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ELSEVIER

A Quantitative Assessment of the Efficiency of


the Judicial Sector in Latin America

EDGARDO BUSCAGLIA

Stanford University and Washington College, Palo Alto, CaliJbrnia


E-mail: buscaglia@hoover.stanford.edu
and

THOMAS U L E N

University of Illinois, Urbana-Champaign, Illinois

T h e r e is a widespread belief t h r o u g h o u t Latin A m e r i c a that the j u d i c i a l sector is n o t


in a position to foster private sector d e v e l o p m e n t within a m a r k e t system. T h e courts are
o v e r b u r d e n e d a n d u n a b l e to dispose of cases in a timely fashion. As a result, frustrated
litigants lose faith in the public justice system's ability to resolve their disputes. This loss
of faith, in turn, causes private parties to factor a d d e d costs for judicial delay into their
private transactions, a n d these a d d e d costs r e d u c e e c o n o m i c activity a n d retard eco-
nomic development. Because there are no viable alternative dispute resolution mech-
anisms in Latin A m e r i c a n countries, the region urgently needs an efficient j u d i c i a l
sector to c o m p l e m e n t the m a r k e t reforms recently i n t r o d u c e d by many governments.
A n i m p o r t a n t implication of this observation is that the e n h a n c e m e n t o f the capability
o f the courts to satisfy the d e m a n d for dispositions is one o f the most i m p o r t a n t , b u t
least noted, aspects o f Latin A m e r i c a n e c o n o m i c d e v e l o p m e n t strategies. First, we
r e p o r t the results o f smweys o f court-users in several Latin A m e r i c a n countries in an
effort to identify the causes o f dissatisfaction with the courts. Second, we show that
simply increasing the a m o u n t o f financial resources available to the j u d i c i a r y will n o t
necessarily increase the courts' efficiency. Finally, we look at a large sample of com-
mercial cases in A r g e n t i n a a n d Venezuela to identify court-related a n d litigant-related
factors associated to the length o f cost-adjusted time to final disposition o f court cases.
O n the basis of this empirical work we identify the most fruitful courses of j u d i c i a l
reform in Latin America. © 1997 by Elsevier Science Inc.

The authors wish to thank Pilar Domingo, William Ratliff, and Laurence Whitehead for valuable discussions about
the subject; and Antonio Brinaldi, ,~Yshley Harris, and Anthony Pietro for their invaluable research assistance.

International Review of Law and Economics 17:275-291, 1997


© 1997 by Elsevier Science Inc. 0144-8188/97/$17.00
655 Avenue of the Americas, New York, NY 111010 PII S0144-8188 (97) 00007-0
276 Efficiency of the Latin American judiciary

I. I n t r o d u c t i o n
As Latin America continues the process of economic reform, the need for a well-
functioning judiciary becomes increasingly important. The shift of most economic
transactions toward the market and away from the public administrative sphere has
created an u n p r e c e d e n t e d increase in the private sector d e m a n d for an improved
definition of rights and obligations. 1 As a result, the judiciary is an important, but little
noticed, element of economic development.
Legal principles in most Latin American countries encourage the freedom to exercise
individual rights and property rights. But this freedom is meaningless without an
effective judicial system in which to vindicate these rights. Consistent enforcement
provides a stable institutional environment for economic decisions to be made in a
predictable way. In many of the judicial systems in Latin America, however, this stability
is lacking: Laws are unclear, and the way the courts apply the laws is highly uncertain.
Coupled with delays in resolving cases, these factors increase litigation costs and induce
potentially inefficient private behavior designed to avoid these costs.
The judiciaries in most Latin American countries are suffering from increasing
backlogs, delay, and corruption, which have created a pervasive distrust of the system by
the private sector and the public at large. 2 In the absence of an impartial and efficient
judiciary or alternative dispute-resolution mechanisms, private parties tend to rely on
reputation, familial relations, and repeated transactions with trusted parties. These
devices exclude many potentially socially beneficial transactions involving previously
unfamiliar parties or start-up businesses.
If the judiciary is to provide the impartiality and efficiency necessary for public trust
and economic development, a well-defined program for judicial reform needs to
address the main factors causing a deterioration in the quality and quantity of court
services. These factors include: the administration of the courts; m a n a g e m e n t tech-
niques; the system of legal education; the methods for licensing lawyers and selecting
judges; the education of the public about the legal system; the means o f access to justice;
the availability of alternative dispute-resolution mechanisms; judicial independence;
and procedural reforms. For example, in Argentina the public has stated that, to reform
the judiciary, oral proceedings and alternative dispute-resolution mechanisms should
be introduced. ~ Judges in Brazil cite improved information technology, revised court
procedures, and the creation of small claims courts as the most important elements of
judicial reform. 4

l"The notion of liberal democracy is defined not only through the compliance with certain procedural require-
ments, notably of a political nature (namely, free and periodic elections, political competition, representation,
etc.) . . . but also through the real application and realization of a rule of law regime." See Pilar Domingo, "Rule of law
and judicial systems in the context of democratization and economic liberalization: A framework for comparison and
analysis in Latin America," Division de Estudios Politicos, Centro de Investigacion y Docencia Economicas, No. 25, 1995.
2The latest World Competitiveness Report provides an international comparison of the public's confidence in their
judicial systems in 35 developed and developing countries. All Latin American countries, except Chile, rank in the
bottom 20% of the confidence index. See World Competitiveness Report (1994): see Buscaglia, E., March 13, 1995; p. A13.
"~Estudio de Opinion Acerca de la Justicia en la Argentina Institute GaUup de la Argentina, March 1994, p. 99.
4See Maria Tereza Sadek and Rogerio Bastos Arantes, "The crisis of the Brazilian judiciary: The judges' perspective,"
Paper presented at the 16th World Congress of the International Political Science Association, August 21-25, 1994, p.
9-11.
Each component of the reform measures mentioned in the text is an integral part of judicial reform. It is unrealistic,
however, to think that all the components can be dealt with at once. Stages of action must he planned considering the
costs and benefits of reform as perceived by politicians and court officers. For this conclusion see Edgardo Buscaglia
E. BUSCAGLL~AND T. ULEN 277

This p a p e r identifies the causes o f j u d i c i a l inefficiency in Latin A m e r i c a a n d suggests


means o f c o r r e c t i n g that inefficiency. In the first p a r t we survey the attitudes of
individuals a n d businesses toward the courts in Latin A m e r i c a n countries. Generally, we
find that t h e r e is great dissatisfaction with the courts, principally because of the delays
a n d backlogs in disposing o f cases. Next we consider the relationship between cost-
adjusted times-to-disposition (our m e a s u r e of j u d i c i a l efficiency) a n d the resources
p r o v i d e d to the courts by the government. If m o r e j u d i c i a l resources will r e d u c e the
times-to-disposition a n d thereby increase j u d i c i a l efficiency, t h e n there is a clear warrant
for r e c o m m e n d i n g increased j u d i c i a l f u n d i n g as an i m p o r t a n t e l e m e n t o f j u d i c i a l
reform in Latin America. But we find no clear correlation between the level o f resources
available to the courts a n d j u d i c i a l efficiency. In the last p a r t o f t h e p a p e r , we look m o r e
closely at a c o m p r e h e n s i v e set of c o m m e r c i a l cases from A r g e n t i n a a n d Venezuela to
identify factors besides j u d i c i a l resource constraints that a c c o u n t for a lack of j u d i c i a l
efficiency a n d might, therefore, be c o r r e c t e d so as to allow the j u d i c i a r y to foster, r a t h e r
than retard, e c o n o m i c development.

