Rethinking the Principal-Agent Theory of Judging

Abstract

This Essay offers new insights into understanding the relationship between higher and lower courts and responds to the extant literature that has characterized the relationship as one involving a principal and an agent. We challenge the underpinnings of the principal-agent understanding of judicial hierarchies and identify problems with the theory’s applicability in this context. While principals ordinarily select their agents, higher court judges usually do not select lower court judges. Moreover, while lower court judges may cast votes with an eye to the possibility of elevation to a higher court, the higher court judges who review the lower court’s decisions usually do not decide whether to elevate a judge from that court to a higher position.

Rather than dismiss the principal-agent theory of judging out of hand, this Essay empirically examines whether judicial actors behave as the theory suggests they would in a setting that has been overlooked by the extant literature and where application of the theory should be at its apex — the federal bankruptcy litigation system. Bankruptcy court judges who sit as trial judges are appointed for renewable time-limited terms by the court of appeals. Moreover, the court of appeals provides a second intermediate level of appellate review of bankruptcy court decisions. Initially, such decisions are appealed to a bankruptcy appellate panel (“BAP”) if the circuit has created one. The circuit’s judicial council, over which the court of appeals has dominant sway, selects BAP judges from among the circuit’s bankruptcy court judges. If the principal-agent theory of judging has traction, evidence of it should exist in this setting, which provides a stronger principal-agent relationship than the one typically found in other judicial hierarchies.

Our study focuses on the voting behavior of circuit court judges and bankruptcy judges (both as trial judges and as appellate judges when sitting on the BAP) in student-loan-discharge proceedings in consumer bankruptcy cases. While our findings indicate that the ideological preferences of the circuit court judges predict their voting behavior, we do not find evidence of voting behavior by bankruptcy judges that would suggest sensitivity to the potential for circuit court monitoring and conformity to circuit court preferences. Thus, our findings cast doubt on the principal-agent theory of judging.

Keywords: courts, judges, empirical, bankruptcy, appeals, appellate structure