Does the Law Matter? Win Rates and Law Reforms

• Date: 01 June 2014
• Author: David Gliksberg
• DOI: http://doi.org/10.1111/jels.12044
• Published date: 01 June 2014

Does the Law Matter? Win Rates and

Law Reforms

David Gliksberg*

The empirical legal study of tax law has developed greatly in recent years and has yielded

many insights into the judiciary in particular and the legal system as a whole. This article

continues this process by evaluating, through the prism of tax litigation and based on

theories of analyzing judicial decision making, the effect of law reforms on win rates and

whether win rates can help predict future law reforms. The analysis is based on a compre-

hensive database (census, not sample) of 1,330 tax decisions of the Israeli Supreme Court

(ISC), divided into seven tax categories, and covering 60 years of tax jurisprudence since

Israel’s establishment (1948–2008). The data enabled us to find changes in win rates over

time, among different tax categories, and in relation to several tax reforms. The detailed

analysis found that law reforms have a significant effect on win rates and that win rates have

a predictive ability for future law reform. These findings strengthen the legal model and the

neo-institutional theory and do not provide support for selection effect theory or the

attitudinal model regarding their explanatory function in analyzing judicial decisions.

I. Introduction

The empirical legal study of tax law has developed greatly in recent years (e.g., Staudt 2003;

Schneider 2001; Brennan et al. 2009a, 2009b; Staudt et al. 2004–2005, 2006; Epstein et al.

2003). This development has yielded many interesting findings within the tax arena, such

as confirming or refuting beliefs about current tax regimes and economic theories, but it

has also suggested at times more general insights into the judiciary and the legal system as

a whole (e.g., Staudt et al. 2006:1800–02; Staudt 2004:891). This article follows the same

path. It evaluates, through the prism of tax litigation, the relationship between win rates

and law reforms, focusing on the effect of law reforms on win rates, and the ability to predict

law reforms by using win rates.

*Satinover Professor of Tax Law, Director of the Harry and Michael Sacher Institute for Legislative Research and

Comparative Law, Faculty of Law, Hebrew University. An earlier version was presented at the Faculty Seminar of the

Hebrew University Law School, at the 2012 Conference of the Israel Law and Society Association (ILSA), at the 2013

Cornell and Tel Aviv Law Schools Conference, and at the 2013 Columbia and Hebrew University law schools’ Tax

Conference. I am very grateful to Theodore Eisenberg for his detailed and excellent comments. I also thank Yoav

Dotan, Michael Graetz, Ehud Guttel, Alex Raskolnikov, and Eyal Zamir for their comments. I thank Yaniv Lushinsky

for his valuable research assistance. I also thank Inbal Golany, Ori Katz, and Nadiv Mordechay for their research

assistance and Alex Klien and Uri Isserless for their statistical assistance. I thank the Israel Science Foundation (ISF),

the Maurice Falk Institute for Economic Research, and the Aharon Barak Center for Interdisciplinary Legal Research

at the Hebrew University for their financial support. Lastly, I thank Columbia Law School for its wonderful hospitality

while I was writing this article.

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Journal of Empirical Legal Studies

Volume 11, Issue 2, 378–407, June 2014

378

Evaluating the effect of law reforms on win rates raises many interesting issues (e.g.,

Richards & Kritzer 2002; Richards et al. 2006; Bailey & Maltzman 2008). First, does law

reform have any association with litigants’ win rates. Second, if such an effect exists, does

law reform increase the plaintiffs’ win rates or those of the defendants’? Third, if law reform

affects win rates, is there an association between the content of the reform and the change

in win rate? Fourth, do win rates have a predictive ability for future law reform? Is it possible,

for example, to signal that a law reform is expected by analyzing litigants’ win rates?

Evaluating the relationship between win rates and law reforms can not only help

detect whether a law reform is expected, it also assists us in assessing which legal area is in

a need of revision by comparing litigants’ win rates in an area of law with win rates in similar

legal areas. Applying these methods evidently requires that the legal areas being compared

have similar characteristics. This study compares the win rates of different groups of tax

cases that have similar characteristics, as described below.1

To address the issues at hand, we have compiled a full census of 60 years of Israel

Supreme Court (ISC) tax jurisprudence, over 1,300 cases, to identify litigants’ win rates over

time. The Israeli tax arena has one characteristic that provides a useful test of the relation

between law reform and case outcomes: Israeli tax law has undergone various law reforms,

large and small, and it may thus help us answer some of these important questions.

The article proceeds as follows: the second section reviews the literature regarding

the four major approaches toward empirical legal analysis of judicial decision making:

selection effect theory, attitudinal theory, the legal model, and the neo-institutional

approach. The third section describes the database that will be the basis of our discussion.

The fourth section presents the relevant findings and discusses our first hypothesis regard-

ing the effect of law reform on win rates and the fifth section presents the relevant findings

and discusses our second hypothesis concerning the use of win rates as a predictor of future

law reforms. Lastly, in the sixth section, concluding remarks are given.

II. Literature Review: Does the Law Matter in Judicial

Decision Making?

The theories for assessing outcomes of litigation have changed over the years. The basic

distinction between the theories is whether they support the contention that the law matters

and affects justices’ rulings and, if they do support this contention, to what extent. In this

section, we only briefly present the theories, since they have been extensively described in

many publications.2

1See Section V.A.

2For a general methodological discussion, see Epstein and King (2002). For an empirical study that integrates models

from the legal and economic areas with models from political science, see de Figueiredo (2005), examining the effect

of judicial ideology on the selection and outcome of telecommunications regulatory cases, and Yates and Coggins

(2009), creating a model that combines the selection theory and the attitudinal theory.

Win Rates and Law Reforms 379