Great Working Paper on Duty To Disclose:

Over the weekend, I had the opportunity to read a terrific paper by Kimberly Krawiec and Kathy Zeiler on the duty to disclose in contract negotiations. The paper collects a huge database of cases involving claims of an affirmative duty to disclose and examines the various variables that have been argued by theorists that explain these cases. As anyone who has looked at these cases will know, they are a real thicket, and it is difficult to discern a coherent pattern. Krawiec and Zeiler do a marvelous job in disentangling all of the theories and developing ways of carefully testing each of them using their data set.

What I especially like about the paper is that this is an area where many scholars have generated large theories from a relatively small handful of evocative cases. By looking at an aggregate of cases, rather than just individual cases, papers like Krawiec and Zeiler’s are useful in getting away from this micro-level analysis of particular cases that can be misleading in terms of recognizing overall patterns. I personally would like to see a lot more work like this.

Moreover, they are both very clear about what they are testing, and are responsible in the conclusions that they draw. This is atypical for empirical legal scholarship, from what I have seen. Much empirical legal scholarship rests on poorly-specified assumptions and hypotheses, using variables with a questionable relationship to the hypothesis being tested, and a tendency to draw sweeping conclusions that go beyond the limits of the particular test. Many have observed (including myself) that law needs fewer arguments and more facts. Unfortunately, arguments are cheap and data is expensive. Moreover, for whatever reason, law reviews often seem to prefer clever arguments to sound empirical evidence, creating a disincentive to produce good empirical scholarship. Finally, a lot of empirical research by law professors is, well, junk. A lot of research is being done by scholars who have not been trained and simply do not understand what they are doing. As someone who holds a graduate degree in economics, I understand how difficult it is to do quality original empirical work. I admire those who do it well, but I wish that others would show some caution.

Perhaps most amusing to me, having just served time as a senior government policy-maker, is the claim by many law professors that policy-makers are not interested in empirical analysis, or simply ignore it because of ideological predispositions. I think that those who believe this should recognize that, in fact, empirical studies are incredibly important and interesting to policy-makers. Based on my experience at the FTC, sound empirical analysis was especially important, because of its bipartisan make-up. As I said, arguments are cheap– as a result, at the FTC, sound empirical evidence was extremely important in that it provides a common ground that cuts across ideological differences. At root, most policymakers are pragmatists, regardless of party, and want to know what will be the consequences of their policies. Both Democratic and Republican Commissioners could agree that evidence should be the common ground of their decision-making, even if they had very different views on the normative ends of competition or consumer protection. Of course, the evidence wasn’t always unambiguous, but it was always relevant and always a first-line of analysis.

The problem, therefore, is not that policymakers are uninterested in empirical analysis; the problem is that the empirical analysis by many law professors is simply of very poor quality. One can only hope that the standards will be raised before Gresham’s Law of Legal Scholarship kicks in and bad empirics drive out good. Whether this can be done within the traditional law review system is, I think, and interesting question. Peer-reviewed journals such as Supreme Court Economic Review, JLS, Journal of Empirical Legal Studies, and the like, may become crucial in the process of raising standards for empirical legal studies.

In the meantime, for students and general legal readers of the VC, I think Krawiec and Zeiler are an excellent example of interesting, professional, and useful empirical legal scholarship. Of course, there is plenty more out there (Kimberly Moore, Ted Eisenberg, etc.)–it just so happens that I Krawiec and Zeiler’s article is in an area I know and is on a topic that is very, very useful, given the difficulty of trying to reconcile all these cases using traditional legal reasoning. This new knowledge will definitely change the way I teach that material next time in Contracts.

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