Swiss Re Ag · SIX:SREN
Swiss Re — Investor Presentation (2016)
83 slides from Swiss Re's investor presentation, 2016
Slide 1: Contracting as Seen Through a Therapeutic Jurisprudence Lens
Contracting as Seen Through a Therapeutic Jurisprudence Lens© THOMAS D. BARTON PROFESSOR OF LAW, CALIFORNIA WESTERN SCHOOL OF LAW, SAN DIEGO, CALIFORNIA © COPYRIGHT THOMAS D. BARTON, 2016. ALL RIGHTS RESERVED
Slide 2: Starting Point: Therapeutic Jurisprudence
Starting Point: “Therapeutic Jurisprudence” Therapeutic Jurisprudence (“TJ”) is a movement from the late 20th Century. TJ is often studied in the context of mental health law, criminal law, and problem solving courts.
Slide 3: Starting Point: Therapeutic Jurisprudence
Starting Point: “Therapeutic Jurisprudence” TJ is dedicated to reform of legal methods and ideas, so that human interactions with the law will contribute to human well-being, rather than cause distress to individuals and social relationships.
Slide 4: Starting Point: Therapeutic Jurisprudence
Starting Point: “Therapeutic Jurisprudence” If we applied the concerns and values of TJ to the legal and social institution of contracting, What issues would we find? What suggestions could we make?
Slide 5: Beginning Premises
Beginning Premises: When seen through a TJ lens, the basic starting premises of “contracting” are: 1. People must make private contracts, a need that will only increase with more globalization. 2. As human interaction cross national borders, public laws and enforcement become increasingly clum
Slide 6: Beginning Premises
Beginning Premises: BUT, 3. Often the parties to a contract do not: a. talk fully through their interests, goals, or the particulars of the exchange relationship; b. or even read the contracts that are made for them.
Slide 7: Beginning Premises
Beginning Premises: Consciously or unconsciously, these behaviors result in an abdication of inter-party communication, and a hollowing of the relationships that should be created through contracting.
Slide 8: The Problem
The Problem For consumers, this can lead to potential exploitation; For business people, it can lead to lost opportunities for innovation, value, and stronger commercial relationships; and for everyone: under-use of contract documents for preventing disputes and achieving exchange goals.
Slide 9: The Problem
The Problem At least in part, both of those shortcomings of actual contracting may be because: The parties have been trained to regard “contracts” as the domain of the law and lawyers, where precision of legal language and the complete articulation of legal rights and duties are essential.
Slide 10: The Problem
The Problem Therefore the parties may fear attempting to make their own agreements, or may fear objecting to language that is presented to them in a prepared contract.
Slide 11: The Problem
The Problem They have been trained to be relatively helpless, or at least tentative about designing their own agreements. But even if they were emboldened to try, they likely would not understand the contract anyway.
Slide 12: How to Fix It
How to Fix It: “The focus [should be] on a contract, not so much as a legal document but as a framework, as a tool, as a[n] … enabler … .” Quotation from IACCM Executive Forum Interview
Slide 13: How to Fix It
How to Fix It: That sentiment is exactly right. Especially in North American and Eurozone economies, we must use contracts not just to document and secure transactions, but to facilitate relationships, innovation, and increased productivity.
Slide 14: How to Fix It
How to Fix It: But that is not enough of what contracts currently are. Contracts are not typically designed to act primarily as frameworks or business enablers: they are designed more as legal documents to provide certainty about the parties’ rights and duties.
Slide 15: How to Fix It
How to Fix It: Ironically, however, the features of contracts that enable the law to do that job—to provide certainty and enforceability--may actually fight innovation, value, and personal relationships between the parties.
Slide 16: How to Fix It
How to Fix It: Contract law sets out rules and language, in other words, that may stifle these goals, rather than enable them.
Slide 17: How to Fix It
How to Fix It: The following slides offer possible examples of this ironic counter- productivity between contract laws, values, or principles and what seem to be preconditions of innovation and strong relationships:
Slide 18: How to Fix It
How to Fix It: a. One pre-condition for both innovation and good interpersonal relationships might be flexibility. But contracts may over-promote its opposite, which is certainty.
Slide 19: How to Fix It
How to Fix It: b. Innovation and personal relationships flourish with good communication and accommodation; but contracts seek control.
Slide 20: How to Fix It
How to Fix It: c. Innovation and good relationships advance through imagination; but contracts elevate predictability and self-containment.
