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Tuesday, October 13, 2015

Drafting better laws

Deepak Patel has a useful article in today's Business Standard about the problems of poorly drafted laws.

Badly drafted laws and the problem of State capacity


It is widely understood that badly drafted laws induce legal risk. Some of this is at the level of syntax, e.g. the use of ambiguous words like "shall" or "may". Far more important is the semantic content. When it is not clear what the law says, government officials and private persons are continually at sea in thinking about what is to be done.

Badly drafted laws are about much more than legal risk, however. They go to the heart of India's crisis of State capacity. Our challenge is to go from government organisations which are shambolic rulers, to high performance organisations which are precisely structured agents of Parliament.

Parliamentary law is the contract between the principal (Parliament) and the agent (a government agency).  In India, these laws are often riddled with vague objectives (e.g. "the welfare of the people"), expansive powers (e.g. "any action that is necessary") and inadequate accountability mechanisms (e.g. lack of a mechanism for appeal or lack of a proper board of directors). Bad laws mishandle the principal-agent relationship and lay the foundation for pervasive failure on the part of the agent. The laws that have created organisations ranging from SEBI to RBI to the CBI are riddled with problems, and have caused low performance on the part of these agencies. A quantum leap in the laws is of essence in the task of achieving State capacity in India.

A key foundation of low State capacity in India is badly drafted law. State apparatus is integral to the process of drafting law in India. This gives a vicious cycle, as bad laws $\rightarrow$ low State capacity $\rightarrow$ bad laws. Getting to good quality laws, at present, is going against the grain. A great deal of effort is required to break with this vicious cycle, to get a first wave of high quality laws, which will induce better working of the State, which can potentially kick off a virtuous cycle.

How to do better: Contracting between the Principal and Agent


Private parties mitigate the risks of failure by applying skepticism and precision to the contracts they draft: A company might use a well-written contract to bind, motivate and monitor the canteen services vendor it has hired. The Principal does not believe the Agent is benevolent and means well. The Principal writes a contract which constraints the Agent into delivering results. The drafters of laws should apply at least the same level of skepticism and precision for writing a "contract" which establishes a government agency and asks it to do work.

How to do better: An analogy with computer software


A computer program is a precise set of instructions which tells the hardware what to do. In similar fashion, law is the precise set of instructions which tells a government agency what to do. Writing law is like computer programming. The law is written, it is enacted by Parliament, and then it induces certain effects. We would like for those effects to be the ones that we desire.

When computer programs are written, there is extreme care about every single letter of the code. A small core of high skill persons is given the ability to touch the code. Every little detail matters. There is a sense of craftsmanship about the product. We do not allow random people to make even minor edits in the code.

A similar culture is required when drafting law. The ability to touch the code should be restricted to small teams of very high skill. Every little detail should be thought through with great care. There should be an extreme sense of craftsmanship about the product.

With computer software, it is relatively easy to take an interim version, load it into the hardware, and try to run it. If the code is incorrect, we know fairly soon that there are problems. The trouble with law is that there is no easy way to visualise what will happen when a proposed text is enacted. This requires imagination and visualisation, grounded in deep domain knowledge. The teams which draft law have to thus be deeply grounded not just in law but in the domain knowledge. Every small proposed change must be exposed to extreme scrutiny by very capable people.

The journey to better laws in 11 steps


How can law be drafted better? The following principles are useful:

  1. Be wary of incumbents. "Do not judge your own cause" is a principle of natural justice, and this requires excluding incumbent agencies from the legislative process. The canteen contractor should not be given a say in the drafting of the canteen contract. In similar fashion, incumbent agencies should not be given a say in the drafting of laws which shape their objectives, powers and accountability mechanisms as they will exert their influence in favour of more power and less accountability.
  2. Malleability vs. the agency problem. Many laws achieve malleability by leaving procedural details to be written in the future in subordinated legislation. We should, however, be mindful of giving power to the canteen contractor to reshape the objectives, the powers and the accountability mechanisms of the canteen contractor. This principle guides the scope for powers given to the agent to write law.
  3. The Joint Secretary cannot manage these projects. The scale of time and effort that goes into a well drafted law is very large. Example. It is generally not possible for senior government officials (e.g. joint secretaries) to put in this kind of time. A different organisational arrangement is required.
  4. Writing law is different from reading it. Most lawyers in India are used to treating the law as given, and thinking about transactions or litigation. Writing law is a very different skill. It is primarily a skill that requires a combination of domain knowledge and public administration. Years of experience as a legal practitioner is not adequate preparation for writing law.
  5. Premature coding. In drafting projects, there is a temptation to start coding prematurely. It feels satisfying, particularly for lawyers, to be writing code. However, it makes more sense to first grow roots in the domain knowledge, and write sophisticated documents that articulate the thought process of the proposed law. This thinking process is a necessary preamble before the first line of code is written. There is an old adage in project management: `plan in haste, repent in leisure'. A long slow process is required, that builds clarity of mind, and results in a reasoned document of drafting instructions, after which the drafting can commence.
  6. Access control in the drafting / editing process. A very small team of persons should be constructed which has the ability to make changes to the draft. The management process should eschew edits coming in from people who are not fully steeped in the thought process of the law.
  7. The need for continuity and absorption. It is very hard for a new person to fully understand the logic of a large code. It is even more dangerous for a new person to propose or make changes in a large code without fully understanding it. High continuity of personnel who will own and refine a code, over long periods of time, is required. These personnel should be fully immersed in all aspects of the law, so as to keep all the moving parts in their heads, and be able to effortlessly and immediately see the implication of a change in Section $i$ for the working of Section $j$.
  8. Break with our traditional writing style. High levels of craftsmanship are required, with the use of modern English and simple direct precise sentences. The traditional Indian writing style is a recipe for introducing legal risk, executive discretion and ultimately in producing low State capacity.
  9. Gear up for a detailed law. A canteen contract of 1000 words, which is a skimpy high level statement, is almost surely a bad contract. It takes a lot of work to precisely write down a sound contract. In similar fashion, most Indian parliamentary laws have inadequate detail. We should go into drafting projects knowing that the parliamentary laws of the future will be much more detailed than those of our past.
  10. Given enough eyeballs, all bugs are shallow. Draft law should be put through elaborate processes of expert peer review, and public comment, in order to identify flaws ahead of time.
  11. Code reuse -- but in the future. Most existing law and jurisprudence in India has a high defect rate. Hence, law drafting projects should be skeptical about the existing landscape and try to replace it with clean building blocks for India's future. There are opportunities for code reuse -- but only in our future.

Conclusion


We are stuck in the wrong equilibrium. Most laws in India today are poorly drafted. Badly drafted laws are at the foundation of low State capacity in India today. As arms of the State presently play a dominant role in the drafting of laws, there is a vicious cycle there. If we don't make a big push to do law $n+1$ properly, by default, it will be mediocre. The normal processes are stacked in favour of failure.

The minimum required step up is from the conventional drafting quality up to the standards of commercial contracts. The SEBI Act (say) should match the quality of a commercial contract in terms of precision, level of detail, and a skeptical approach to the principal-agent problem. This level of improvement is relatively easy to obtain, in the sense that myriad detailed commercial contracts are being drafted by lawyers in India every day.

The bigger step up is to think of law as the DNA of government. The law is the computer code which is loaded into government. When this code runs, it has legal effects. This requires bringing public administration and economic thinking in envisioning the legal effects of every line of the code. The standards of craftsmanship and perfection which are found in the best computer programs are required in writing law.

Acknowledgments


I thank Pratik Datta and Arjun Rajagopal for useful discussions.

    2 comments:

    1. This is a great post. Indeed, in the last couple of years, the drafting quality has dropped further from even the earlier poor standards. Almost every Bill – even minor amendment Bills which are just a few clauses – come with a page or two of corrigenda.
      I have a challenge: can anyone understand the process by which licenses for mining would be allocated according to the Mines and Minerals Bill, 2011 (lapsed now) [available at http://www.prsindia.org/uploads/media/Mines/Mines%20110%20of%202011.pdf]? In particular, see clauses 13 and 22.
      Madhavan
      (madhavan@prsindia.org)

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    2. "We are stuck in the wrong equilibrium. Most laws in India today are poorly drafted. Badly drafted laws are at the foundation of low State capacity in India today. As arms of the State presently play a dominant role in the drafting of laws, there is a vicious cycle there."

      Could not agree more with the para, and especially the last sentence. IMHO (following Hayek), knowledge is discrete and spread across the stakeholders (among them the regulated). It is important to internalize that knowledge by getting these folks to contribute ex ante. This is all the more so, because the bureaucrats in India are "generalists". Undue concerns about lobbying and revolving door foreclose their opportunity to learn from the private sector during their stint. The Draft revised IFC strikes a new ground for proposing a comment mechanism on the lines of APA in the US. We need to bolster the transparency by mandating disclosure about the mannner in which they have addressed the feedback. On the flipside, we need a ramp up of capacity in situ for the regulators' and bureaucrats' in-house teams so they understand the discourse/ language/tools that stakeholders use.

      I also endorse the idea that law drafting shapes incentives and as such, should be inclusive exercise where lawyers familiar with Coasian economics or economists familiar with Coase, Williamson et al line of research work together with practicing lawyers to come up with drafts. At present, few practitioners appear to be aware of L&E approach to law.

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