II. The Efficiency of Latin A m e r i c a n Judicial Systems


H e r e we first r e p o r t a survey of the attitudes of individuals a n d businesses toward the
courts in Latin A m e r i c a n countries a n d then c o n s i d e r the relationship between j u d i c i a l
efficiency a n d the a m o u n t o f resources p r o v i d e d to the courts by the government.

A Survey of Attitudes Toward the Latin American Judicial Systems


T h e j u d i c i a l sector in Latin A m e r i c a is ill p r e p a r e d to foster private sector d e v e l o p m e n t
within a m a r k e t system. 5 T h e results o f business surveys t h r o u g h o u t Latin A m e r i c a
indicate that the j u d i c i a l system is c o n s i d e r e d to be a m o n g the most significant con-
straints to private sector development. 6 For example, a W o r l d Bank survey c o n d u c t e d in
May, 1993, in E c u a d o r a m o n g private businessmen f o u n d the j u d i c i a l system to be the
sixth most significant constraint to private sector development. 7 T h e central c o m p l a i n t
in E c u a d o r a n d elsewhere is that the r e g i o n ' s judiciaries provide n e i t h e r p r e d i c t a b l e
ruling s , n o r reasonable accessibility, n o r reasonable times-to-disposition of disputes.
It is n o t only businessmen who find the Latin A m e r i c a n j u d i c i a r y unacceptable. T h e
public's view of the j u d i c i a r y reflects a d e e p distrust o f the system. Surveys c o n d u c t e d in
Argentina, Brazil, Ecuador, a n d Peru show that between 55 a n d 75% o f the public has
a very low o p i n i o n of the j u d i c i a l sector, s More specifically, in A r g e n t i n a 46% o f the
p e o p l e surveyed perceived the j u d i c i a l sector as inaccessible a n d corrupt. In Brazil,

and Maria Dakolias, 'Judicial reform in Latin America: Economic efficiency v. institutional inertia," Proceedings of the
First Annual Meetings of the Latin Anwrican Law and Economics, Mexico City, February 2-3, 1995.
5See World Competitiveness Report, supra note 5 at 23-27.
6The results indicate that in samples of 60 to 100 firms per country,, the majority of these enterprises consider the
role of the judiciary as "deficient." See Edgardo Buscaglia, Maria Dakolias, and William Ratliff, 'Judicial Reform in Latin
America: A framework for Economic Development." Essays in Public Policy, Stanford University Press, 1995.
7The World Bank conducted the survey of 68 p r i ~ t e enterprises to determine the constraints on Ecuadorian private
sector development. The results indicated that the most significant constraints were the following: political instability,
inflation and price instability, the lack of skilled labor, the lack of infrastructure, the high level of taxation, the poor
functioning of the judicial system, excessive regulatory constraints, the lack of access to credit, and the lack of market
services. ""Ecuador: Private sector assessment," World Bank, 1994.
8See World Competitiveness Report, supra note 5 at 21.
278 Efficiency of the Latin American judiciary

Ecuador, a n d Venezuela the percentages are 56, 47, a n d 67%, respectively. 9 Addition-
ally, 76.9% o f the j u d g e s interviewed in Brazil consider that the j u d i c i a r y is in a state of
crisis, m These feelings, as we shall see in m o r e detail below, are due to a p e r c e p t i o n that
the courts are c o r r u p t a n d that there are u n p r e c e d e n t e d delays and backlogs in the
c o u r L s . 11
O n e possible corrective is for potential litigants to make every effort to avoid using
the c o u r t s - - e . g . , t h r o u g h either avoiding controversial relationships or by simply avoid-
ing disputes. ~2 A n o t h e r is for private dispute-resolution services to step in to allex4ate the
excess d e m a n d for the services of the public courts. Alternative dispute-resolution
(ADR) mechanisms, such as arbitration a n d mediation, can h e l p to alleviate the case-
load by removing c o m p l e x a n d highly visible cases from the courts' dockets.l:~ A l t h o u g h
the g e n e r a l public may benefit in the long run from the use of m o r e efficient private
sector-provided arbitration, mediation, a n d conciliation mechanisms, e x p e r i e n c e shows
that the public does n o t i m m e d i a t e l y trust new mechanisms for the supply ofjustice.~4
This is due to the fact that the average i n d M d u a l is not as familiar with the n e g o t i a t i n g
techniques n e e d e d to resolve disputes, according to la~Ters working in textile manu-
facturing a n d agriculture. 15
T h e r e may also be adverse distributional effects a n d u n d e s i r a b l e secondary ineffi-
ciency impacts of the inefficient public courts. Small c o m p a n i e s a n d low-income fam-
ilies often c a n n o t afford the relatively expensive private dispute-resolution services. T h a t
means that, if they are to have justice, they must get it from the heavily subsidized public
courts, where, as we have seen, there are long delays. Because small a n d start-up
businesses face credit constraints, they are f u r t h e r b u r d e n e d by the costs of court
delays. 16 If it also h a p p e n s that those courts are corrupt, as is the widespread p e r c e p t i o n
in Latin American, small businesses a n d low-income litigants b e c o m e the primary
targets of c o r r u p t i o n . ~7
In contrast, bigger a n d well-established businesses usually d o n o t rely as m u c h on the
public courts to smwive because they can afford private dispute-resolution alternatives
a n d also they have e x p e r i e n c e d lobbyists, who use their c o n n e c t i o n s with the local
g o v e r n m e n t elite to get e x p e d i t e d t r e a t m e n t for their large clients in the public
courts. 18

%ee Gallup Sun~ey, supra note 6.


l°See World competitiveness Report, supra note 5 at 15.
I iBuscaglia, supra note 2.
12Buscaglia, Ratliff and Dakolias, ~upra note 6, at 12-14, show that as times-to-disposition increase, the filings per
court decrease.
13For example, 69.1% of the Brazilian judgcs inten:iewed indicated that they considered it important to expand the
use of extrazjudicial cnncifation to improve the administration of justice. See World Competitiveness Report, supra note :5
at 6.
t4The ADR services recently introduced throughout Latin America have experienced a v m T weak demand. The
Inter-American Development Bank has found an initial public rejection of ADR mechanisms within the civil.jurisdic-
tions of Uruguay and Argentina during the frst 2 years since their operations started. See "Legal reR)rm in Latin
America," Inter-American Development Bank, Washington, D.C., pp. 45-56.
1:'This segmentation in the ADR market in a developing counny environment was first proposed in Edgardo
Buscaglia, "Stark picture of justice," The Fi*~ancial Times, March 21, 1995, p. 12; and Buscaglia and Dakolias, s**pranote
7.
~%ee I~brld Competitiveness ~ o r t , supra note 5 at 56; and Buscaglia, supra note 2.
17In more technical terms, in a developing countl T environment without a well-developed ADR system, small firms
and low-income sections of the population possess a smaller elasticity of demand for justice.
18Sma'eys conducted throughout the region show that 94% of small businesses consider ADR mechanisms expensive
E. BUSCAGLIA AND T . ULEN 279

TABLE 1. Statistical d e s c r i p t i o n s o f t h e courts.