Slide 21: How to Fix It
How to Fix It: • d. Innovation and good relationships are promoted through collaboration and sharing; • but contracts assume individual self-maximization and secrecy.
Slide 22: How to Fix It
How to Fix It: Frankly, restoring contracts to becoming true enablers of human well-being, economic exchange, innovation, and productivity is quite challenging.
Slide 23: How to Fix It
How to Fix It: We must figure out ways to change, or at least soften, some of the underlying assumptions and practices that the lawyers typically deem crucial for making economic exchange into a “contract” that is enforceable by the State.
Slide 24: How to Fix It
How to Fix It: So let us summarize the task: If private contracting really is a precondition for the successful human transition to a globalized world, then …
Slide 25: How to Fix It
How to Fix It: how can contracts and contracting practices be reformed to serve as true frameworks of human interchange and enablers of innovation, and yet still assure that agreements will be carried out satisfactorily?
Slide 26: Possible Solutions
Possible Solutions 1. If one problem is that the actual parties to an exchange sometimes avoid speaking with one another, because they feel they should (or must) leave the discussion to their lawyers …
Slide 27: Possible Solutions
Possible Solutions … then one solution is to devise ways to encourage the parties to talk more often, and more deeply, to one another about their respective interests and goals.
Slide 28: Possible Solutions
Possible Solutions 2. If a second problem is that people do not read their contracts because they cannot understand them, then possible solutions include …
Slide 29: Possible Solutions
Possible Solutions … A. making contract law easier to understand through “plain meaning” legal reform efforts; and B. Using visualization techniques to convey more intuitively both contract laws and the terms of the parties’ exchange.
Slide 30: Possible Solutions
Possible Solutions Other presentations in this conference have addressed the second possibility: improving contracting through stronger visualization. My presentation will thus focus on the TJ lens, the first problem and its possible solutions …
Slide 31: Possible Solutions
Possible Solutions … namely, how to get parties to strengthen their economic exchange and personal relationships by abdicating less to their lawyers, and instead talking more strongly to one another about their respective interests and goals.
Slide 32: Possible Solutions
Possible Solutions I will ask, and try to answer, two questions: 1. How did we get this way? How did contracting gravitate so strongly into the domain of law and lawyers?
Slide 33: Possible Solutions
Possible Solutions 2. How can those causes be reversed? How can we restore party control, responsibility, and personal relationships to economic exchange?
Slide 34: Contracts as Three Relationships
Contracts as Three Relationships For me, looking at contracting through a TJ lens means thinking of contracts as three distinct, but overlapping, relationships: 1. an “exchange” relationship that voluntarily transfers goods, services, or the use of property. Exchange
Slide 35: Contracts as Three Relationships
Contracts as Three Relationships • 2. a “personal” relationship involving qualities like trust, loyalty, empathy, and cooperation; but also suspicion, competitiveness, and potential exploitation. Personal
Slide 36: Contracts as Three Relationships
Contracts as Three Relationships • 3. a “legal” relationship formalizing the exchange relationship—and perhaps some of the personal relationship as well—and enabling each party to call upon the State to back up particular rights and duties embedded in the contract. Legal
Slide 37: Contracts as Three Relationships
Contracts as Three Relationships Exchange Relationship Legal Personal Relationship Relationship
Slide 38: Contracts as Three Relationships
Contracts as Three Relationships All three of these relationships are crucial for us to identify an agreement as a “contract.” Further, for contracts to be optimally successful and efficient the three relationships must …
Slide 39: Contracts as Three Relationships
Contracts as Three Relationships Support each other; And be appropriately balanced, given the particular nature of any given economic exchange.
Slide 40: Contracts as Three Relationships
Contracts as Three Relationships But neither of those optimal conditions are typically met in contemporary commercial contracting. That is because two things have happened to the interaction of the exchange, personal, and legal relationships.
Slide 41: Contracts as Three Relationships
Contracts as Three Relationships Both of these developments need to change if contracts are even to keep pace with evolving commercial environments, much less spur innovation.
Slide 42: Contracts as Three Relationships
Contracts as Three Relationships First, the communication problem: the three circles have detached from one another, hived off into largely separate, disconnected realms. They no longer communicate well. Exchange Relationship Legal Personal Relationship Relationship
Slide 43: Contracts as Three Relationships
Contracts as Three Relationships Second, the legal domination problem: the legal relationship tends to monopolize the other two, arguably stifling value and innovation in both economic exchange and personal relationships. Exchange Relationship Legal Relationship Personal Relationship
Slide 44: Questions
Questions 1. How did the three overlapping circles diverge from one another? 2. How did the “legal” circle became so relatively large? 3. How can we restore both the integration of the third circles, and a better balance of influence among them?
