Every morning at the National Grid’s Control Centre, an auction quietly clears. Gas plants, wind farms, and nuclear reactors bid into a "merit order," ensuring that the last kilowatt-hour needed to meet demand sets the price for everyone. This system is known as the Merit Order Model. It is a marvel of cold, mathematical efficiency, keeping the lights on without the need for a central committee to decide which turbine turns when.
The Employment Tribunal, by contrast, operates on a rather more artisanal basis. We allocate "justice-hours" through a system of fiercely guarded geographic silos. If you happen to work in London, you join a queue that stretches some 18 months into the future; if you work in Newcastle, the wait is half that. We have built national interconnectors for our electricity, but for our justice, we prefer local waiting rooms.
With the outstanding caseload now hovering around 515,000, one begins to wonder if we should stop trying to manage the queue, and start auctioning it instead.
The Merit Order Effect (Electricity Market)
How marginal pricing works in standard commodity markets. Generators are stacked from cheapest to most expensive. The intersection of the supply stack with the demand line sets the uniform "Spot Price" paid to all dispatched generation.
The Architecture of Allocation
Before we can redesign the market, we must understand how it currently operates. In the UK Employment Tribunal, allocation is a protracted administrative funnel rather than a single event. It begins with geography: a claim is routed to one of 12 regional offices based strictly on the employee's work address. From there, it enters the "Sift Stage" (under Rules 26-28), where an Employment Judge reviews the ET1 and ET3 on paper to strike out doomed claims and issue initial Case Management Orders.
The actual listing of the final hearing relies heavily on practitioner input. Representatives complete a Case Management Agenda (CMA), stipulating time estimates and witness counts. What follows is a period of administrative wrangling—often conducted via telephone with overwhelmed regional listing officers. Regional Employment Judges (REJs) generally only intervene to manually expedite cases requiring urgent attention, such as those involving severe medical grounds, applications for interim injunctive relief, or chronically relisted matters.
Cases are then funnelled into a rigid track system: Short Track (low-value, 1-2 hours, default video), Standard Track (unfair dismissal, 1-3 days, default judge alone), or Open Track (complex discrimination, multi-week, full tripartite panel). To cope with the sheer volume, HMCTS relies on aggressive "over-listing," mathematically banking on last-minute settlements. When cases don't settle, litigants are forced to "float" in waiting rooms, praying a judge becomes available.
The Artisanal Pipeline: Current ET Allocation
How cases are currently routed, sifted, and listed through a hierarchical, geographically-fenced administrative funnel, culminating in the "over-listing" bottleneck.
The Fungibility of a Preliminary Hearing
The first conceptual hurdle is admitting that not all justice is a bespoke artisan craft. A one-hour Preliminary Hearing on "employment status" or a case management discussion is, for all practical purposes, a fungible commodity. The law is national; the judges are trained to a single standard; the video platform (Cloud Video Platform) is the same in Bristol as it is in Leeds. A sceptical Employment Judge might bristle, arguing that local knowledge and procedural continuity matter. But for a standard case management discussion or a single-issue remote hearing, standardised pleadings have already quietly commoditised the work. The procedural architecture is identical whether the respondent is in Truro or Tyneside.
In economic terms, we should treat these as "Differentiated Lots". By breaking the geo-fencing, we allow a judge with an empty list in a quiet region to "purchase" a case from an overwhelmed one. We transition from a system of regional silos to a national pool of judicial capacity.
The Merit Order of Justice
How do we set the value of this capacity? We might explore the value in applying Milgrom and Wilson’s 2020 Nobel-winning auction theory. Instead of the current system of hierarchical rationing—where cases are allocated by practitioners submitting time estimates on a Case Management Agenda, followed by telephone wrangling with regional listing officers, and Regional Employment Judges intervening manually only for urgent medical, injunctive, or chronically relisted matters—the Ministry of Justice should run a daily "pay-as-cleared" auction for listing slots.[2] To be precise about the mechanics: this would be an *internal shadow market*. HMCTS acts as a monopsonist (a single, dominant buyer), purchasing capacity from suppliers (regions with spare salaried time, or individual fee-paid judges). Since there are, at present, no Employment Tribunal fees, it remains the State—not the litigants—paying this clearing price (the hourly rate ultimately paid to the judge to hear the case). The ambition is not to build a literal trading floor in the Rolls Building, but to use the auction as a diagnostic instrument.
Translation Map: From Tribunal to Trading Floor
How the physical and administrative actors of the Employment Tribunal map directly onto the theoretical components of a monopsony auction market.
The "marginal judge"—perhaps a high-earning practitioner sitting as a fee-paid judge, or a retired judge returning to the bench—sets the clearing price for a unit of judicial time.[1] If the clearing price in London is £3,000 per hour while Newcastle clears at £800, the system throws off a rather brilliant, real-time investment signal. We stop guessing where to hire; the market tells us. Because HMCTS ultimately caps demand based on its budget rather than true public need, this shadow price acts as an irrefutable mechanism to make the scale of structural underfunding legible.
