Measuring, Monitoring, and Managing Legal Complexity

• Author: J.B. Ruhl & Daniel Martin Katz
• Position: David Daniels Allen Distinguished Chair of Law, Vanderbilt University Law School/Associate Professor of Law
• Pages: 191-244

191

Measuring, Monitoring, and Managing

Legal Complexity

J.B. Ruhl & Daniel Martin Katz

ABSTRACT: The American legal system is often accused of being “too

complex.” For example, most Americans believe the Tax Code is too complex.

But what does that mean, and how would one prove the Tax Code is too

complex? Both the descriptive claim that an element of law is complex and the

normative claim that it is too complex should be empirically testable

hypotheses. Yet, in fact, very little is known about how to measure legal

complexity, much less how to monitor and manage it.

Legal scholars have begun to employ the science of complex adaptive systems,

also known as complexity science, to probe these kinds of descriptive and

normative questions about the legal system. This body of work has focused

primarily on developing theories of legal complexity and positing reasons for,

and ways of, managing it. Legal scholars thus have skipped the hard part—

developing quantitative metrics and methods for measuring and monitoring

law’s complexity. But the theory of legal complexity will remain stuck in theory

until it moves to the empirical phase of study. Thinking about ways of

managing legal complexity is pointless if there is no yardstick for deciding

how complex the law should be. In short, the theory of legal complexity cannot

be put to work without more robust empirical tools for identifying and

tracking complexity in legal systems.

This Article explores legal complexity at a depth not previously undertaken in

legal scholarship. First, the Article orients the discussion by briefly reviewing

complexity science scholarship to develop descriptive, prescriptive, and ethical

theories of legal complexity. The Article then shifts to the empirical front,

identifying potentially useful metrics and methods for studying legal

complexity. It draws from complexity science to develop methods that have

 David Daniels Allen Distinguished Chair of Law, Vanderbilt University Law School.

 Associate Professor of Law, Chicago-Kent College of Law; External Affiliated Faculty,

CodeX: The Stanford Center for Legal Informatics.

We are thankful for comments from participants in workshops conducted by Lancaster

University, the University of San Diego’s Center for Computation, Mathemat ics, and Law; the

Society for Evolutionary Analysis in Law; and the German Law and Society Association. We also

are grateful to our respective institutions for research support. Please direct comments or

questions to jb.ruhl@vanderbilt.com and dkatz3@kentlaw.iit.edu.

192 IOWA LAW REVIEW [Vol. 101:191

been or might be applied to measure different features of legal complexity.

Next, the Article proposes methods for monitoring legal complexity over time,

in particular by conceptualizing what we call Legal Maps—a multi-layered,

active representation of the legal system network at work. Finally, the Article

concludes with a preliminary examination of how the measurement and

monitoring techniques could inform interventions designed to manage legal

complexity by using currently available machine learning and user interface

design technologies.

I. INTRODUCTION ............................................................................. 193

II. THE COMPLEXITY SCIENCE THEORY OF LEGAL COMPLEXITY ....... 201

A. DESCRIPTIVE THEORIES ........................................................... 203

B. PRESCRIPTIVE THEORIES .......................................................... 207

C. ETHICAL THEORIES ................................................................. 210

III. MEASURING LEGAL COMPLEXITY .................................................. 211

A. COMPLEXITY AND SYSTEM STRUCTURE ..................................... 212

1. Agents and Agent Sets: Composition, Classification, and

Diversity .......................................................................... 212

2. Formal Architecture: Trees and Other Formal

Hierarchies .................................................................... 213

3. Network Architecture: Emergent Hierarchies ............ 216

4. Information Storage and Computation ....................... 222

B. COMPLEXITY AND SYSTEM BEHAVIOR ....................................... 224

1. Networks, Trees, Diffusion, and System Behavior ...... 226

2. Emergence, Feedback, Laplace’s Demon, and System

Prediction ...................................................................... 228

i. Feedback .................................................................... 229

ii. Emergence .................................................................. 229

