Many people are not aware that the US legal system facing corporations is much like a shopping mall that lets the plaintiff choose jurisdictions just as freely as we choose between the Adidas, Nike, or Puma store. And plaintiffs choose for the same reasons we choose a shoe store – price and fit. They want quick decisions, because they are inexpensive, and they want decisions that fit their wish. Which is to win, of course.
Thanks to research by Maxim Sytch and Yong H. Kim published in Administrative Science Quarterly, we now know more about how plaintiffs choose jurisdictions. The authors find that the choice is often guided by social connections, a way of choosing that sounds odd but is actually very effective. To understand how this works, there are two things we need to know.
The first is that although the law is said to be the same for everyone, it is not. Legal cases involve communication and interpretation, so whoever can tailor their message to the judge has a better chance of winning.
The second is that communication and interpretation are learnt. That matters because sharing law school education means sharing this type of learning, as well as the feeling of coming from the same stock. Sharing work experience matters too, because people who work together practicing law, as newly minted lawyers do when serving as clerks for judges, learn how their colleagues communicate and think.
Knowing these two things, we can start understanding how a patent lawsuit, which is what Sytch and Kim studied, is filed. The law firm (patent lawsuits are not handled by in-house lawyers) looks for judges who attended the same law school as one or more of its lawyers or for whom its lawyers served as clerks. The firm picks a jurisdiction that has such connected judges. If it gets the judge it wants, the firm’s lawyers tailor the language in their filing to match the communication and interpretation of the judge. And then they win – not always, of course, but much more often than they would if there was no connection or no tailoring of the message.
The increase in win likelihood is stunning. Having studied at the same school at the same time as the judge multiplied the likelihood of a win by 4.6, and having been a clerk for the judge multiplied it by 2.8. Tailoring the lawsuit further increased the likelihood. Clearly, we cannot say that “all corporations are equal before the law.” Those who pick law firms that get the judges they want do a lot better.
Is there no risk to this behavior? Well, the way it works is that a law firm chooses the jurisdiction (Federal District Court), but the judge is chosen randomly within the jurisdiction. Because the law firm looks for social connections, it may actually sacrifice some human capital when assigning its lawyers to the case. That, in turn, means that a loss is more likely if the judge they’re hoping for does not get assigned to the case. The downside is not huge, though: the firm is just over 10 percent less likely to win the case. So, we are looking at a one-sided bet.
Clearly the practice of law is in some jeopardy if it is done in such a club-like fashion. This is especially so because under the US legal system, decisions establish precedent, so any decision in favor of the plaintiff that pushes the boundary of what a patent claim can cover has future consequences. These consequences are already seen in the form of “patent trolls,” which are corporations that acquire (buy) patents not to make products and do business but just to file lawsuits against other firms. Patent trolls benefit from the ability to threaten firms into offering settlements (paying without even going to court), which is more likely when law firms skilled in jurisdiction choice keep winning their cases.
Sytch, M., and Y. H. Kim
2020. "Quo Vadis? From the Schoolyard to the Courtroom." Administrative Science Quarterly, forthcoming.
This blog is devoted to discussions of how events in the news illustrate organizational research and can be explained by organizational theory. It is only updated when I have time to spare.