In the early 1920’s, a group of prominent American judges, lawyers, and law professors formed "The Committee on the Establishment of a Permanent Organization for the Improvement of the Law," led by Elihu Root, George Wickersham, and William Draper Lewis. The Committee reported to the members of the legal profession that the “law is unnecessarily uncertain and complex,” and as a result, there is a “general dissatisfaction with the administration of justice.”
According to the Committee, the law's uncertainty stemmed in part from a lack of agreement on fundamental principles of the common law, while the law's complexity was attributed to the numerous variations within different jurisdictions.
In order to remedy these issues, the Committee proposed the formation of The American Law Institute in order "to promote the clarification and simplification of the law and its better adaptation to social needs, to secure the better administration of justice and to encourage and carry on scholarly and scientific legal work."
One of the Committee’s suggestions was for a Restatement of the Law that “should not only be to help make certain much that is now uncertain and to simplify unnecessary complexities, but also to promote those changes which will tend better to adapt the laws to the needs of life.” A Restatement should be critical and constructive, and although largely based on statutes and decisions, “it should not be confined to examining and setting forth the law applicable to those situations which have been the subject of court action or statutory regulation, but should also take account of situations not yet discussed by courts or dealt with by legislatures….”
The Committee then recommended that the work be done by members that represent the profession as a whole. The diversity of voice, in all ways, would prove essential to the work that the Institute produces.
Based on the recommendation of the Committee, The American Law Institute was incorporated in 1923. That year, work began on the first four Restatements, covering the subjects of Agency, Conflict of Laws, Contracts, and Torts. Additional early leaders of ALI included William Howard Taft, Charles Evans Hughes, Learned Hand, and Benjamin Cardozo. ALI held its first Annual Meeting in February 1923.