The Merit Order Stack: Auctioning Justice-Hours
How uniform marginal pricing clears the market. Bidders (judges/regions) stack their capacity from cheapest to most expensive. The intersection with demand (caseload) sets the uniform clearing price paid to all dispatched capacity.
The Lemons Problem and the Winner’s Curse
The objection is obvious: won't overloaded regions just offload their "lemons"? In auction theory, Adverse Selection suggests that London will keep the straight-forward, single-day unfair dismissal cases and auction off the messiest, most intractable multi-week complex discrimination claims involving litigants in person.
To prevent a "Market for Lemons", we need a centralised triage—a standardised "prospectus" for every case in the auction pool. Bidders (receiving regions) must know the complexity they are buying. Without information symmetry, the market will collapse as quiet regions suffer an execution-risk variant of the **Winner’s Curse**: successfully bidding on a seemingly 'standard' case-hour only to discover it requires three times the expected resource, destroying their own local capacity.
Nodal Pricing for Justice
If all hearings were remote, we would have a single national price. But justice is often physical. This is where "Nodal Pricing" comes in.[3] An in-person hearing in Central London consumes highly contested courtroom space and travel time that a virtual hearing hosted from Wrexham simply does not.
By pricing each "node" (tribunal centre) differently, we recognise the physical friction of the system. High nodal prices in London shouldn't just be an administrative headache; they should be the economic justification for the "London Weighting" required to attract more permanent staff. We use the market to discover the true cost of regional disparity.
Justice is not a Market (But Capacity Is)
The standard philosophical objection is that "justice is not a commodity". This misses the point. We are not auctioning the outcome of the case, nor are we allowing the parties to bid for priority (which would be truly regressive).
We are auctioning the **administrative capacity** to deliver that justice. The current system rations by time—the least efficient and most punishing method for the vulnerable. In a queue-based model, a one-day wages claim can often be squeezed into a diary gap, but a multi-week discrimination claim requires clearing a vast tract of continuous judicial time. The result is a structural perversity: the most complex, serious, and psychologically damaging cases are inherently the ones made to wait the longest. An internal "shadow market" for judicial hours is not a retreat from public service; it is the most sophisticated tool we have to ensure that service is actually delivered.
The Political Veto
The difficulty, of course, is not economic but political. HMCTS is not a rational monopsonist (the sole buyer in a market); it is a Treasury-constrained department. A well-designed auction would reveal the true marginal cost of clearing the backlog. If the market discovers that clearing the queue requires an extra £180 million a year to pay the nodal clearing prices (the distinct, localised rates required to clear the backlog at individual, highly congested tribunal centres), it creates a rather massive political liability.
This is why Milgrom-style mechanisms rarely survive in public services. The auction works flawlessly, but the principal—the Treasury—does not want the information it produces. Rationing by delay is opaque and free; rationing by price makes structural underfunding legible.
The "Maths of the Backlog" showed us the cliff edge. Auction theory gives us the map to walk away from it. But we cannot walk if the Treasury refuses to look at the clearing price. The true value of this shadow market is not that the Treasury will voluntarily fund it, but that it creates an undeniable, market-derived data point for select committees, journalists, and judicial reviews to hold them accountable.
The mechanism can price the gap perfectly well. The Treasury, one suspects, would just rather not know.
- Strictly speaking, salaried Employment Judges do not submit a true marginal bid. Their "bid" in this stack is an imputed accounting construct. Genuine price discovery only occurs at the extreme margin (fee-paid judges). The infra-marginal supply is a shadow imputation, though it remains a necessary construct for the model. ↩
- A uniform-price auction with only ~10 regional tribunals risks "demand reduction" (see Ausubel & Cramton, 2002). Because Regional Employment Judges act as an oligopoly rather than atomised competitive suppliers, they have an economic incentive to shade their capacity bids upward to artificially inflate the clearing price for their infra-marginal units. This requires careful mechanism design to prevent the Treasury from dismissing the shadow price as the artefact of a "thin market." ↩
- In electricity markets, nodal pricing resolves physical transmission constraints (e.g., line losses on wires). In the tribunal system, the "congestion" is administrative—courtroom scarcity, interpreter availability, and the immobility of in-person witnesses. While the physical analogue is not exact, the mechanism of generating a locational premium to signal investment need operates identically. ↩
Bibliography & Further Reading
- Milgrom, P., & Wilson, R. (2020). Improvements to Auction Theory and Inventions of New Auction Formats. Economic Sciences Prize Committee.
- Ausubel, L. M., & Cramton, P. (2002). Demand Reduction and Inefficiency in Multi-Unit Auctions. University of Maryland. Explains why regional tribunals might "shade" their bids in uniform-price auctions.
- Akerlof, G. A. (1970). The Market for "Lemons": Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics. The foundational text on adverse selection.