Representation and Realities of (Bankruptcy) Court Work

The Yale Journal of Law and the Humanities held a symposium on "Courts: Representing and Contesting Ideologies of the Public Sphere" in 2011, and recently published papers from this event. Some of the contributions to this symposium, especially the piece by Judith Resnik and Dennis Curtis, and the commentary by William Simon, emphasize the potential disconnect between representations of law and justice that might adorn courthouses and the nature of the actual work that goes on inside. Although these scholars did not discuss the bankruptcy court, each side of the disconnect may be quite interesting for our purposes.

First, although I cannot report on sculpture or artwork conveying images of justice in various bankruptcy courts, the physical experience of entering them varies. For example, some are in public buildings (whether or not designed for such purposes), perhaps with other federal courts and government services. But others occupy a floor, or several, of a private office building; technically, I suppose, one does not enter the courthouse until emerging from the elevator, at which point the marshals screen the visitors. Presumably, the architects of these private buildings were even less conscious of trying to convey the ethos of a public court.   

But assuming that all spaces holding bankruptcy courts somehow reflected a unified and traditional court-image of the role of the court, a disconnect would persist because of the nature of the work that must get done in a bankruptcy court. All bankruptcy judges do some of the traditional adversarial work, but they also do a lot of "managerial" work. By "managerial," I don't mean managing the debtor. Rather, as used for generalist courts (especially ever since Judith Resnik's foundational article), the term refers to managing the docket and court workflow by trying to move along cases and proceedings and encourage settlement. (The corresponding concept of "vanishing trials" has been examined in bankruptcy by Credit Slips' own Bob Lawless as well as others). The pressure to be managerial is not unique to bankruptcy courts, although they face it at multiple levels: cases plus the adversary proceedings and contested matters within them. 

Furthermore, much of the work of that bankruptcy courts do (or that some people think they should do) does not fit comfortably into either the adversarial or managerial category. Appellate court decisions, along with some treatises and academics, suggest bankruptcy judges should exercise an independent duty - even in the absence of party objection - over all sorts of things, such as scrutinizing the feasibility of a restructuring plan or evaluating the reasonableness of thousands of pages of professional fee applications. Think about Supreme Court decisions like Espinosa, Energy Resources, and Till, the 11th Circuit decision in Lett, and the 3rd Circuit decision in Busy Beaver. The exercise of this independent duty is neither an adversarial role nor a managerial one as those terms generally are used. 

The "conventional wisdom," though, at least in larger cases with active creditor involvement, is that the barriers to raising of issues sua sponte, such as questioning plan feasibility when it otherwise is uncontested, are formidable. Explanations supporting this conventional wisdom include deference to the parties with money on the line who consider the matter resolved; the limited amount of information available to the judge, by 1978 Bankruptcy Code design, about the underlying business; the lack of resources and infrastructure to independently evaluate feasibility, especially if one is reluctant to hire experts under Federal Rule of Evidence 706); extensive workload from other cases and the aforementioned managerial ethos to keep things moving; or a more minimalist interpretation of the Bankruptcy Code, coupled with a belief that the appellate court exhortations are either dicta or inapplicable. Surely this list is missing other explanations.   

An extensive academic literature explores the philosophical justifications for and institutional competence of generalist courts to engage in non-adversarial and non-managerial work and other models of adjudication. Some bankruptcy scholars have discussed and employed portions of this literature (off-hand, I can think of Christopher Frost, Ted Janger, Jonathan Lipson, and myself), but I see more we can do with these strands of research in the bankruptcy world. More to come in future writings, but in the meantime, it is worth thinking about what expectations are conveyed by the physical experience with any given (bankruptcy) court as well as how one might characterize the enormous amount of work that gets done there.