% Change in median times % Change in backlogs % Change in Clearance rate

Countr.., 1973-1982 1983-1993 1973-1982 1983-1993 1973-1982 1983-1993

Argentina 3.4 (9.1%) '~ 17.8 (11.5%) 9.2 10.9 .5 3.2


Brazil 2.3 (6.1%) 19.1 (12.6%) 2.2 9.7 .7 2.9
Ecuador 4.1 (4.1%) 19.3 (7.8%) 1.5 6.2 -.1 -.3
Chile 8.4 (3.7%) 5.1 (2.7%) 2.1 1.4 -l.1 .7
Colombia 3A (9.1%) 7.8 (10.8%) 9.1 18.1 .2 -3.1
Mexico N/A N/A 7.9 9.1 .3 9.2
Venezuela 3.1 (2.8%) 28.3 (31.1%) 4.8 9.3 .1 -3.1

"Standard deviations are in parentheses.

T h e r e is a widespread p e r c e p t i o n within Latin A m e r i c a n societies that the time


r e q u i r e d by a typical case in c o u r t is excessive, t9 This p e r c e p t i o n is shared by most
j u d g e s , lawyers, litigants, a n d organizations within civil society. Times-to-disposition
within the Latin A m e r i c a n j u d i c i a l systems are increasing a n d r e a c h i n g u n p r e c e d e n t e d
p r o p o r t i o n s . 9° For example, the 1993 m e d i a n times-to-disposition within civil jurisdic-
tions in Argentina, Ecuador, a n d Venezuela are 2.5, 1.9, a n d 2.4 years, respectively. 21
These times-to-disposition have increased, on average, 85, 73, a n d 93% since 1981.
Moreover, the variance in the times-to-disposition f o u n d in these countries has also
b e e n increasing. T h e s t a n d a r d deviations for Argentina, Ecuador, a n d Venezuela are
1.1, 0.9, a n d 1.9 years, respectively, e2 These figures indicate a t r e m e n d o u s lack o f
uniformity in the quality of the services p r o v i d e d by the courts. 9:~
As we show in Table 1 below, each o f the countries i n c l u d e d h e r e has b e e n experi-
encing u n p r e c e d e n t e d increases in backlogs a n d times-to-disposition. T h e chart below
c o m p a r e s the p e r c e n t a g e o f changes in delays a n d backlogs in a j o i n t assessment of the
c o m m e r c i a l a n d civil jurisdictions of selected Latin A m e r i c a n countries. Clearly, the
average annual changes in the m e d i a n times-to-disposition (and their s t a n d a r d devia-
tions, as shown in parentheses) confirm a p r o n o u n c e d d e t e r i o r a t i o n for the p e r i o d
1983 to 1993 c o m p a r e d to the p e r i o d 1973 to 1982.
These changes are a c c o m p a n i e d by u n p r e c e d e n t e d increases in the average clear-

and uncertain, whereas 98% of court-users do not trust mediators unless they are proxided by the courLs. This suggests
a problem of public trust that still hampers the development of ADR mechanisms. See Buscaglia, supra note 2.
191d"
201d'
ZlThe duration of litigation used here follows the Cappelletti-Clark frame of analysis also known as the "expected
duration of the marginal case filed" (EDMCF) approach. In this context, the courts' EDMCF index is .jointly
determined by the annual nmnber of cases filed, pending, and disposed (or withdrawn). The Cappelletti Yearly Index
used here is calculated by dividing the number of pending cases for each court at the end of each year by the number
of cases disposed of during the same year. See John Merry,nan, "Measuring time delay," Stantord University (1977),
unpublished manuscript.
~eht. at 47-48.
U:~Before one draws any general conclusions, however, the analysis of times-to-disposition must be conducted within
each national legal system separately. This is owing to the sometimes profound diffe'rences in the legal systems, even
within Latin America. Another implication of this observation is that an international assessment comparing absolute
times-to-disposition across countries would be senseless because of the deep dift;erences between legal systems.
280 Efficiency of the Latin American judiciary

TABLE 2. Average Changes in the Supply and


Demand for Court Services: 1990 to 1993

% Change in % Change in
filings (t - 1) dispositions t

Argentina 7 4.1
Brazil 2.1 7.9
Chile 6.8 9.1
Colombia 4.9 4.1
Ecuador 12.3 1.2
Venezuela 19.5 3.3

ance rates in courts across all jurisdictions within each o f the countries analyzed. 24 T h e
n u m b e r s shown in Table 1 below seem to justify the public's dissatisfaction with the
j u d i c i a l systems t h r o u g h o u t the region. 25
Notwithstanding these delays, in all the countries e x a m i n e d h e r e the productivity o f
the c o m m e r c i a l a n d civil courts has increased in the r e c e n t past. (By "productivity" we
m e a n the clearance rate.) To assess this variable measure o f court productivity, we
c o m p a r e the average p e r c e n t a g e change in dispositions d u r i n g p e r i o d t to the average
p e r c e n t a g e c h a n g e in court filings in p e r i o d (t - 1)--i.e., with a 1-year lag to allow the
courts time to adjust their supply to the new d e m a n d for their services. 26 T h e n u m b e r s
in Table 2 below show that, e x c e p t for Chile, the average p e r c e n t a g e increase in c o u r t
productivity d u r i n g p e r i o d t has n o t b e e n e n o u g h to satisfy the average p e r c e n t a g e
increases in the d e m a n d for filings in p e r i o d (t - 1).
Tables 1 a n d 2 above also explain why a r e c e n t survey o f the r e g i o n ' s j u d i c i a l systems
i n d i c a t e d that the majority o f c o u r t users are "not inclined" to b r i n g disputes to court
because they perceive the system to be slow, uncertain, a n d costly, or, in o t h e r words,
o f " p o o r quality. ''27 A b o u t 55% of business court-users surveyed in Latin A m e r i c a said
that they p r e f e r to negotiate a partial settlement r a t h e r than to adjudicate a dispute in
the formal c o u r t system. 2s
T h e r e are o t h e r factors that a c c o u n t for the widespread dissatisfaction with the
courts. W h e r e there are no specialized or c o n t i n u i n g education p r o g r a m s for court
officers in commercial, tax, or o t h e r business-related matters, the j u d g e s a n d clerks are
poorly trained. As a result, j u d g e s must increasingly rely in these c o m m e r c i a l a n d o t h e r
technical disputes on nonlegal experts. Because Latin A m e r i c a n legal systems allow ex
parte c o m m u n i c a t i o n , parties can a p p r o a c h judges, a n d j u d g e s can request to see the
parties or their lawyers separately. Court-users c o m m o n l y m a k e accusations that cases

24The "clearance rate" is defined as cases disposed of as a percentage of cases received by a court within a given
period of time. A decrease in the clearance rate represents a deterioration in the quality of court services. An increase
represents an improvement in the quality of court services. These measures hold, of course, under an "all other things
being equal" assumption.
25The raw infol~nlation from which we calculate the numbers presented in Table 2 has been obtained from the
annual reports of the Supreme Courts and the Office of Court Statistics of each of the countries included in our
analysis. Table 1 expands the series developed in Buscaglia and Dakolias, supra note 5 at 14.
26This 1-year lag correlation was first introduced in Buscaglia and Dakolias, supra note 6 at 15.
27Generally surveys and polls are needed to assess the population's overall confidence in the justice system as a proxy
for the court-users' perception of quality. See Buscaglia, Dakolias, and Ratliff, supra note 7.
28See World Competitiveness Report, supra note 5 at 32.
E. BUSCAGLIAAND T. UEEN 281

are decided in these private meetings, rather than in public view. 29 However, in defense
of ex parte contacts, individuals a n d businesses believe that they must use these informal
measures to motivate court personnel, i n c l u d i n g judges, to process cases that otherwise
might lie d o r m a n t for years.

