Lex Mercatoria, Latin for ‘merchant law,’ is a very old concept that predates the rise of nation-states. During the medieval period, a body of legal conventions evolved through custom and commercial practice and was enforced by private courts along the merchant trade routes.1 Modern nation-states came to replace this traditional method of resolving disputes with domestic courts. But the gradual increase in international commerce has encouraged nations to defer to international arbitration as a solution to complex cross-border business disputes, and various other alternatives to lawsuits brought in civil courts.

Legal tech (LT) companies operating in litigation predominantly address B2C relationships, which is odd against the overall LT backdrop where B2B solutions prevail.1 A ‘no win no fee’ policy, whereby consumers are only charged for success, is popular among LT companies that manage claims.2 Even though their contingency fees tend to be significant,3 they attract consumers who would otherwise have abandoned a claim as a result of rational apathy due to its small value. The automated management of claims has impacted consumer access to justice as the activity of LT companies has led to an increase in redress for small value claims.4

The pattern of social role interaction studied in Chapter 3 is an instance of a special kind of norm: a coordination norm. Seeing the pattern as a coordination norm links it to the large body work on such norms in game theory, philosophy, sociology, economics, and political science. The exchange of information in social role interactions is governed by a special kind of coordination norm: an informational norm. Coordination norms – and informational norms in particular – require that the parties to the norm have common knowledge that they will conform to it. When common knowledge collapses (as it may under the onslaught of surveillance), coordination under the norm becomes impossible. People may still coordinate their actions to realized shared goals, but it is significantly more difficult to do so.

People who resist surveillance object to it and try to prevent it. Pervasive surveillance undermines coordination under informational norms. It attacks coordination at a vulnerable point – its reliance on common knowledge. When common knowledge collapses, so does common-knowledge-facilitated coordination. History attests that coordination under informational norms can collapse across the board. The 1950–1990 East German Stasi is a case in point. The Stasi is a convenient reference point that makes current surveillance practices stand out in sharp relief. Resistance is problematic. People generally have a poor understanding of security issues, and even if one mounts a credible defense, a sufficiently skilled adversary can breach it. The rearguard action of preventing surveillance contributes little to the maintenance and creation of informational norms.

Interactions in social roles typically involve the exchange of information. Those exchanges create coordination problems. A coordination problem is a situation in which each person wants to participate in a group action but only if others also participate. The relevant group action in social-role-mediated exchanges of information puts conditions on the flow and use of information. It is easy to solve such coordination problems when it is common knowledge that parties will all conform to the conditions. People’s presentation of themselves in social roles create such common knowledge that they will conform to standards of thought and behavior associated with those roles. We offer six examples of how common knowledge solves the coordination problems that typify social role interaction.

We conclude by considering four objections to our proposal that public policy should maintain and create informational norms.

First: we have done too little. We have only sketched how to create one informational norm. We agree, of course, that we have left a vast amount undone. We have, however, offered a model of how to create informational norms, and one can adapt that model to a wide range of cases in which the task is to maintain or create norms.

Second: we have not, in any detail, shown how to ensure that informational norms implement acceptable tradeoffs. We have done so only in one case, and, even there, we only considered fairness. Our answer again is to appeal to the model we have provided, which incorporates social and political processes to decide tradeoff questions. We see no substitute for that. Those processes generate the detail about how to make tradeoffs.

An extensive literature details how businesses and governments use the information they collect. We focus on the relatively recent use of artificial intelligence (machine learning, predictive analytics) to analyze the information. We focus on two features of AI-driven surveillance. Broad-based predictions: What happens in virtually any area of one’s life (what stores you shop in, what you post on social media, and so on) may serve as input to predictions affecting virtually any other area (what you pay for insurance, whether you get hired, what schools you get in to, and so on). Data feedback without error correction: AI-driven decisions affect what happens to people in the future, and that information feeds back into the systems as input for subsequent decisions. Current AI systems often lack mechanisms for effective detection and correction of errors. These two features create fairness problems.

We show how to create an informational norm that constrains the use of proxies in AI-driven surveillance. The norm creates privacy in public by implementing conditions on the flow of information that controls the use of that information as proxy variables There are a variety of possible conditions. The task is to choose one that implements an acceptable tradeoff between informational privacy and information processing. The norm we propose ensures that the use of proxies is fair and to that extent implements an acceptable tradeoff between informational privacy and information processing. There is, of course, more to finding such a tradeoff than just ensuring that the use of proxies is fair, and the process we describe creates a forum for addressing tradeoff issues in general.

Adequate informational privacy is essential if people are to successfully seek self-realization as they interact in a variety of social roles. Those interactions create and maintain the necessary informational privacy as people conform to shared expectations about the selective flow of information. Conformity to shared expectations about information flow requires complex group coordination, which is facilitated by informational norms. Surveillance creates a massive capacity to know. The existence of that capacity undermines self-realization by undermining the norm-based coordination on which adequate informational privacy depends. Norm-based coordination depends on common knowledge of conformity to norms. Common knowledge is the recursive belief state in which people know, know they know, know they know they know, and so on ad infinitum. Surveillance undermines common knowledge by attacking the first, nonrecursive step in that sequence – simply knowing.

We show how to create an informational norm that constrains the use of proxies in AI-driven surveillance. The norm creates privacy in public by implementing conditions on the flow of information that control the use of that information as proxy variables. There are a variety of possible conditions. The task is to choose one that implements an acceptable tradeoff between informational privacy and information processing. The norm we propose ensures that the use of proxies is fair and to that extent implements an acceptable tradeoff between informational privacy and information processing. There is, of course, more to finding such a tradeoff than just ensuring that the use of proxies is fair, and the process we describe creates a forum for addressing tradeoff issues in general. Our focus for the moment, however, is on fairness. The example of Sally from Chapter 2 illustrates the questions that arise. Sally’s car insurance premiums increase as a result of her bankruptcy.

Privacy in public is a form of informational privacy. Informational privacy consists in the ability to control what others do with your information. You lack that control if you cannot give free and informed consent to how others process your information. How does one ensure free and informed consent across a sufficient range of cases? Our answer is that informational norms ensure that. That is not, however, the dominant legislative and regulatory answer, which is Notice and Choice. The Notice is a presentation of the terms governing the use of information. The Choice is an action signifying acceptance or rejection of the terms. Chapter 5 argues that Notice and Choice is clearly fails to ensure free and informed consent, and concludes that maintaining and creating norms is the most reasonable alternative.