The Crime/Tort Puzzle : The Crime/Tort Puzzle We have two legal systems to do the same work
I do something bad to you
The legal systems take action
Something bad happens to me
A reason not to do bad things to each other
Using different mechanisms
Tort: Claim belongs to, is prosecuted by, victim
Criminal: Claim belongs to, is prosecutedby, state
Is there a good reason to
Have both systems
Sort offenses as torts, crimes or both as we do
Have the differing legal rules we do in the two systems?
Should we abolish the criminal law? : Should we abolish the criminal law? We know a legal system can work without it
Saga period Iceland a clear example
But would it be unworkable for us?
Or clearly inferior
What problems might require criminal system to deal with?
Victim can’t afford a lawyer
Diffuse injury with many small victims
Judgment proof offender
Efficient private system impossible? (L&P)
Can these be solved
For all sorts of cases
And what new problems might the solution raise
A doctor discovered a cure for which there was no disease : A doctor discovered a cure for which there was no disease He caught the cure and died
Some Solutions : Some Solutions Poor victim: Make claim marketable
Diffuse victims
Either current class action, or …
Marketable claims plus
Middlemen to accumulate and rebundle
Buy all claims for less than $200
From ten million people
Sell ten million claims for damages from X to entrepreneurial attorney
Judgment proof defendant
Tort backstopped by imprisonment+bounty
Tort with criminal penalty if you don’t pay
Tort with broader ways of collecting
Work it off: Penal slavery
Forfeit organs?
Landes&Posner Argument : Landes&Posner Argument Imagine a private enforcement system
Firms buy claims from victims
Catch, prosecute, sometimes convict
Collect a fine
Whose amount is set by the state
An efficient system imposes
The right level of expected punishment
Via the right combination of punishment and probability
But the fine set by the state is both
The reward to the enforcer, which determines
how hard he tries to catch offenders
Hence probability of being caught and convicted
And the punishment imposed
So you cannot, save by chance, find a fine that gives the right value of both p and P.
Solution : Solution State sets =pP, not fine F
Private enforcement firm can
Catch lots of offenders, impose a low P
Catch few, impose a high P
Private firm wants to maximize profit
Punishment is measured by effect on offender
Firm’s revenue is what it can collect
Punishment cost is the difference
High p, low P, can collect fines--but spend lots catching criminals
Low p, high P more criminals can’t pay fine--but don’t need as many private cops
Precisely the tradeoff that went into calculating the optimal p,P pair a few chapters back
Enforcement cost+punishment cost are a subtraction from firm profit
So firm picks p,P to minimize the sum
Which means the efficient combination!
Negative Price Offenses : Negative Price Offenses Suppose, at the optimal p,P, it costs
More, on average, to catch and convict
Than you can collect from the convicted offender
So the value to the enforcer of the right to impose p,P on an offender is negative
So he will “buy” offenses only at a negative price
Solution: Deterrence as a private good
“Sell” offenses against you in advance
Notify potential offenders that you have done so
I.e. pay enforcement firm to agree to catch and punish those who offend against you
Thus buying deterrence
Problem
What if the potential offender can’t find out
If the potential victim has precommitted
“Anonymous victim” offenses
Such as the judgment proof dangerous driver
So the private system : So the private system Can work for offenders who can pay
Enough to make it worth catching them
As with the current tort system
Can work for offenders who cannot, if …
Deterrence can be made a private good
I.e. offenders know if victim is pre-committed
For judgment proof offenders+anonymous victims
Works poorly unless backstopped by
Bounty+criminal punishment
Organ forfeiture …
But “works poorly for a subset of offenses”
Might still be better than the criminal law alternative
Since no good mechanism to make it choose to be efficient
Sorting offenses : Sorting offenses L&P: Torts are offenses easy to detect
So p always about 1
So their p,P problem with private enforcement vanishes
But tort damages are the reward for winning the case
So the incentive to spend money litigating
Why should the optimal incentive to litigate
Equal the optimal fine to the loser
So their problem reappears
Implies that the tort system cannot be efficient for torts!
Criminal law for the judgment proof? : Criminal law for the judgment proof? Tort law for offenses likely to sell for a positive price
Criminal law for negative price offenses
Due to being costly to catch and prosecute
And/or requiring very large punishments
And/or committed by offenders with few assets
But note that negative price torts unlikely to be litigated under present arrangements
So we are observing a biased sample of torts
Which may make this explanation look better than it is
Further issues : Further issues On the other hand
Torts are often accidents, and accidents
Are anonymous victim offenses
Which makes it harder to use private enforcement
So perhaps we have it backwards!