The Relationship Between Judicial Resources and Judicial Efficiency in Latin America
T h e e n h a n c e m e n t of the capability of the courts to satisfy the d e m a n d for dispositions
is one of the most challenging a n d i m p o r t a n t aspects of judicial reform. As we have seen
in Table 2 above, almost evelywhere in Latin America courts are u n a b l e to supply
e n o u g h services to satisfy the c u r r e n t d e m a n d . The lack of ability to satisfy this d e m a n d
manifests itself through the increasing backlogs a n d time delays observed in Table 1.
Most observers ascribe these delays to a lack of resources or procedural defects. 3° For
example, one often hears that many countries in Latin America provide inadequate
budgets to the courts, which impedes the judiciary from sustaining even the m i n i m a l
needs to ensure the public's access to justice. 31 Additionally, observers say that inade-
quate budgets perpetuate the d e p e n d e n c e of the judiciary o n private, illegal payoffs,
a n d the political process (rather than the financial a n d other i n d e p e n d e n c e that Article
I I I j u d g e s in the U n i t e d States enjoy). Moreover, the critics also assert that the lack of
court resources causes c o r r u p t i o n a m o n g court p e r s o n n e l a n d prevents the judiciary
from attracting well-qualified judges a n d support staff. ~2 As a corrective, many judges
a n d legal scholars argue that the j u d i c i a r y m u s t have a separate a n d larger b u d g e t ,
to be c o n t r o l l e d , m a n a g e d , a n d p r o p o s e d to the legislature. 3~
Some casual evidence o n this p o i n t comes from court p e r s o n n e l c o m p e n s a t i o n
figures. O n average, salaries in the judicial sector t h r o u g h o u t Latin America r e m a i n low
by comparison to those in non-profit jobs in the private sector. For example, d u r i n g the
last decade in Ecuador a n d Venezuela, j u d g e s ' real salaries have increased 3-fold,
whereas support staffs' real salaries have increased only 54%. The same is true in
Argentina, where real salary levels in the federal system r e m a i n relatively unattractive. 34
Some countries in Latin America have proposed allotting a prespecified p r o p o r t i o n
of the g o v e r n m e n t s ' b u d g e t to the judiciary as a way to address the low-salary p r o b l e m
a n d as a m e c h a n i s m to reduce times to disposition a n d backlogsf~5 There are, however,
i m p o r t a n t differences a m o n g countries that make a proposal of a specific p r o p o r t i o n ill
advised. Differences in procedural requirements, substantive law, a n d cultural a n d legal
history m e a n that the resources n e e d e d by courts in commercial jurisdictions to pro-
duce a certain type a n d quantity of services (e.g., 1000 bankruptcy rulings) are likely to
vary greatly a m o n g countries. This means that, for instance, 3% of the g o v e r n m e n t
b u d g e t devoted to the judiciary in one country may have a very different impact on
times-to-disposition (or other measures of judicial efficiency) than the same a m o u n t
devoted to the courts in a n o t h e r country. Therefore, it is doubtful that a higher fixed

Z%ee Gallup Survey, supra note 6 at 14-16.


:~°SeeCarlosGregorio, "lnvestigacionsobre la Den,ora en el proceso.judicial:Informefinal,"La Ley (1993).
31771eCIA WorldFactbook,CentralIntelligenceAgency,Washington,D.C. 1994.
-~2SeeWorldCompetitiveness Report, supra note 5 at 34 and 44-46.
33See WorldCompetitiveness Repert, supra note 5 at 11.
34Id. a t 15.
35"Informedel PoderJudicial," PoderJudicial de la NacionArgentina,BuenosAires, 1994,p. 34; "Informede la
Corte Suprema,"PoderJudicial del Ecuador, Quito, 1994.
282 Efficiency of the Latin American judiciary

proportion of the government's budget would necessarily improve the functioning of


the judicial system.
Moreover, there is no clear correlation between judicial resources and judicial effi-
ciency. Countries not suffering from delays and corruption and with a high degree of
public satisfaction or confidence in their judiciary (countries such as Denmark, Japan,
Germany, the Netherlands, and Norway) tend to devote less of their government's
budget to the judiciary than do Latin American countries such as Argentina, Brazil, and
Mexico, which are in the bottom 20% of the public's confidence. 3G More specifically,
governmental spending on the judiciary in countries with a developed judicial system as
a percentage of total government spending is as follows: Norway, 0.8%; Netherlands,
0.4%;Japan, 0.5%; Denmark, 1.2%; and Germany, 0.9%. By contrast, judicial spending
as a proportion of total government spending in those countries with the hea~4est
backlogs and longest delays are as follows: Venezuela, 1.3%; Peru, 1.5%; Ecuador, 1.4%;
Argentina, 2.2%; and Paraguay, 5.1%. 37
Based on these figures and the times-to-disposition in Table 1, there seems to be no
significant direct correlation between judicial efficiency (measured in terms of clear-
ance rates and times-to-disposition) and the percentage of the government budget
allocated to the courts. ~s The graph below clearly demonstrates this lack of correlation
within Latin America. Along the vertical axis, we measure country-specific average
percentage changes in the median times-to-disposition. We measure these figures with
a 2-year lag after the average percentage changes in real spending devoted to the
judiciary increased in the country. Along the horizontal axis we measure the average
percentage changes in real spending devoted to the judiciary in the country. (These
measurements are only for the commercial and civil jurisdictions.) The figure shows
that countries ~ t h the largest changes in spending are not usually those experiencing
the lowest subsequent times-to-disposition of civil and commercial cases. For example,
Brazil and Chile are clear examples of this lack of correlation.
T h e reason for this clear lack of direct correlation is that increased judicial
resources may ultimately lead to increased workload. Additional resources (e.g., for
p e r s o n n e l and capital expenditures) may initially increase court productivity and,
therefore, reduce backlogs and delay. But after a lag (such as the one we measured,
a 2-year lag) a m o r e efficient judiciary attracts additional d e m a n d (filings per court)
from citizens and businesses that had previously been reluctant to use the courts due
to delay and backlog. "~'~This makes it difficult to d e t e r m i n e the efficiency conse-
quences of a d d i n g or subtracting judicial resources. In some countries the initial
productivity increase may d o m i n a t e the subsequent increase in filings; in others, the
subsequent increase in filings may d o m i n a t e the initial productivity increase. In
light o f this m u d d i e d relationship between resources and judicial efficiency, it is
m u c h m o r e sensible to i m p l e m e n t a budgetary m e c h a n i s m by which courts can
request funds based on projected increases in filings within each subject matter a n d
geographical jurisdiction and on p e r f o r m a n c e indicators.
Given the lack of a strong direct correlation between times-to-disposition and in-

:~%ee World Competitiveness Report, supra note 5 at 12.


