The Untapped Public Wealth of Courts

Faced with shrinking budgets and revenue streams that are dry or reduced to a trickle, at the same time as citizens are demanding better public services, judiciaries must learn not only how to spend more wisely but also to manage their public assets better. Justice systems own valuable land and brick-and-mortar assets that they often do not use and do not need. As judiciaries around the world consolidate or close courts altogether to improve their supply chain management of judicial service, courthouses are not at capacity or sit empty as judges are transferred to other locations.

This unused real estate represents untapped capital that justice systems should exploit. Historically, courts were located in the administrative centers of towns, cities, states and provinces. Today, they sit on valuable real estate, some of it is outrageously so (think of the center and suburbs of the developing and developed nations of the world). The physical space that courts will need to occupy may decrease steadily as internet-enabled remote access to court increases. Judiciaries will need to decide what to do with this untapped capital. Courthouses and the land upon which they sit could be rented to yield a steady stream of revenue or sold to produce a cash for investment in judicial reform efforts such as online dispute resolution (ODR).

Smart asset management promises a steady stream of revenue and a healthy return on assets (ROA). Unfortunately, as recently pointed out by The Economist (“Public wealth – How to spend it: If pubic assets were managed better, government coffers would enjoy a much-needed boost.” October 20, 2018), governments are not very good at public asset management. For the judicial branch, it may be even more challenging than for the other two branches of government.

Lessons from the UK

The stage seemed to be set for an early demonstration of wise asset management of judicial real estate in the UK in 2015. In that same year, the United Kingdom Civil Justice Council made  the economic case for an Internet-based online dispute resolution system for England and Wales, the HM Online Court (HMOC). It predicted that taking cases out of the conventional court system online would reduce both fixed and operating costs. “[I]f a large number of disputes come to be resolved by HMOC, this would have significant implications for the court estate – there will be a reduction in need for many of the current buildings and the land on which they sit.” The prospects of financing online dispute resolution (ODR) by the monies made by renting or selling the justice system’s public assets is tantalizing, an innovative justice system reform enabled by an innovative financial approach.

It is clear that not everyone is as enamored with such innovations as the reformers. Resistance rests on both ideological and financial grounds. Critics in the UK say that the closing of courts is ill-conceived because it will seriously restrict access to justice and that courts’ real estate is being sold too cheaply.  As reported in The Guardian by  Owen Boycott in March of this year (Court closures: sale of 126 premises raised just £34m, figures show: ‘Ideological’ sell-off limits access to justice, says Labour, leaving many far from their nearest court, March 8, 2018), the Shadow  Secretary of State for Justice, Richard Burgeon, accused the Ministry of Justice (MoJ) of aggressive court sell-offs before a £1billion court modernization program focused on ODR has proved viable. His accusations were reinforced by a justice select committee which cited the example of the closure of the Northallerton magistrates court would force court users to travel to another court, a journey of three hours one way by bus. As reported by The Guardian, £224 million has been generated by the sale of courts with two-thirds of that sum coming from the sale of just nine courts in and round London; other locations fetched much less, like the Rochdale magistrates court for £6,316 and the Conset country court for £13,735.  Such examples “do nothing to assuage fears that the government’s wave of court sell-off is driven by blinkered ideology with scant regard for the impact on access to justice in whole swaths of the country,” said Burton.

The lessons drawn from UK’s experience suggests two steps that other nations and sub-national states and provinces should consider for efficient asset management of its court real estate.

Controlling the Narrative of the Story

As my colleagues and I have stressed in our recent judicial mapping in Ukraine, where at the start of this year 587 first instance courts were consolidated into 257 circuit courts, successful supply change  management, as well as wise asset management, must first establish critical managerial strategies required for change management –  controlling the narrative of the story of reform and avoiding unproductive and divisive ideological debates such as those in the UK.

Reform requires change management focused on controlling the counterproductive narratives and beliefs about how to achieve a rational and optimal allocation of judicial resources. Changes to the status quo in pursuit of efficiencies and cost-savings often are met with fierce resistance from justice officials and politicians invoking arguments steeped in doctrine and ideology. Such arguments too often are woven into narratives beginning with the principle of the “right” to access to justice, then continue to diverge with references to the doctrines of the independence of the judiciary and the separation of powers, and then might even continue to degenerate into debates about the pros and cons of liberal democracy or sovereignty. It ends in stalemate with no progress being made.

It is not uncommon for court leaders and justice stakeholders to grasp at political ideology and raise the issue of access to justice to resist the closing or consolidation of courts.  If you close this court -- the argument goes -- citizens will be denied access to justice.  This is a strong argument because it typically evokes an emotional response irrespective of the information’s truth value, especially if the counter-arguments are couched in terms of efficiency and cost-savings that pale against complains of a denial of the right to access to justice. The trouble is that such arguments are heavy on rhetoric and doctrine and light on hard evidence and they often produce factionalism and political stalemate.  International good practice relies on public data and uses the scientific method, pointing toward solutions, not doctrine and ideology.

 Controversy and intense debate are, of course, not about the optimal distance of courts from the residents of a region and their access to justice. No, instead controversy and debate most often do not originate from citizens’ or anyone’s real concerns about access to justice, but rather from fear of judges, local politicians, and other local stakeholders of losing their power and control of their territory. 

International experts agree that creating productive narratives is the most important struggle for governments and societies, only after the first tough struggle of building of strong and inclusive institutions like courts that are free of corruption and oppression. The struggle is developing a set of norms, narratives, and shared beliefs that do not freeze participants us into dysfunction.

Is the Price Right?

A second step is for judiciaries to calculate the current market value of its untapped capital. This may be promising but very tricky.  Citing the work of Dag Detter, a consultant who has co-written a book on the subject, The Economist points to examples of inefficient exploitation of public assets. Politicians and finance ministers may be more interested in making up shortfalls in cashflow than making a good deal. For example, in 2008, the city of Chicago leased its parking meter operations to a consortium of private companies at price that was determined to be $1 billion too low. In 2014, Britain determined that it had sold its state-owned postal service far too cheaply when the shares of the now privately held entity rose 38% on the first day of trading.

Worth the Effort

The October article in The Economist concludes with this recommendation which I endorse: “The more that cash- strapped governments can raise from stuff they own, the less they will have to cut and squeeze elsewhere.”

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