Slide 45: 1. How Did We Get This Way?
1. How Did We Get This Way? Harvard Law Professor Larry Lessig might explain both questions by describing a gradual movement of contracts from what he would call a “simple” network into he would call a “smart” network.
Slide 46: 1. How Did We Get This Way?
1. How Did We Get This Way? A “smart” network is internally complex, and usually built by experts. It is typically designed with precision. A smart system requires that inputs follow templates, or fit within precise structures, that are also designed by the experts.
Slide 47: 1. How Did We Get This Way?
1. How Did We Get This Way? The formatting or content of those inputs into the system--and subsequent operations or manipulations of those inputs--can typically be done only by the experts.
Slide 48: 1. How Did We Get This Way?
1. How Did We Get This Way? Smart networks are optimized to work efficiently, and effectively, for a relative narrow set of applications. The creative focus of smart networks is internal, and usually confined to highly skilled designers—it is not with the users.
Slide 49: 1. How Did We Get This Way?
1. How Did We Get This Way? Furthermore, operations within the system are also given over to the experts. Only they are qualified or capable of working within the system.
Slide 50: 1. How Did We Get This Way?
1. How Did We Get This Way? The role of the users of the system, therefore, is peripheral. Their role is not creative, but passive. Efforts to control the system would be ineffectual at best, destructive at worst. Sound familiar?
Slide 51: 1. How Did We Get This Way?
1. How Did We Get This Way? Lessig offers old-fashioned dial-up telephone technology as one illustration of smart networking. Arguably, though, one could describe formal legal contracting as such a “smart” network—that in an information age may be a bit too smart for its own good, and for the go
Slide 52: 1. How Did We Get This Way?
1. How Did We Get This Way? A smart network thus is dependent on expert specialists for its design and operation. And so, therefore, the users of a smart system are also dependent on those same specialists.
Slide 53: 1. How Did We Get This Way?
1. How Did We Get This Way? “Simple” networks, by contrast, are far more flexible and open to diverse inputs. They do not operate by elaborate internal rules or channel usage narrowly. The creative focus of a simple system is pushed to the outside, to the users rather than the designers. The d
Slide 54: 1. How Did We Get This Way?
1. How Did We Get This Way? By analogy, modern contracting has gradually become a smarter and smarter system: a network or system that is internally complex, full of rules that are designed by experts (the lawyers and judges);
Slide 55: 1. How Did We Get This Way?
1. How Did We Get This Way? and whose operation is largely beyond the reach of the users of the system, because non-experts are not authorized to contribute or tinker with the system rules; but whose rules and operations the users are unlikely to understand anyway.
Slide 56: 2. Legal Domination
2. Legal Domination The users of the contracting system are thus reduced to a relatively non-creative, passive role. They become overly dependent on the lawyer-experts who build and operate the system.
Slide 57: 2. Legal Domination
2. Legal Domination And users may tend, as a consequence, to abdicate to the lawyers even more creativity and control than necessary—because users do not know the boundaries of what may or may not be destructive to the system.
Slide 58: 2. Legal Domination
2. Legal Domination All of which causes the legal circle to detach from the users circles of the actual economic exchange, and their accompanying personal relationship: Exchange Relationship Legal Relationship Personal Relationship
Slide 59: 2. Legal Domination
2. Legal Domination Furthermore, perhaps because of the dependence by users on the experts and uncertainty about when inter-party communications may become risky or destructive, the economic exchange circle detaches from the personal relationship circle. Exchange Relationship Personal Relationship
Slide 60: 3. Restoring the Integration and Balance of Relationships in Contracts
3. Restoring the Integration and Balance of Relationships in Contracts Regardless of the possible reasons for the problems of communication and legal domination, they seem to exist. Overcoming them could bring broader party participation, more creativity, and arguably more innovation to contract
Slide 61: 3. Restoring the Integration and Balance of Relationships in Contracts
3. Restoring the Integration and Balance of Relationships in Contracts How can we: 1. manage to bring the circles back closer together? 2. reduce the relative dominance of the legal relationship circle, and thus find a better balance among the three relationships of contracting?