:~7See Domingo, supra note 2 at 23-24.
3SThis paper expands the initial finding ill Buscaglia and Dakolias (1995) by including additional countries. See
supra note 5 at 20.
39Our numerical results show that, during the first 2 years after significant increases in real spending, filings per
court first increase and later decrease once again.
E. BUSC_:AC,
I.1A:~D T. ULEN 283

4O
i I
VENEZUELA.

mm
3O

ARGENTINA.
PERU,

20
BRAZIL.
PANAMA.
-COLOMBIA
.BOLIVIA

10 *URUGUAY

•DOMINICAN-RE ,ECUADOR
•GUATEMALA *CHILE

0 I I
0 5 10 PERSONAL 15
FJG. 1. Procedural times vs. s p e n d i n g in personal.

creases in judicial resources, we must also consider other factors affecting times-to-
disposition, such as the absence of an active case-management style or even an excessive
administrative b u r d e n falling o n judges. For example, Page has f o u n d that approxi-
mately 70% of Argentine j u d g e s ' time is spent o n nonadjudicative tasks. 4° The same
administrative duties occupy 65 a n d 69% of available judicial time in Brazil a n d Peru,
respectively. 4~ Excessive administrative r e q u i r e m e n t s do n o t fall only o n judges. Based
on recent surveys of the courts in Ecuador, Venezuela, Peru, a n d Argentina, between 20
a n d 40% of the court officers interviewed seem to welcome administrative tasks, such as
signing checks or requesting office supplies. 4z

III. A Quantitative Analysis of the Efficiency of Commercial Jurisdictions in


Argentina and Venezuela
If simply providing more resources to the Latin American courts is n o t likely to improve
their efficiency, what will? To answer that question, we n e e d to have a clearer picture of

4°See Robert Page, Argentina Report, DEA Consulting Group, 1994, unpublished manuscript.
4lid"
4"2id"
284 Efficiency of the Latin American judiciary

the factors that determine judicial efficiency in Latin America. This section focuses on
commercial litigation in Argentina and Venezuela to identify some of these additional
factors. We first specify a broad spectrum of factors that we think are likely to affect the
times-to-disposition (our measure of judicial efficiency), and then we speculate on the
likely relationship between each of those factors and judicial efficiency. We next
correlate each of these factors with the times to complete each procedural stage of
litigation for 190 commercial cases in Argentina and Venezuela. Using nonparametric
analysis, we identify those factors that are most significant in determining judicial
efficiency. This decomposition allows proponents of judicial reform to pinpoint specific
procedural stages in litigation that may need to be addressed.

The Scope of the Stud)'


We have analyzed the main procedural stages in selected commercial litigation in
Argentina and Venezuela. In each of these two countries we drew a stratified sample of
the most c o m m o n types of commercial cases--bankruptcies, debt collection, and
breach of contract. We then c o m p u t e d the procedural times for each stage of those
cases: court-preparation, litigants' pretrial discussion, motions, discovery, and sentenc-
ing. We next gathered information about court-related and user-related variables that
might have affected these procedural times. In all, we interviewed 18judges and 180
court-users.

Efficien O, in the Suppl~ and Demand for Court Services


To pinpoint the factors related to the times-to-disposition (our principal measure of
judicial efficiency), we first catalogue the factors that affect the supply of and d e m a n d
for judicial services. 43 For each of these factors we indicate what the expected effect of
that factor is likely to be on the time-to-disposition of a commercial dispute like those
in our sample.
We consider the following supply-related variables:
1. real growth in government spending devoted to the judiciary;
2. the increase in the n u m b e r of courts, judges, and support personnel and in their
work time;
3. the level of case-management uniformity;
4. the technology applied to case tracking and research;
5. judges' time dedicated to mandatory settlement conferences and judges' time
allocated to administrative work other than caseflow management; and
6. the complexity of the case type.
What effects do we anticipate for each of these factors on times-to-disposition? All
other things being equal, we should expect a real (not nominal) increase in govern-

4aWe m i g h t have m e a s u r e d judicial efficiency by any of a n u m b e r o f statistics: the clearance rate, the n u m b e r o f cases
d e c i d e d p e r j u d g e , times-to-disposition, sitting hours o f j u d g e s relative to sentences, a n d cost-per-case-processed are all
e x a m p l e s o f s t a n d a r d efficiency measures. Each o f these m e a s u r e s has strengths a n d weaknesses. For e x a m p l e , to m e e t
a "sustainable" efficiency criterion in the provision o f court services, a h i g h clearance rate m u s t be a c c o m p a n i e d by the
public's p e r c e p t i o n that they have reasonable access to the conrts. It is possible to find court systems with very h i g h
clearance rates that at the s a m e time lack the public's confidence, and, therefore, provide a low-quality" selwice. O n
reflection a b o u t the strengths a n d weaknesses of each m e a s u r e o r o f s o m e composite measure, we have c h o s e n to focus
on "times to disposition" as o u r principal m e a s u r e of judicial efficiency.
E. BUSCAGLIAAND T. ULEN 285

m e n t capital s p e n d i n g on the courts to improve j u d i c i a l efficiency (i.e., to lower


times-to-disposition). Therefore, there should be a negative correlation between in-
creases in real resources available to the courts a n d times-to-disposition (i.e., a positive
relationship between real resources a n d j u d i c i a l efficiency). T u r n i n g to o t h e r supply-
side factors, we s h o u l d e x p e c t an increase in the n u m b e r o f courts a n d in the n u m b e r
o f c o u r t p e r s o n n e l to lead to a r e d u c t i o n in times-to-disposition (i.e., to improve
efficiency a n d to have a negative correlation); m o r e uniformity in c a s e - m a n a g e m e n t
techniques o u g h t to r e d u c e the times-to-disposition, because the c o u r t has lowered its
administrative costs (again, a negative correlation); s u p e r i o r technology (such as the
wider availability of computers) should improve the courts' efficiency because o f their
g r e a t e r ability to m a n a g e the caseload, write opinions, search r e p o r t e d cases on-line,
a n d the like (a negative correlation). How j u d g e s allocate their time will also have an
i m p a c t on efficiency: if j u d g e s m a n d a t e settlement conferences (and thereby devote
m o r e time to t h e m ) a n d if those conferences cause parties to resolve their disputes
m o r e expeditiously, t h e n that reallocation o f j u d i c i a l time should improve judicial
efficiency. 44 Similarly, if j u d g e s are able to devote m o r e time to substantive dispute-
resolution, r a t h e r than to the administrative tasks o f case-flow m a n a g e m e n t , there
s h o u l d be an i m p r o v e m e n t in the efficiency o f the courts (i.e., a negative correlation
between this increase in the use of j u d g e s ' time a n d times-to-disposition). O f the
supply-side factors identified above, the only o n e whose increase should lead to a
decrease in j u d i c i a l efficiency is case complexity. If, all o t h e r things b e i n g equal, the
cases p r e s e n t e d to the courts b e c o m e m o r e complex, then the times-to-disposition
s h o u l d increase. This is because the pleadings will be m o r e lengthy a n d r e q u i r e m o r e
attention by the courts, the factual matters in dispute will be m o r e n u m e r o u s a n d
c o m p l e x a n d require greater time to p r e s e n t a n d evaluate, a n d the issues o f law are
likely to be m o r e complicated, r e q u i r i n g greater p r e s e n t a t i o n by the parties a n d greater
research by the court.
T u r n i n g now to the o t h e r side o f the m a r k e t for j u d i c i a l services, we consider the
following d e m a n d - r e l a t e d variables:
1. the direct costs o f access to the courts (e.g., court a n d attorney's fees, a n d trans-
p o r t a t i o n costs);
2. the i n d i r e c t costs (e.g., wages lost);
3. the filings p e r court;
4. the size o f the firm litigating ( n u m b e r o f employees);
5. the initial d e m a n d as a p e r c e n t a g e o f the firms' assets;
6. the m e a s u r e o f how m u c h firms are willing to discount the a m o u n t d e m a n d e d in
litigation to reach a s e t t l e m e n t out of court;
7. the size o f the law firms involved in the dispute;
8. the propensity to litigate ( n u m b e r of previous litigations within the same case type)
a n d the filings p e r total population; a n d
9. the e x p e r i e n c e o f the attorneys involved in the dispute.
W h a t correlations should we e x p e c t between these factors a n d j u d i c i a l efficiency? For
the first of these factors, the considerations a b o u t the effects on j u d i c i a l efficiency are

