Academic

Hasen on Legal Transitions

By Lawrence Solum

David Hasen (University of Michigan at Ann Arbor - Law School) has posted Legal Transitions - Reliance Redux on SSRN.  Here is the abstract:

The recent literature on legal transitions is noted for its welfarist approach to the analysis of legal change. This approach tends to efface, and purports to debunk, a number of distinctions that are salient to conventional understandings of legal transitions. According to a welfarist analysis, these distinctions have no significant role to play in the analysis of legal change.

This article examines the theoretical apparatus on which these criticisms are based, with a principal focus on taxation. The examination demonstrates that the apparatus suffers from significant conceptual shortcomings. They include the unwarranted assimilation of legal to factual change, the naturalization of conventional arrangements, and the unfounded disregard of the distinction between making law and finding it. The result is an account of legal transitions that is unable either to explain actual transitions or to provide a novel normative theory of how legal change should take place. In the end, the older view of legal transitions is more capable than the welfarist approach of providing an adequate normative and positive framework for understanding legal transitions.

And from the conclusion:

In one sense, these criticisms can be traced back to a fundamental tenet of the new transitions literature, articulated first by Graetz,165 developed by Kaplow,166 and given perhaps its most comprehensive explication by Shaviro.167 This is the idea that new rules have a retroactive effect when they have an impact on the future consequences of decisions made prior to the adoption of the rule. The idea that such transitions ?reach back into the past,? in Shaviro?s formulation,168 implies that one cannot meaningfully distinguish between legal transitions that apply by their terms to completed conduct and those that apply to the present and future consequences of completed conduct ? conduct that projects itself into, and assumes the risks of, future developments. It is on the basis of this view that the transitions literature downplays, if it does not dismiss, the distinction between nominal retroactivity and nominal prospectivity that has retroactive effect. The considerations developed in this article, however, explain why it is sensible to draw a distinction in kind between forward-looking reforms and nominally retroactive ones, and why one might want to reserve the term retroactive for the latter as well as, perhaps, for future consequences of past actions where the distinction between past and future is irrelevant. Future consequences always depend upon future conditions, whereas past consequences and conduct depend upon nothing; they are complete. It is often appropriate to impute to investors an assumption of the risk that the future will differ from the past, but not that the past does not turn out to be what it was.

Compelling.  Highly recommended.

Full post as published by Legal Theory Blog on August 26, 2008 (boomark / email).