2 10/9/00 DRAFT-DO NOT CITE WITHOUT PERMISSION VOL #: parties dispute real cases. Real judges apply real law. Is there a need for synthetic law? This article maintains that there is. I advocate a system of synthetic common law for use primarily in private dispute resolution In this system, private synthetic law associations will publish menus of cases and commit to resolve disputes based on those cases. Private parties will select from among these competing associations a particular menu of cases to govern their contracts. The selected association will adjudicate any disputes based on those cases. Court will have limited review of association judgments This system will fill a sizeable gap in current law, both in theory and in practice. In terms of theory, synthetic common law is an attractive alternative to common law, statutory law, private law, and private adjudication. Because synthetic common law would be based on ex ante findings by the parties, it more likely would reflect societal practice and the parties' expectations than does common law, which is based on ex post findings by a judge or jury. Because synthetic common law would be based on broadly ranging menus of cases, it would avoid the inflexibility of statute-based regimes. Because synthetic common law would rely on analogical reasoning by private judges based on cases specified ex ante, it would avoid certain intractable problems associated with private contract provisions including the difficulty of specifying contingencies of rapidly evolving practices. Because synthetic common law would be administered privately it would generate the benefits of existing private dispute resolution regimes; moreover, because synthetic common law would provide to parties a list of cases to govern any dispute, it would avoid he uncertainty and secrecy associated with private arbitration In terms of practice, synthetic common law would enable private parties to avoid the pitfalls of federal and state legislation, while also avoiding the ambiguity and uncertainty of modern alternative dispute resolution. In many instances, it would be cheaper, clearer, and fairer than current alternatives. The advantages would be especially great for private parties in areas of rapidly evolving technologies, where s To the extent common law regimes generate greater economic benefits than civil or statutory law regimes, as several recent studies have suggested, syntheti common law should achieve those benefits, too. For example, studies by raphael LaPorta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny of the lega rules protecting shareholders and creditors in forty-nine countries conclude that common law governance rules tend to protect investors more than civil law rules See Raphael La Porta, et al., Law and Finance, 106 J. POL ECoN. 1113, 1151(1998 see also Andrei Shleifer Robert Vishny, A Survey of Corporate Governance, 52J IN. 737(1997); Raphael La Porta, et al., Legal Determinants of External Finance, 52 J FIN. 1131(1997). For a criticism of the methodology of these studies, see Frank artno, Why Markets Crash and What Law Can Do About It, 61 U. PITT. L REV.# Moreover, because private contractual provisions often are written in mpenetrable boilerplate, it is far more likely that private parties will actually read and consider provisions articulated in narrative case format. Human beings often find it much more efficient to process information presented in narrative form. By resenting legal rules as narrative, a synthetic common law regime may level th laying field between parties facing information or sophistication asymmetry might read a provision articulated in narrative, case format. See, e.g. Melvin reasonable for consumers to refuse to read dense form contracy s argument that it is 59S.CAL.L.REV.305(1986)2 10/9/00 DRAFT – DO NOT CITE WITHOUT PERMISSION [VOL. #:# parties dispute real cases. Real judges apply real law. Is there a need for synthetic law? This article maintains that there is. I advocate a system of synthetic common law for use primarily in private dispute resolution. In this system, private synthetic law associations will publish menus of cases and commit to resolve disputes based on those cases. Private parties will select from among these competing associations a particular menu of cases to govern their contracts. The selected association will adjudicate any disputes based on those cases. Courts will have limited review of association judgments. This system will fill a sizeable gap in current law, both in theory and in practice. In terms of theory, synthetic common law is an attractive alternative to common law, statutory law, private law, and private adjudication. Because synthetic common law would be based on ex ante findings by the parties, it more likely would reflect societal practice and the parties’ expectations than does common law, which is based on ex post findings by a judge or jury. Because synthetic common law would be based on broadly ranging menus of cases, it would avoid the inflexibility of statute-based regimes.3 Because synthetic common law would rely on analogical reasoning by private judges based on cases specified ex ante, it would avoid certain intractable problems associated with private contract provisions, including the difficulty of specifying contingencies of rapidly evolving practices.4 Because synthetic common law would be administered privately it would generate the benefits of existing private dispute resolution regimes; moreover, because synthetic common law would provide to parties a list of cases to govern any dispute, it would avoid the uncertainty and secrecy associated with private arbitration. In terms of practice, synthetic common law would enable private parties to avoid the pitfalls of federal and state legislation, while also avoiding the ambiguity and uncertainty of modern alternative dispute resolution. In many instances, it would be cheaper, clearer, and fairer than current alternatives. The advantages would be especially great for private parties in areas of rapidly evolving technologies, where 3 To the extent common law regimes generate greater economic benefits than civil or statutory law regimes, as several recent studies have suggested, synthetic common law should achieve those benefits, too. For example, studies by Raphael LaPorta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny of the legal rules protecting shareholders and creditors in forty-nine countries conclude that common law governance rules tend to protect investors more than civil law rules. See Raphael La Porta, et al., Law and Finance, 106 J. POL. ECON. 1113, 1151 (1998); see also Andrei Shleifer & Robert Vishny, A Survey of Corporate Governance, 52 J. FIN. 737 (1997); Raphael La Porta, et al., Legal Determinants of External Finance, 52 J. FIN. 1131 (1997). For a criticism of the methodology of these studies, see Frank Partnoy, Why Markets Crash and What Law Can Do About It, 61 U. PITT. L. REV. # (forthcoming 2000). 4 Moreover, because private contractual provisions often are written in impenetrable boilerplate, it is far more likely that private parties will actually read and consider provisions articulated in narrative case format. Human beings often find it much more efficient to process information presented in narrative form. By presenting legal rules as narrative, a synthetic common law regime may level the playing field between parties facing information or sophistication asymmetry. Disadvantaged parties often do not read the relevant contractual provisions, but might read a provision articulated in narrative, case format. See, e.g, Melvin Eisenberg, Text Anxiety, 59 S. CAL. L. REV. 305 (1986) (discussing argument that it is reasonable for consumers to refuse to read dense form contracts)