Slide 62: Possible Solutions
Possible Solutions a. Bring the three circles back together through contract differentiation. Create different legal relationships to suit different exchange environments and goals, and different levels of personal trust and collaborative potential.
Slide 63: Possible Solutions
Possible Solutions In other words, create an assortment of contract types, each with its own standard terms and understandings that offer a different mix or balance of “legal” versus “personal” relationship terms, to suit the nature of various exchange environments.
Slide 64: Possible Solutions
Possible Solutions • Parties could then select the contract type that would be most appropriate to their particular exchange, from a possible matrix of alternatives. • Much more research could be done on this, attempting to craft contract types best suited to situations, like the following …
Slide 65: Possible Solutions
Possible Solutions Distinguishing a long term exchange pattern from short term; or a densely relational exchange from a simple point transaction; or a very high value exchange from a low value exchange;
Slide 66: Possible Solutions
Possible Solutions or distinguishing an exchange between people who have had many previous dealings, from an exchange between strangers; or exchanges in which background conditions are highly volatile, from ones under stable conditions; or exchanges involving people from collectivist or “high
Slide 67: Possible Solutions
Possible Solutions b. Reduce the domination of the legal relationship. This could be done, for example, through the parties collaborating and accommodating to one another’s needs, rather than trying to control one another’s options.
Slide 68: Possible Solutions
Possible Solutions • Successful collaboration reduces the importance of legal rules, which then softens the dominance of the legal relationship.
Slide 69: Possible Solutions
Possible Solutions Note that collaboration also fosters the sort of communications that can help to bring the circles back together, and that can help to avert legal problems from arising.
Slide 70: Possible Solutions
Possible Solutions Here are a few sample terms that might be used in a contract type that heavily stresses collaboration and trusting personal relationships. Collaborating contractors could pledge …
Slide 71: Possible Solutions
Possible Solutions “to improve the quality of information they share, focusing from the beginning on their underlying interests and the risks they perceive;”
Slide 72: Possible Solutions
Possible Solutions “to work toward sharing risks in a balanced way, striving for maximal realization of both parties’ interests;” “to communicate in regularly scheduled meetings about the progress and quality of performances;” “when needed, to cooperate and perhaps even provide affirmative ass
Slide 73: Possible Solutions
Possible Solutions “to work toward understanding and accommodating the needs of one another in response to changes, and to be open to modifying terms where conditions suggest the need for adjustment;” and “to instruct that all aspects of the agreement should be interpreted consistently with the
Slide 74: Guiding Design Principles
Guiding Design Principles Here, then, are two possible future projects for a Preventive/Therapeutic Approach to contracting: Consider creating a set of contract types that would: 1. match well the needs of the exchange with legal and personal relationship provisions; and
Slide 75: Guiding Design Principles
Guiding Design Principles 2. foster the growth of collaborative contracts generally, so as to foster stronger relationships, value, and innovation.
Slide 76: Guiding Design Principles
Guiding Design Principles The agenda of reforming contracting can be guided by design principles: Render legal rights and legal rules intelligible and accessible in design, and transparent as to the process of their creation.
Slide 77: Guiding Design Principles
Guiding Design Principles Decentralize, where possible, the sources and enforcement of contractual provisions and legal norms.
Slide 78: Guiding Design Principles
Guiding Design Principles Respect consensual commercial and social relationships, but ensure that the consent is genuine.
Slide 79: Guiding Design Principles
Guiding Design Principles Structure procedures, assessment, and communication channels so as to enable people to take measures to prevent legal problems from arising, or to contain problems quickly against escalation.
Slide 80: Guiding Design Principles
Guiding Design Principles Honor, where possible, historical relationships and their attendant loyalties and social identities—but always stress tolerance and dignity toward those who are different.
Slide 81: Guiding Design Principles
Guiding Design Principles Augment the power of the law with private incentives, social reinforcement, marketplace choices, and broad participation to assist in law enforcement.
Slide 82: Guiding Design Principles
Guiding Design Principles Diversify possible remedies, and involve communities of interest constructively in the implementation of those remedies.
Slide 83: Basic Copyright Notice & Disclaimer
Basic Copyright Notice & Disclaimer ©2016 This presentation is copyright protected. All rights reserved. You may download or print out a hard copy for your private or internal use. You are not permitted to create any modifications or derivatives of this presentation without the prior written permiss