IN the absence of a legal system, a person performing an act that increased the total social product would be obliged, in order to capture the benefits created by the act, to detect and ward off the efforts of others to appropriate those benefits. Such an arrangement would impose heavy costs on a person contemplating a productive act both in uncertainty as to his ability to retain the benefits he had created and in the commitment of resources to detection and prevention of harmful activity by others. The legal system can reduce these costs by defining the rights of individuals in the social product, providing a means for resolving disputes about facts relevant under the prescribed definitions, and marshalling, in support of the determinations of the institutions authorized to resolve disputes, enforcement resources sufficient to overcome the efforts of private individuals to violate the law. The efficiency of the legal system is thus a function both of the definition of rights and of the means employed to invoke governmental force in support of them. A great deal of scholarly attention has been paid recently to the efficiency of various assignments of rights. Some beginnings have also been made in assessing the efficiency of different types of legal proceedings. What has not been done, however, is to view the system as a whole.' Thus, discussions of the efficient distribution of rights customarily put enforcement costs aside. Similarly, appraisals of enforcement mechanisms omit any precise formulation of how the "output" of legal proceedings contributes to the social gain realizable through the assignment of "efficient" rights. In the present paper we will try to identify the costs of a legal system designed to enhance efficiency and develop a model for minimizing these costs.