On Thursday, leaders of the American Law Institute are set to gather in Philadelphia to discuss controversial changes to its restatements of consumer and insurance law, the results of which would dramatically shift how the law in these areas is interpreted in courts nationwide in a way that could profoundly benefit the plaintiffs' bar.

The fact that ALI is even considering these changes illustrates how far the group has drifted from its mission to state what the law is and moved toward advocating what certain ALI members think the law should be. I urge ALI's president, David F. Levi, and the group's governing council to guide the organization back toward its traditional role as an impartial and invaluable authority on the current state of the common law.

Lately, ALI has assumed a more activist stance, with academic experts using the restatement process to lay out proposed changes to the law that they think would make it better. That's a dangerous trend, replacing the wisdom of the common law and stability of precedent with restatements that reflect the biases of the experts who write them. The more ALI strays into these waters, the less authority the organization will have. As the late Justice Antonin Scalia warned in 2015, the ALI's restatements already “are of questionable value, and must be used with caution.”

The ALI's proposed Restatement of the Law of Liability Insurance has drawn strong criticism, not only from the insurance industry but from the whole of the business community, as well as the National Council of Insurance Legislators, a coalition of lawmakers who sit on state insurance and financial committees nationwide. As this criticism reached a new high in 2017, ALI leadership delayed the final vote on the restatement for a year and promised to embark on a “listening tour.” But instead of listening to its many critics, the reporters resubmitted the restatement with the most objectionable provisions intact. They include replacing the longstanding “plain meaning rule,” which requires courts to interpret insurance contracts according to their text, with one allowing judges to consider “extrinsic” evidence to evaluate even unambiguous terms defining coverage.

The restatement would also expand the obligation of insurers to defend policyholders and expose them to increased financial risk if they fail to settle claims quickly and for the price plaintiffs' lawyers demand. And in a detour into quasi-legislative policymaking, the restatement endorses one-way fee-shifting, in which insurers would have to pay a policyholder's legal expenses if they lose a challenge, but would receive nothing if they win.

A broad coalition of corporate general counsel also have objected to ALI's proposed Restatement of the Law on Consumer Contracts, which not only would create an ill-defined and heretofore unknown category of “consumer contracts,” but inject the amorphous language of consumer protection statutes into the common law. The restatement was written by a panel that includes Harvard Law School professor Oren Bar-Gill, who co-wrote a 2008 paper with Sen. Elizabeth Warren and whose own book, “Seduction by Contract,” argues that “better legal policy can help consumers and enhance market efficiency.” Among other things, the restatement would:

• Create a “deceptive contract” theory, establishing a novel basis upon which consumers could reject any contract terms they think are the “result of a deceptive act or practice.” Similarly vague language in consumer protection statutes has provided a bonanza for plaintiffs lawyers.
• Undermine arbitration agreements by ignoring Supreme Court decisions and the Federal Arbitration Act to lay the groundwork for courts to invalidate pre-dispute arbitration contracts.
• Broaden the “unconscionability” doctrine, giving courts more leeway to invalidate contract terms they find objectionable.

Some may argue that these are good ideas, but regardless, they aren't the law and it isn't the job of ALI to try and make them so. They reflect the shift toward activism illustrated by the 2015 changes to ALI's Style Manual, which formally embraced the expansion of the power of the reporters who compile restatements to “ascertain trends in the law” and “determine the best rule.”

If ALI continues to push the agendas of a few members and ignore the comments of industry participants and legislators, it risks damaging its own credibility. In a Nov. 28 letter to the group, the National Council of Insurance Legislators stated bluntly that the insurance restatement “is, in numerous places, a misstatement of the law, and does not afford proper respect to the expertise and jurisdiction of state insurance legislators and should not be afforded recognition as an authoritative reference.” ALI's leaders should heed this warning, and reject any restatements that go beyond stating what the law is to what a small group of academics think the law should be.

Lisa A. Rickard is president of the U.S. Chamber Institute for Legal Reform. Rickard is one of the U.S. Chamber's top leaders on a wide range of issues, with a strong focus on legal reform.