There is a striking incongruence between the discussions of negligence in the legal literature, including the American Law Institute's Restatement of Torts, and the understandings of ordinary people and the actual practice of the courts. The legal literature generally assumes that an aggregate-risk-utility test is employed to determine whether conduct was reasonable or negligent. This test was invented by legal academics and inserted in the first Restatement during the first part of the twentieth century, although, as recent studies all conclude, it had almost no support in the cases prior to its adoption in the Restatement and for several decades thereafter. It is less well recognized that the test continues to be infrequently mentioned by the courts, is rarely actually employed, and almost never explains the results. Instead, the courts apply varying standards of reasonable care, based on the principles of justice, that take into account the rights and relationships among the parties. The most famous judicial exposition of the aggregate-risk-utility test is the "Hand formula," which was set forth by federal Second Circuit Judge Learned Hand in a series of opinions that commenced in 1938, four years after the test's adoption in the first Restatement. Hand was an active participant in the drafting of the first Restatement, and these opinions seem to have been an attempt to stimulate courts' use of the aggregate-risk-utility test. However, the test continued to be rarely mentioned by the courts, even by other judges in the Second Circuit. During the five decades (1909-1961) that Hand served as a federal judge, he mentioned the test in only eleven opinions, between 1938 and 1949, and in none of these opinions did he actually apply the test to resolve the negligence issue. In his last reference to the test, in 1949, he essentially abandoned it. A series of publications by Richard Posner, initiated when he was a law professor, brought renewed attention to the Hand formula, which Posner claims expresses an economic efficiency interpretation of negligence that has long been implicit in judicial opinions. However, Posner's arguments are composed of speculative and implausible assumptions, overbroad generalizations, and superficial descriptions of and quotations from cases that misstate or ignore facts, language, rationales, and holdings that are inconsistent with his argument. None of the cases discussed by Posner support his thesis. Instead, the reasoning and results in these cases employ varying standards of care, depending on the rights and relationships among the parties, that are inconsistent with the aggregate-risk-utility test but consistent with the principles of justice. Since becoming a federal judge, Posner has attempted to apply the Hand formula in his opinions. Frank Easterbrook, a like-minded former professor who joined Posner on the Seventh Circuit, has also endorsed the Hand formula. However, neither of them has been able to employ the Hand formula to resolve the negligence issue in any case, and none of their fellow circuit judges has attempted to do so.
Hand, Posner, and the Myth of the "Hand Formula", in Symposium, Negligence in the Law, 4 Theoretical Inquiries in Law