Litigation realities redux.

• Author: Clermont, Kevin M.
• Position: Six phases of a civil lawsuit

Both summarizing recent empirical work and presenting new observations on each of the six phases of a civil lawsuit (forum, pretrial, settlement, trial, judgment, and appeal), the author stresses the needs for and benefits from understanding and using empirical methods in the study and reform of the adjudicatory system's operation.

INTRODUCTION I. FORUM A. Forum Selection B. Forum Effect II. PRETRIAL A. Steps to Termination 1. Pleading 2. Disclosure 3. Discovery 4. Conference 5. Settlement 6. Motion B. Time to Termination III. SETTLEMENT A. Importance of Settlement B. Rate of Settlement IV. TRIAL A. Decline of Civil Trial B. Trial by Judge or Jury V. JUDGMENT A. Win Rates B. Foreigner Effect VI. APPEAL A. Affirmance Effect B. Anti-Plaintiff Effect CONCLUSION INTRODUCTION

A half-dozen years ago, Ted Eisenberg and I started our article entitled Litigation Realities (1) with a quotation of Louis XVI: his journal entry for July 14, 1789, was "Nothing." (2) Our point was that the modern lawyer who ignores empirical research, even though law has long ignored empirical methods, risks giving in retrospect the very same impression as the French king gave. From that starting point, our article tried to explain empirical methods and map an empirical agenda.

Well, a new age has since dawned. The recent years have seen tremendous advances in empirical studies. Much remains to do, of course. But, as the even earlier French proverb put it (although arguably with inaccuracy under some circumstances), "Something is better than nothing." (3)

I propose in this Article to discuss anew what all of us are now learning about litigation, thanks to this increasing use of empirical methods. I shall again treat separately the six phases of a lawsuit: forum selection, pretrial practice, settlement process, trial practice, judgment entry, and appellate practice. For each, I shall describe what I see as important insights from recent empirical publications, while also providing new data on the realities of that phase. As I shall demonstrate, the last half-dozen years have altered our earlier article's understanding of some features of litigation, which was to be expected given that any initial steps into a new field of study must be tentative ones. Thus, the emphasis in this redoing of Litigation Realities, as compared to the original, will appropriately be less on yesterday's news of empirical methods (4) and more on recent empirical results.

1. FORUM

   1. Forum Selection

      The name of the game is forum shopping, as many have observed elsewhere. (5) Lawyers all know this and have lived by it forever. The contribution of recent empirical research, besides confirming the existence of the phenomenon, has been to show that all of those lawyers were not wasting their clients' money on forum fights--because, in fact, forum matters. Forum is worth fighting over because outcome often turns on forum, as I shall explain in the next subpart.

      Forum selection accordingly remains extraordinarily important in the American civil litigation system. Today, after perhaps some initial skirmishing, most cases settle, while few cases reach trial. (6) Yet all cases entail forum selection. The plaintiff's opening moves include shopping for the most favorable forum, be it some state's courts or the federal system, and be it any particular venue within the jurisdiction. (7) Then, the defendant's parries and thrusts might challenge the plaintiffs choice of forum and also might include some forum shopping in return, possibly by removal from state to federal court (8) or by a motion for change of venue. (9) As a consequence, the parties frequently dispute forum. Federal litigators, for example, deal with many more change-of-venue motions than trials. (10) When the dust settles, the case typically does too--but on terms that reflect the results of the shopping and skirmishing. Thus, forum selection is a critical step for litigators, and any fight over forum can be the critical dispute in the case.

      When all these individual incentives cumulate, forum selection also becomes a critical concern of the legal system as a whole. Forum selection is very important not only to the litigator, but also to the office lawyer who is drafting contracts with an eye toward possible future litigation. Not surprisingly, there exists an entire treatise devoted to the subject of forum selection. (11) Moreover, the transactional costs of forum shopping, and its effects on outcome and so on justice, should be important to society.