~4Clearly, there is a correlation among some of the variables we have identified as supply-side factors. For instance,
the wider availability of computer technology would, all other things being equal, free up judicial time for settlement
conferences and for substantive dispute resolution (away from administrative purposes). Also, more real resources
might well lead to more computers.
286 Efficiency of the Latin American judicia U

slightly m o r e c o m p l e x than they were with the supply-side factors. As the first two factors
(direct a n d indirect costs) increase, the d e m a n d for court services should fall. First
principles do n o t dictate a clear effect on j u d i c i a l efficiency. O n the one hand, the
h i g h e r costs o f using a court to resolve a dispute could cause potential litigants with
relatively low-quality disputes to look elsewhere for resolution. If that leaves high-quality
cases for resolution by the courts, then j u d i c i a l efficiency may improve. O n the o t h e r
hand, if the h i g h e r costs o f using courts encourages only those litigants with c o m p l e x
or high-stakes disputes to seek judicial services, only the most c o m p l e x cases may be left
in court, and, as we have seen above, c o m p l e x cases cause a r e d u c t i o n in j u d i c i a l
efficiency (i.e., an increase in times-to-disposition). Because we do n o t know which o f
these effects (or some others) will d o m i n a t e , we c a n n o t make a clear p r e d i c t i o n a b o u t
the effects o f these costs factors on j u d i c i a l efficiency.
T h e p r e d i c t e d relationship between filings p e r court a n d times-to-disposition is, by
comparison, relatively straightforward. As those filings increase, all o t h e r things b e i n g
equal, the courts should b e c o m e m o r e congested, and, so,judicial efficiency should tall
(i.e., there should be a positive correlation between filings p e r court a n d times-to-
disposition). (Later we shall look at the effect o f a closely related factor, the "propensity
to litigate.")
W h e n the stakes involved in a dispute, m e a s u r e d as a p e r c e n t a g e o f the firms' assets,
are high, there should be a positive correlation with times-to-disposition. T h e impor-
tance o f the stakes at issue, relative to the disputant's assets, is a fair m e a s u r e o f how
i m p o r t a n t the dispute is to the parties, a n d one could expect that the m o r e i m p o r t a n t
the dispute is, the m o r e hard-fought the dispute will be, in terms of the time a n d o t h e r
resources devoted to litigation. By contrast, the m o r e willing the disputants are to
discount the stakes to resolve the dispute, the s h o r t e r the dispute is likely to be.
Therefore, we should expect a negative correlation between this willingness a n d the
times-to-disposition.
Two o f the final d e m a n d - s i d e factors deal with the n a t u r e o f the lmwers pressing the
dispute. Consider, first, the nature of the lawyers, as m e a s u r e d by the size of the law firm
a n d the e x p e r i e n c e of the attorneys. T h e larger the law firms pressing the disputes, the
m o r e c o m p l e x and, therefore, lengthy the dispute is likely to be. This is because, all
o t h e r things b e i n g equal, larger law firms are able to b r i n g m o r e resources to b e a r on
a dispute, and, as a result, clients with large a m o u n t s at stake or with c o m p l e x matters
r e q u i r i n g resolution are m o r e likely to hire larger firms. ?dl of this means that the larger
the firms involved, the greater the time-to-disposition of a dispute (i.e., there will be a
positive correlation between the law-firm size a n d time-to-disposition). T u r n i n g to the
e x p e r i e n c e o f the attorneys involved, we c a n n o t be sure what the effect on j u d i c i a l
efficiency would be. O n the o n e hand, e x p e r i e n c e d attorneys know how to delay
resolution o f a dispute for as long as seems advantageous to their client. A younger,
less-experienced attorney might n o t have the guile to draw o u t a dispute. O n the o t h e r
hand, an e x p e r i e n c e d attorney is better able than is a y o u n g attorney to recognize the
true merits a n d o t h e r dimensions of a dispute a n d to b r i n g it to a resolution as
expeditiously as possible. As a result of these conflicting tendencies, we c a n n o t be sure
what the correlation will be between the e x p e r i e n c e o f the attorneys involved a n d the
time-to-disposition. Moreover, we must recognize that there will be some c o m p l e x
interactions between attorney e x p e r i e n c e a n d some of the o t h e r d e m a n d - s i d e factors
that we have identified.
T h e final factor whose effect on j u d i c i a l efficiency we shall investigate is the p r o p e n -
sity to litigate (as m e a s u r e d by the previous a m o u n t of litigation in this area a n d filings
E. BUSCAGLtaAND T. ULEN 287

per capita). As was the case with filings p e r court, when the propensity to litigate
increases, all o t h e r things b e i n g equal, the times-to-disposition are likely- to i n c r e a s e - -
i.e., the correlation should be positive. T h e courts will b e c o m e m o r e congested, reduc-
ing j u d i c i a l efficiency. (Ultimately, of course, d e p e n d i n g on what o t h e r responses there
are to this congestion, there may be an increase in j u d i c i a l resources that leads to a
r e d u c t i o n in the times-to-disposition.)
T h e r e were some additional factors that we t h o u g h t probably affected the efficiency
o f the courts b u t for which we h a d only sketchy information, i.e., the availability, a n d
price o f alternative dispute-resolution m e c h a n i s m s i o r an increase in n e t national
income, for which the effect was unclear.

Quantitative Analysis of the l~ctors Related to Procedural Times


We drew a sample of 100 c o m m e r c i a l cases in 'Argentina a n d 90 in Venezuela for the
p e r i o d 1989 to 1992. Merely selecting a r a n d o m sample o f cases from the entire
universe o f cases from all c o m m e r c i a l courts (i.e., a sample where each case has the
same probability of b e i n g drawn) would tend to over-represent the case D'pes with the
greatest n u m b e r of filings. We a t t e m p t to avoid this pitfall by selecting a stratified
r a n d o m sample, involving firms as plaintiffs, drawn so as to p r o d u c e a roughly equal
n u m b e r of cases for each case type a n d firm size. 4~
We surveyed 10 c o m m e r c i a l courts in A r g e n t i n a (Federal District) a n d 9 trial courts
in Venezuela (Caracas District). We further classified these courts in terms of w h e t h e r
they h a d large, m e d i u m , a n d small backlogs. For each court, we selected three types of
cases. For each type of case, we stratified o u r sampling once again in terms of the size
of a plaintiff-firm. We also surveyed court officials a n d asked t h e m to c o m m e n t on their
experiences in o p e r a t i n g certain p r o c e d u r e s and to provide estimates of their time
devoted to administrative tasks, their c a s e - m a n a g e m e n t techniques, the technology they
used in case handling, alternative solutions p r o p o s e d to r e d u c e the backlogs, etc. For
example, we i n c l u d e d questions a b o u t court-enforced p r o c e d u r e s a i m e d at the control
of the pace of discoveD,, or even actions i n t e n d e d to simpli~' or liberalize the motions
a n d p l e a d i n g rules, m a n a g e m e n t of court resources, a n d the court's capacity to pro-
m o t e settlements. The information o b t a i n e d in this sm~,ey reflects the perspective of
court m a n a g e m e n t personnel, lm~Ters, a n d litigants. We asked litigants to provide
i n f o r m a t i o n a b o u t the n u m b e r of lawTers in their firms a n d their caseload p e r la~Ter,
a b o u t their direct and indirect costs o f litigation, a n d their willingness or ability to settle.
We then m e a s u r e d the times obsm~'ed for evm T p r o c e d u r a l step for all case types in
the selected courts in each country. Finally, we used n o n p a r a m e t r i c correlation analyses
to identify, the strongest factors associated with the observed times-to-disposition. 46

