"The formal law of torts specifies that someone injured in an automobile accident may recover from a driver if he can show, by the preponderance of evidence, that the driver violated his duty to conduct the vehicle in the manner of an ordinarily prudent person. The driver, however, need pay nothing if he in turn can show by preponderance of evidence that the claimant also violated a similar duty...

The formal criteria might lead to the expectation that relatively few people injured in an automobile accident would receive reparation. Most drivers may be thought to be ordinarily prudent people, and even where one is not, formal law embodies the difficulty of affirmative proof of unreasonable behavior. Moreover, to the extent that numbers of negligent drivers are on the highway, an equivalent number of negligent claimants might be expected, who ought to recover nothing. On these assumptions one would expect most claimants to be denied completely, the balance recovering something more than their economic losses. In contrast, the actual picture of recoveries shows that most people injured in traffic accident are paid, and those who are seriously injured are paid in the large majority of cases. The amount of recoveries fits the formal model only for small claims; where injuries are serious, most claimants fail to recover their out-of-pocket losses."

"The reason the distribution predicted by knowledge of the formal law does not fit the observed distribution of claim settlements is that other factors influence the settlement process... Among them are the attitudes and values of the involved personnel, organizational pressures, and negotiation pressures. They exert a direct effect on the enormous majority of bodily claims....

As a consequence of these and other pressures, the tort law in action is differentiated from the formal law by its greater simplicity, liberality, and inequity. The concepts of the formal tort law are quite complex: definitions of both damages and negligence suggest the need for case-by-case consideration. The rule of contributory negligence as a bar to recovery makes the formal law appear close-fisted, though it may be lavish in the recovery that it grants a ‘blameless’ victim of a ‘negligent’ driver. Above all, the formal tort law - like the bulk of Anglo-American law - is equitable in its insistence that cases similar in facts be treated in a similar fashion. The law in action departs from the formal law on these three main dimensions.

In order to process successfully vast numbers of cases, organizations tend to take on the characteristics of ‘bureaucracy’ in the sociological sense of the term: operation on the basis of rules, government by a clear hierarchy, the maintenance of files, etc. Such an organizational form produces competence and efficiency in applying general rules to particular cases, but it is not well suited to making complex and individualized decisions. One form of response of bureaucracies to such demands involves a type of breakdown. There will be long delays, hewing to complicated and minute procedures, and a confusion of means with ends. A common and perhaps more constructive response is to simplify the task...

Traffic laws are simple rules, deliberately so because their purpose is to provide a universal and comprehensible set of guidelines for safe and efficient transportation. Negligence law is complex, its purpose being to decide after the fact whether a driver was unreasonably careless. However, all levels of the insurance company claims department will accept the former rules as generally adequate for the latter purpose...

The law of damages is also simplified in action ... for instance, life table calculations are used to compute future earnings. More important, the measurement of pain, suffering, and inconvenience is thoroughly routinized in the ordinary claim. The adjuster generally pays little attention to the claimant’s privately experienced discomforts and agonies....

The tort law in action is more liberal than the formal law. The formal law of negligence appears to be very stingy from the victim’s point of view ... The doctrine of contributory negligence is of course the main block to recovery in the formal tort law, and it is this doctrine that is most strongly attenuated in action...

The tort law in action may also be termed inequitable. It is responsive to a wide variety of influences that are not defined as legitimate by common standards of equity ... I believe that the settlement produces relatively more for the affluent, the educated, the white, and the city-dweller. It penalizes the poor, the uneducated, the Negro, and the countryman..." [See: H. Laurence Ross, Settled Out of Court: The Social Process of Insurance Claims Adjustment, 2nd ed. (1980)].