With a tiny handful of exceptions, common law jurisprudence is predicated on a “winner-take-all” principle: The plaintiff either gets the entire entitlement at issue or collects nothing at all. Cases that split an entitlement between the two parties are exceedingly rare. While there may be sound reasons for the all-or-nothing rule, in this Article we argue that there is a limited but important set of property, torts, and contracts cases in which an equal division of an entitlement should be adopted. The common element in these cases is a windfall—a gain or loss that occurs despite the fact that no effort to promote, prevent, or allocate it ex ante would be cost-justified or reasonable. We show that an equal division of disputed windfalls promotes both efficiency and fairness and also has the virtue of clarifying several tortured legal doctrines.
We also address and reject the standard objections to split-the-difference remedies. We demonstrate that the introduction of a splitting option is unlikely to distort judicial incentives, and that it is likely to improve the integrity of the judicial system. Counterintuitively, we show that giving judges the option to order a compromise remedy in windfall disputes is likely to reduce judicial error, rather than increase it, and that the valuation problems that attend the introduction of a split-the-difference rule are insignificant.
