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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