False conviction problem
Private enforcement via positive price offenses
Requires that conviction is profitable
Which raises risk of fraudulent conviction
Back to the efficiency of inefficient punishments
So perhaps criminal law should be for
Offenses it is easy to frame people for?
But that has its own risks--framing by the state
Is this why tort law doesn’t include probability multipliers?
“Make the victim whole” means he cannot gain by being a victim
Which eliminates one class of frauds
Where the damage is real, but arranged by the victim
Bundling legal rules : Bundling legal rules
Does it make sense? : Does it make sense? Same actor controls prosecution, collects fines
Fine provides an incentive to prosecute
Which can be a feature, or …
A bug--too much incentive, bogus prosecutions
Consider the recent Duke case
Also, if the two are separate
Controller can settle out of court
And so steal the fine from collector
Victim as owner/prosecutor in tort
Combines deterrence and fine incentives
But the victim is often the chief witness
And his evidence becomes less credible
The more he has to gain by conviction
Old problem with rewards in 18th c. England
Current with testimony in exchange for lenient treatment
Punishments : Punishments Tort uses efficient, criminal inefficient
Makes sense in terms of incentive to prosecute
Efficient punishment makes it more likely
That the enforcer collects enough
To pay the cost of enforcement
Making it a positive price offense
Higher standard of proof in criminal
Fits the use of less efficient punishments
But … efficient punishments give risk of fraud
Problem when the enforcer pockets the fine
And when the standard of proof is low
I.e. tort law
Probability multipliers? : Probability multipliers? In criminal but not tort system
Tort rule: Make the victim whole
Criminal punishment can be >> damage done
Because?
Probability higher in tort, less need for a multiplier?
But arguably private needs multiplier for incentive
But … high punishment harder to collect
And multiplier->risk of fraud
Arguably a problem with punitive damages
And class actions today
Are there efficient offenses?
Tort, often, so use Pigouvian rule to control
Criminal, intentional
So could choose not to commit
Could buy the car instead of stealing it
Makes it more likely that we want to deter all offenses
If doing so doesn’t cost us too much
Which is an argument for higher punishments--not just probability multiplier
Other differences : Other differences Intent
Intentional more likely to be concealed
So costly apprehension, lower p
Both arguments for criminal
Intentional more likely to have market substitute
Hence the crime version less likely to be efficient
So don’t need Pigouian rule to limit punishment
Right to a jury trial
Criminal in the Anglo-American system
Civil only in the U.S.
Perhaps because in a criminal trial
Everyone but the victim is a state employee
Raising the risk of a corrupt system
If you don’t have a jury to limit state power
Stigma : Stigma Criminal use, tort usually no
Does not provide an incentive to prosecute
Since the gain goes to other people using the information
Not, like a fine, to the prosecutor
Does provide a substitute for expensive punishments
Private prosecutor has an incentive to
Out of court settlement with facts kept secret
I.e. accept bribe from defendant to suppress stigma
Since its benefit goes to other people
Makes sense if the law can control stigma
But if stigma consists of individuals using information
In their own interest
Then it is the nature of information that determines whether it gives stigma
Mainly whether it implies that voluntary association with the offender is costly
Victim’s incentives : Victim’s incentives Tort compensates the victim
Which reduces his incentive not to be a victim
Which might be a feature or a bug
What we want is the right (efficient) level of incentive
Efficient incentive means that
Victim’s gain from acts to prevent offense
Equals net social gain
Buys prevention if and only if worth the cost
World of Costless Enforcement : World of Costless Enforcement To focus on just that issue, imagine
That offenders caught and punished at 0 cost
Steal my car? Caught, pay the car’s value
To me under a tort system
To the state under a criminal system
How hard should I try to protect my car?
Not at all.
You only steal if the car is worth more to you
In which case it is efficient
Just as the grocery store shouldn’t glue the groceries to the shelf
So tort system gives the right incentive, criminal wrong
How careful should I be not to be run into by a drunk driver?
Here my loss isn’t his gain
So an incentive for me to prevent it is useful
Which we get with criminal but not with tort
At least in that world, theft should be a tort, auto accidents criminal!
If we consider only the one issue
Of the victim’s incentive to prevent the offense
The point being : The point being That the tort/crime choice affects
Many things relevant to sorting offenses
Some of which may be reasons to make X a tort
Others reasons to make it a crime
Many things relevant to sorting rules
Some of which may be reasons why a rule should be associated with (say) tort la
And others why it should not be
Making this a hard problem