      Removal provides a good illustration of forum selection. (12) For background, suppose the plaintiffs commence in a state court an action that they could instead have started in a federal district court. All the served defendants acting together may then seek removal, subject to a few exceptions. (13) The defendants must promptly file, in the federal district court sitting in the same locality, a notice of removal. (14) The defendants must give the plaintiffs and the state court notification of the filing. (15) By this activity solely on the part of the defendants, removal is complete. (16) The state court can proceed no further with the action unless and until the federal district court remands it to the state court, as upon a finding that it was by law not removable. (17) A decision to remand, however, is typically not appealable. (18)

      Normally, the defendants can remove only a case that the plaintiffs could have brought in federal court but instead chose to bring in state court. Thus, the group of removed cases are ones where both the plaintiffs and the defendants had a choice of court, but the defendants preferred federal court and possessed the power to trump the plaintiffs' initial choice of state court. The obvious story behind removal, then, is one of forum selection.

      What forces drive the parties' choice between state and federal forum? It is not substantive law, as the same substantive law will apply after removal. However, there are many other considerations that might affect choice, according to empirical studies of attorneys' preferences. (19) Most of these considerations group under four general headings: expected bias against a litigant; logistical and practical concerns; perceived disparity in quality and other characteristics between state and federal judges and between state and federal juries; and the different procedures offered by one or the other court system. (20)

      What about the numbers? Although the overwhelming majority of all U.S. cases are state cases, (21) a surprising number of those cases are removed to federal court. Consider the data on removal presented in Figure 1, which come from a federal database that I shall be using for all six figures in this Article. (22) The graph shows removal over the thirty-seven-year period for which computerized data exist and are available. (23) The graph focuses on a particular head of federal jurisdiction--diversity jurisdiction (24)--not because the pattern appears only there, even if it is particularly salient there, but because a single context makes expression of analysis clearer. The upper line shows the proportion of diversity cases that originated as removals. The lower line shows the proportion of those removed cases that the district court remanded. (25)

      In the original Litigation Realities, we took the data through 2000. The resulting graph (26) exhibited, in its two ascending lines, a surprising time trend. It suggested a removal story of increasing use of removal as a forum selection device and possibly increasing abuse of removal that required more and more remands, a story that nicely conformed with anecdotal impression. (27)

      Then, Professors Eisenberg and Morrison extended the graph through 2003, showing that the numbers were staying at their elevated levels. (28) They observed that during the recent period in which state tort filings noticeably decreased, the numbers of both tort and other diversity cases that rested on removal were steadily or even markedly increasing, with their combined percentage of the whole diversity docket mounting well over 30%. (29) Meanwhile, the percentage of those removed cases that the federal courts remanded to state court had climbed toward 20%, which raised even sharper concerns. (30) These remands, by definition, involved erroneous removal, the correction of which very often involves difficult questions of fact and law and almost always involves considerable time and expense that represent a deadweight loss to the system and the parties. Out of a belief that the increase in erroneous removal might entail an increase in abusive removal, they ended by suggesting possible reform that would provide for more frequent fee-shifting against the remanded defendant. (31)

      A call to action may have been premature. Figure 1 now goes through 2006. It shows that a more modest upward trend persists for removal (32) but the remand trend has unexpectedly reversed. (33) This very recent dive in remand rate is hard to explain. Perhaps the removing defendants are adjusting to the new regime, so that remand rates can return to their historic level of around 10% of the cases removed.

      [FIGURE 1 OMITTED]

   2. Forum Effect

      Let me return to the effect of forum selection on the outcome of cases, and let me define "win rate" as the fraction of plaintiff wins among all judgments for either plaintiff or defendant. (34) Application of empirical methods can then reveal the effect of forum in the context of removal, (35) as well as in the analogous context of transfer of venue between federal district courts. (36)

      Our removal article showed that plaintiffs' win rates in removed cases are very low, compared to original cases in federal court and to state cases. For example, the win rate in original diversity cases is 71%, but for removed diversity cases only 34%. (37) The explanation could be the ready one based on the purpose of removal: the defendants thereby defeat the...