4:'Following Stone, we classify firms' size within lhe textile and agricultural sectors according to their nmnber of
employees. We consider the range 1 to 25 employees to represent a small firm, the range of 26 to 250 employees to
represent a medium firm, and the range above 250 employees to represent a large firms. See Andrew Stone, "Measuring
transaction costs in the textile indust* T in Argentina, Brazil, and Chile," The World Bank, 1993, unpublished
manuscript.
4~;Previous studies have shown that the question of how to reduce time-to-dispositlon is an extremely complex issue.
This previous research, however, has been based on aggregate data rather than case-level inlormation. Our study
overcomes the limitations that have plagued previous researchers by collecting more extensive and detailed informa-
tion about the litigation, the case structure, and processing within the courts, and by aualyzing individual cascdevel
information through stn~'eys of the conrts and the litigation invoh'ed. For examples of previous studies, seeJulio Gueto
Rua, "Los abogados y la congestion en los tribunales," La L U 23-37 (1992); and Corte Suprema de Justicia, Cantidad
288 Efficiency of the Latin American judiciary

Using a nonparametric correlation analysis, we examined the strength of the rela-


tionship between the supply- and demand-side variables and the average procedural
times experienced at each of the stages of litigation. 47 The correlation matrices (Tables
3 and 4) show the strength of the relationships. The sign attached to the relationship
shows the expected association. For instance, in Argentina, there is a clear and signif-
icant relationship between the filings per court and the total court time devoted to the
commercial case (.78). The same is true for the relationship between filings per court
and the time devoted to preparing (.83) and discussing (.67) the case. The positive signs
of the correlation coefficients attached to the discovery process (.57), motions (.45),
and sentencing (.75) also show that as the filings per court increase, the time devoted
to each of these stages of litigation also increases.
O n e can also observe that as the courts devote more resources, especially court
personnel, to all phases of the judicial process, the times devoted to each stage decrease
within the same year. O n e cannot, however, observe the same strength in the relation-
ship between capital spending and procedural times. Additional personnel shows a
strong inverse correlation ( - . 7 8 ) at the sentencing level. What is also important to note
is that an active and uniform case-management style tends to be correlated with the
reduction in the procedural times, especially in relation to motions elevated by the
parties and in the preparation and the discovery stages. This clearly shows that proce-
dural times are not just associated with an increase in the availability of resources but
also with a different use of the previously available resources.
M1 of the significant correlations shown in the matrices display the expected signs.
For example, on average, the correlation f o u n d between filings per population and
total times-to-disposition is significant and strong at .91 in Venezuela (.56 in Argentina's
case). However, we may also need to find out if the correlation between filings per
population and preparation is also significant--i.e., whether a larger filings per popula-
tion rate is correlated with longer times devoted to the clerk's preparation of a case
before being considered by the judge. In both countries commercial courts take more
time to prepare the filed cases when congestion increases. The correlations equal .96 in
Venezuela and .76 in Argentina. Note also that larger stakes captured by d e m a n d s /
assets tend to p r o l o n g the times-to-disposition (.49 and .83 correlations for Argentina
and Venezuela, respectively).
A weak or insignificant correlation seems to exist in both countries between filings
per population and discussion (judging from the 0.12 result in Venezuela and the 0.23
correlation in Argentina). In other words, the congestion in this case would not affect
the time devoted by the parties to the pretrial discussion stage. 48
We turn next to the association between increases in spending devoted to personnel

de Expedientes Tramitados en los Fueros de la Capital Federal y Jurisdicciones Federales del Interior (1991 ). See also G r e g o r , supra
note 35.
47We used the rank-based n o n p a r a m e t r i c S p e a r m a n index. A correlation coefficient is always between - 1 a n d + 1.
A correlation coefficient o f + 1 m e a n s that all o f the data are perfectly positively (directly) correlated. A correlation
coefficient o f - 1 m e a n s that all o f the data points are perfectly negative (inversely) correlated. I f the correlation
coefficient is close to 0, t h e n there is n o relationship between the variables. In o u r case, each correlation can be
significant o r insignificant at a 5% c o n f i d e n c e level. In the charts if a correlation is a c c o m p a n i e d by the symbol "(1),"
t h e n this m e a n s that there is m o r e than a 95% c h a n c e o f a zero correlation for the population.
4SWe f u r t h e r p r o b e d this claim that there is no correlation between filings p e r population a n d pretrial discussion
by u s i n g the t-distribution to c o m p u t e the likelihood o f a zero correlation. W e f o u n d that there is a v e r y h i g h likelihood
o f no correlation's existing. T h a t is, in both countries a m o r e c o n g e s t e d court is n o t likely to e x p e r i e n c e a l o n g e r
pretrial discussion stage.
E. BUSCAGLIAAND T. ULEN 289

TABI.E 3. Commercial courts: Argentina (100 commercial cases)

Total time Preparation Discussion Motions Discovery Sentence

Supply side
Time of administrative procedure .75 .88 .00 (I) .09 (I) .61 .45
Total spending resources -.36 .24 (I) -.15 (I) -.02 (I) -.56 -.10 (I)
Spending capital -.11 (I) -.26 -.00 -.01 (I) -.12 (I) -.33
Spending court personnel -.45 -.57 -.34 -.03 (I) -.56 -.78
Case management -.89 -.68 -.29 -.79 -.68 -.45
Time dedicated to ADRa -.58 -.45 -.50 -.05 (I) -.07 (1) -.05 (I)
Judge active intervention -.38 -.90 -.07 (I) -.39 -.38 -.67
Computer system -.78 -.95 -.56 -.34 -.67 -.81
Case complexity" .76 .44 .51 .59 .89 .92
Demand side
Direct costs -.34 .16 (I) -.35 .02 -.67 .18 (I)
Filing per court .78 .83 .67 .45 .57 .75
Indirect costs .28 (1) .29 (I) .38 .45 .29 (I) .18 (I)
Demand/assets .49 .36 .79 .27 .35 .35
Firms' size -.55 .07 (I) -.39 .17 (I) -.78 .02 (I)
Willingness to discount -.39 -.56 -.13 (I) -.16 (I) -.37 -.29
Size of law firm .08 .06 (I) -.01 (I) .07 (I) -.06 (I) -.03 (I)
No. of complaints .04 (I) .02 (I) .07 (I) .08 (I) -.05 (I) -.04 (I)
Cases per attorney -.12 (I) -.16 (I) -.18 (I) -.24 -.04 (I) .03 (I)
Attorney experience .39 .13 (I) .56 .57 .25 (I) .39
Filings/population .56 .76 .23 (I) .11 (I) .89 .72

~'ADR,for purposes of Tables 3 and 4, refers to arbitration, conciliation, and mediation.

