of persons principally served by the consumer bankruptcy system and to determine if suggestions of widespread abuse of that system by debtors are well-founded. The paper reports that the system is used primarily by the middle-class. It also reports that there is no evidence of widespread abuse. The second area of investigation is explanation of differences in the operation of the system in different regions of the country, differences that have persisted over twenty years despite major changes in legal rules and economic conditions. The paper argues that these differences are not explicable in terms of formal legal rules or a simple economic model and that a better explanation of the data is that the differences are the product of a "local legal culture" in each region.

What Have We Learned About Court Delay, “Local Legal Culture,” and Caseflow Management Since the Late 1970s?

Research on court delay in the late 1970s has led us to focus more on “local legal culture” than on court resources and formal rules or procedures in our efforts to improve the pace of litigation. In the 1980s, aggressive caseflow management was an important part of our efforts to change local legal culture. Yet our overall results have been mixed. What must we do in the future? We must take further steps to refine caseflow management, but we must at the same time consider other factors possibly linked to local legal culture that could be changed through other kinds of programs. Court structure and the resources available to courts cannot be overlooked, and such theories of organization dynamics as the “Abilene Paradox” may suggest further ways to address the problem.

Barristers and the Growth of Local Justice in England and Wales

The putative emergence of local legal cultures poses important questions both for the geography of law and for access to justice which have been affected by the unprecedented changes in the legal system of England and Wales since the early 1970s. There have been large increases in public funding through the Legal Aid Scheme and the Crown Prosecution Service, a rapid growth in the numbers of practising lawyers and decentralization of many of the higher courts. As part of this process, the distribution of barristers the advocates in the legal system has begun to alter. This paper examines the nature and geographical significance of the growth in the number of barristers, why these changes are occurring and the extent to which they could contribute to the emergence of a more locally-based legal system.

Local Legal Culture and the Control of Litigation

In 1983, the Federal Rules of Civil Procedure were modified to mandate sanctions against attorneys who filed frivolous pleadings or motions or who failed to make reasonable efforts to verify facts or statements of law made in pleadings or motions. There is substantial variation among federal judicial districts in the use of this Rule 11 provision. To what degree can these variations be explained by situational or legal factors? Does one need to use a concept such as local legal culture to account for at least some of the variation? These are the questions addressed by this article. We find that variations in most Rule 11-related activities can be explained by structural and situational factors. We conclude that beyond the expectations created by specific structural and legal factors, one does not need to resort to local legal culture to explain Rule 11-related phenomena. We suggest that the conditions that make local legal culture a useful construct in the context of the criminal courts may not apply in the civil justice system.

Laws, Models, and Real People: Choice of Chapter in Personal Bankruptcy

It has been a central assumption in bankruptcy policy debates that financially troubled persons faced with bankruptcy will respond to economic incentives and disincentives. Two provisions of the Bankruptcy Code (Chapters 7 and 13) are most commonly used by individual debtors. Under Chapter 7 debtors agree to give up all their property (n excess of state-determined exemptions) to a trustee for sale and distribution to creditors. Under Chapter 13 debtors keep all their property but agree to pay all or part of their debts over three to five years. This empirical study of fifteen hundred consumers in three states explores whether economic incentives and disincentives are in fact the chief factors influencing choice of chapter. The analysis demonstrates that while economic factors play a part, noneconomic factors are also significant, among them intra- and interstate migration, marital status, self-employment, state of residence, and local legal culture. We conclude that to explore fully how individual decisions are made, the simplistic economic model must be replaced by a more sophisticated model that accounts for both economic and noneconomic factors.

Legal Culture: A Re-Examination of the Adversarial Perspective

Analysts of courtroom processes typically focus on the predictive power of legal and extra-legal determinants upon actual case outcomes. The present research, by looking at practitioner responses to hypothetical felony cases, focuses on adversariness and local legal culture as predictors of attitudes toward case disposition time and sentencing. First, we examine Church's (1982) findings regarding legal cultures with the inclusion of statistical conrols, absent in his analysis. Second, we examine four issues salient to practitioners: preferred pace of litigation, preferred sentence for guilty pleas, attitudes toward 'just deserts", and practitioner interpersonal relations. Using the Eisenstein and Jacob (1977) typology of workgroup goals, indicants of these issues are separated into two categories: expressive and instrumental. We find that instrumental aspects are most strongly predicted by courtoom identity, in support of local legal culture. On the other hand, expressive aspects are most affected by practiioner type, in support of the adversarial model.

Examining Local Legal Culture

This study examines the contours of local legal culture in four criminal trial courts. Local legal culture is conceptualized as common practitioner norms governing case handling and participant behavior in a court. A questionnaire consisting of descriptions of 12 hypothetical cases, together with questions regarding the appropriate mode of disposition, disposition speed, and sentence, was completed by judges, defense attorneys, and prosecutors in each of the courts. Responses on these questions are compared across courts and various types of practitioners. The responses are also compared with analogous data on actual case dispositions in each of the courts. The major substantive conclusion of the research is that the existence of local legal culture—if defined as attitudinal agreement on proper disposition of criminal cases—is most apparent on issues of a procedural nature: disposition time and the necessity of a trial to resolve issues in the case. On these procedural dimensions there is general agreement among the lawyers and judges practicing in a court; furthermore, the contours of this agreement tend to differ across courts and to be related to actual practices (as illustrated by the samples of closed cases). On issues relating more to the substance of the cases—the appropriateness of plea concessions and the proper sentence—much more intracourt disagreement emerges. This disagreement is consistent with traditional notions of the roles of opposing counsel in an adversary setting, suggesting that at least attitudinal adversariness is present in the courts examined.

Examining Local Legal Culture

Examining Local Legal Culture