IV. MONITORING LEGAL COMPLEXITY ............................................... 231

A. DESIGNING “LEGAL MAPS” FOR NETWORK BEHAVIOR

MONITORING .......................................................................... 232

B. TESTING SYSTEM PERFORMANCE .............................................. 234

1. Synchronization Monitoring ........................................ 234

2. Stress Tests ..................................................................... 237

3. Interdependent Systems Analysis ................................. 237

C. COMPARATIVE DESIGN STUDIES ................................................ 238

V. MANAGING LEGAL COMPLEXITY ................................................... 238

A. DEFINING TOO MUCH COMPLEXITY ......................................... 238

2015] LEGAL COMPLEXITY 193

B. MANAGING TOO MUCH COMPLEXITY ....................................... 240

1. Real-Time Monitoring Leveraging Learning

Algorithms ..................................................................... 240

2. Designing Legal User Interfaces .................................. 242

VI. CONCLUSION ................................................................................ 243

I. INTRODUCTION

Do you believe the U.S. Tax Code is too complex? If so, you are in good

company—most Americans believe the Tax Code is too complex.1 Many legal

scholars believe the Tax Code is too complex.2 Even the Internal Revenue

Service’s own National Taxpayer Advocate Service believes the Tax Code is

too complex.3 And this is not a new sentiment in society—“[s]ince the

inception of the federal income tax, commentators have viewed complexity

as virtually inevitable.”4 But prove it! That’s right, prove the Tax Code is too

complex.

How would you do that? How would you prove the Tax Code—or any

other statute or regulation—is too complex? Making such a claim about some

element of law requires proof of two related hypotheses. The first is

descriptive: the law is complex. The second is normative: the law is too complex.

Both are, in theory, empirically testable hypotheses. The claim that a body of

law is complex requires some convention for defining legal complexity and

1. Surveys routinely find the vast majority of American taxpayers believe the Code is too

complex. See, e.g., Courtney Coren, Tax Poll: Most Americans Say Tax Code Is Too Complicated,

NEWSMAX (Apr. 11, 2013, 9:27 AM), http://www.newsmax.com/Newsfront/quinnipiac-poll-irs-

tax/2013/04/11/id/498974. Google searches for “U.S. tax code too complex” and “tax code is

too complex” yield millions of sites.

2. For a small slice, see Michelle Arnopol Cecil, Toward Adding Further Complexity to the

Internal Revenue Code: A New Paradigm for the Deductibility of Capital Losses, 99 U. ILL. L. REV. 1083

(1999); Steven A. Dean, Attractive Complexity: Tax Deregulation, the Check-the-Box Election, and the

Future of Tax Simplification, 34 HOFSTRA L. REV. 405 (2005); Samuel A. Donaldson, The Easy Case

Against Tax Simplification, 22 VA. TAX REV. 645 (2003); James S. Eustice, Tax Complexity and the

Tax Practitioner, 45 TAX L. REV. 7 (1989); Stanley A. Koppelman, At-Risk and Passive Activity

Limitations: Can Complexity Be Reduced?, 45 TAX L. REV. 97 (1989); Susan B. Long & Judyth A.

Swingen, An Approach to the Meas urement of Tax Law Complexity, 8 J. AM. TAX ASS’N 22 (1987);

Edward J. McCaffery, The Holy Grail of Tax Simplification, 1990 WIS. L. REV. 1267; John A. Miller,

Indeterminacy, Complexity, and Fairness: Justifying Rule Simplification in the Law of T axation, 68 WASH.

L. REV. 1 (1993); and Deborah L. Paul, The Sources of Tax Complexity: How Much Simplicity Can

Fundamental Tax Reform Achieve?, 76 N.C. L. REV. 151 (1997).

3. 1 TAXPAYER ADVOCATE SERV., INTERNAL REVENUE SERV., NATIONAL TAXPAYER ADVOCATE

2012 ANNUAL REPORT TO CONGRESS 3 (2012), http://www.taxpayeradvocate.irs.gov/2012-Annual-

Report/downloads/Most-Serious-Problems-Tax-Code-Complexity.pdf (“The most serious problem

facing taxpayers—and the IRS—is the complexity of the Internal Revenue Code (the ‘ta x code’).”).

4. Eric Kades, The Laws of Complexity and the Complexity of Laws: The Implications of

Computational Complexity Theory for the Law, 49 RUTGERS L. REV. 403, 408 (1997) (citing

commentary from the early 1900s).