a n d p r o c e d u r a l times, H e r e t h e c o r r e l a t i o n is w e a k e r t h a n t h e p r e v i o u s o n e b u t is
significant. N e g a t i v e c o r r e l a t i o n s e q u a l to - 0 . 4 5 in A r g e n t i n a a n d - 0 . 2 8 in V e n e z u e l a
c o n f i r m t h e inverse r e l a t i o n s h i p b e t w e e n real s p e n d i n g o n p e r s o n n e l a n d total time-
to-disposition within the s a m e year.
W e also f i n d t h a t t h e r e is a significant inverse c o r r e l a t i o n b e t w e e n a l a r g e r plaintiff-
f i r m a n d t h e times-to-disposition. T h e s e c o r r e l a t i o n s are - . 5 5 in A r g e n t i n a - . 4 9 in
Venezuela.
As e x p e c t e d , we also see t h a t case c o m p l e x i t y a n d the use o f c o m p u t e r s have t h e
p r e d i c t e d association with t h e times-to-disposition o b s e r v e d at all stages in b o t h c o u n -
tries. W e asked j u d g e s o r clerks to r a n k t h e c o m p l e x i t y o f t h e i r c o m m e r c i a l cases in
t e r m s o f t h e r e q u i r e d i n t e r a c t i o n with parties, the t e c h n i c a l k n o w l e d g e r e q u i r e d , a n d
the e x t e n t o f the discovery process. W e asked t h e m to r a n k c o m p l e x i t y o n a 1-to-10
scale, w h e r e "1" m e a n s " s i m p l e " a n d "10" m e a n s " e x t r e m e l y c o m p l e x . " W e t h e n c o m -
p u t e d the c o r r e l a t i o n b e t w e e n these r a n k i n g s a n d t h e times o b s e r v e d at e a c h p r o c e -
d u r a l stage. E v e n t h o u g h we observe a significant a n d positive c o r r e l a t i o n all across t h e
b o a r d (as e x p e c t e d ) , we also f i n d that the s t r o n g e s t positive c o r r e l a t i o n s exist at the
discovery a n d s e n t e n c i n g stages, w h e r e the c o m p l e x i t y o f t h e cases d e m a n d a d d i t i o n a l
time from court personnel.
Finally, we s o u g h t to find a c o r r e l a t i o n b e t w e e n the t e c h n o l o g y available to t h e c o u r t
a n d the p r o c e d u r a l times in the d i f f e r e n t phases o f litigation. ( C o m p u t e r t e c h n o l o g y is
o f t e n useful as a m e t h o d o f c o m p i l i n g a d a t a b a s e o f cases o r in s e a r c h i n g for cases o n
point, in i m p l e m e n t i n g a case-tracking system, a n d as a w o r d processor.) In o u r s a m p l e ,
290 Efficiency of the Latin American judiciary

TABLE4. Commercial courts: Venezuela (90 commercial cases)

7btal time Preparation Discussion Motions Discovery Sentence

Supply side
Time administrative procedure .41 .81 .06 (1) .02 (I) .59 .78
Total spending resources -.45 -.19 (I) -.78 -.32 -.42 -.18 (I)
Spending capital -.01 (l) .06 (I) -.00 (1) .01 (I) -.02 (I) -.15 (I)
Spending court personnel -.28 -.27 -.28 .33 (I) -.26 -.55
Case management -.29 -.18 (I) -.59 -.06 (I) .01 (I) -.29
Time dedicated to ADR -.00 (I) -.00 (l) -.50 (I) -.05 (1) .00 (I) -.69
Judge active intervention -.11 (I) -.03 (I) -.27 -.01 (I) .18 (I) -.76
Computer system -.48 -.15 (1) -.17 (I) -.21 (I) .67 -.92
Case complexity .86 .49 .51 .19 (I) .96 .69
Demand side
Direct costs -.29 .18 (I) -.77 -.52 -.88 -.01 (I)
Filing per court -.29 .18 (I) .77 -.52 -.88 -.01 (I)
Indirect costs -.18 (I) .13 (I) -.73 -.59 .71 -.02 (I)
Demand/firms' assets .83 .04 (I) .99 .82 .58 .49
Firms' size -.49 .01 (1) -.62 -.66 .01 (I) .09 (I)
Willingness to discount .69 .00 (*I) .92 -.38 -.72 -.03 (I)
Size of law firm .88 .06 (I) .01 (I) .89 -.02 (I) .03 (I)
No. of complaints .00 (I) .07 (I) .11 (I) .29 -.01 (1) -.12 (I)
Cases/attorney -.42 .00 (I) -.78 .31 .00 (I) .05 (I)
Attorney experience .31 .00 (I) .34 .29 .15 (I) .09 (I)
Filings/population .91 .96 .12 (I) .11 (I) .89 .46

45% o f the courts c h o s e n for this study u s e d c o m p u t e r t e c h n o l o g y b u t only for w o r d


processing. Even so, the use o f c o m p u t e r t e c h n o l o g y in the supply o f c o u r t ser~ices
clearly s h o w e d a significant n e g a t i v e association with times-to-disposition. M o r e o v e r , we
see that the s t r o n g e s t association occurs at t h e s e n t e n c i n g stage, w h e r e t h e use o f w o r d
p r o c e s s o r s has a c c e l e r a t e d the process o f writing o p i n i o n s . In s o m e c o u r t s c o m p u t e r s
l e a d to a 3-fold i n c r e a s e in s e n t e n c i n g productivity.

IV. Conclusion
This study p r o v i d e s the first q u a n t i t a t i v e analysis o f courts within t h e Latin A m e r i c a n
region. T h e first p a r t o f this study clearly shows t h a t times-to-disposition have b e e n
i n c r e a s i n g at an u n p r e c e d e n t e d rate since 1990 t h r o u g h o u t the region. T h e m a i n
increases in t h e times-to-disposition s e e m to be c o n c e n t r a t e d within the discovery stage.
T h i s suggests the n e e d to e n f o r c e p r o c e d u r a l d e a d l i n e s d u r i n g the discovery process
w h e r e u n j u s t i f i e d m o t i o n s are c o m m o n as a strategic tool in litigation.
It is i m p o r t a n t to stress that the d e t e r i o r a t i o n in t h e q u a l i ~ ' o f c o u r t services has
o c c u r r e d d u r i n g a t i m e w h e n , in m o s t legal j u r i s d i c t i o n s , courts have i n c r e a s e d t h e i r
productivity at an i n c r e a s i n g rate. T h e s e increases, however, have n o t b e e n e n o u g h to
m a t c h the i n c r e a s i n g d e m a n d m e a s u r e d in t e r m s o f the p e r c e n t a g e c h a n g e s in c o u r t
filings. This also suggests that a l t h o u g h courts have b e e n responsive to t h e increases in
the d e m a n d for c o u r t services, they have n o t b e e n able to "catch up" a n d o v e r c o m e the
increases in filings. As a result, p e n d i n g cases have i n c r e a s e d at an u n p r e c e d e n t e d rate.
As a s o l u t i o n to this p r o b l e m , the j u d i c i a r y may a d o p t a m o r e proactive, a n d n o t
reactive, a p p r o a c h by f o r e c a s t i n g the d e m a n d for c o u r t services to avoid u n e x p e c t e d
E. BUSCAGLIAAND T. ULEN 291

increases in filings and times-to-disposition. Based on our jurimetric analysis showing


the links between times-to-disposition and the supply- and demand-related variables
shown in Section II, further increases in time productivity can be accomplished t h r o u g h
the creation of additional courts, improvements in case-management techniques, and a
uniform, less time-consuming, and more centralized administrative approach. An im-
portant conclusion from our analysis is that increases in judicial resources have no
significant effect on reducing times-to-disposition, measured with a 2-year lag. Put
dramatically, "throwing money" at the problem of judicial inefficiency in Latin America
is not likely to work.
It is also interesting to observe that all the supply- and demand-related variables we
examined affected the times-to-disposition in commercial jurisdictions in precisely the
ways expected. This is the most important conclusion derived from the nonparametric
analysis of Section II. More specifically, uniform administrative procedures, improve-
ments in case management, the wider availability of c o m p u t e r technology for applica-
tion in case management, and the size of plaintiff-firms are all factors that are strongly
and positively associated with the times-to-disposition observed in commercial litigation
in Argentina and Venezuela.