It is true that argument ad verecundiam (from authority) is a logical fallacy and it is also true that argument from and to legal authority is the basic modus operandi of the law. Does that therefore mean that the basic method of operation of the law based in a logical fallacy?
The answer is not a simple "yes", because there is more involved than argument ad verecundiam. Legal practice is mostly about deciding what actions to take on behalf of the public, which involves what are called deontic propositions. During the course of that process, there is a tendency to indulge in making declarative propositions, assertions about what is or is not, and that is where such fallacies can be a special problem.
A court is a deliberative assembly of individuals with various duties and the authority to decide certain kinds of legal issues presented to it, called its jurisdiction. One of those duties is to preside over the court, and that presiding officer is typically called the bench or the "judge" (although it may be a panel of several, one is normally the chief).
One of the things courts are typically asked to do is "find" declarative propositions: that the defendant is or is not guilty, or at fault, or whatever. Obviously, the court can err, and declaring something true doesn't make it true. What the court is really doing is deciding "we will act as though it were true". They may have the authority to do that.
So when in law someone argues from authority one is really saying, "we don't know if what he is saying is valid, but we have to make a decision, and he seems more credible than the alternatives, so we will act as though what he is saying is valid." No ad verecundiam fallacy in that.
The fallacy comes when one transitions from "we will act as though what he is saying is valid" to "what he is saying is valid".
Let's examine what Court Y in Case B is doing when it cites a Court X in Case A as precedent. It is saying:
1. The evidence and arguments in Case A are similar to those in our Case B.
2. Court X in Case A decided to act as though the arguments for their decision were more valid than the arguments against.
3. We have confidence in the integrity and competence of Court X.
4. We don't have time to re-examine all the arguments in our Case B going back to first principles.
5. Therefore, in the interests of clearing our docket so we can take other cases, we will act as though the decision of Court X in Case A was valid, and act as though it is similar enough to our case B to make a decision to act in a similar way.
Now all of the above seems sensible, and indeed, given crowded dockets and limited cognitive capacity of judges, it would seem that "justice" could hardly be done otherwise if we are to have any finality in cases. However, as a matter of logic, every one of the five points above involves at least one logical fallacy, not only ad verecundiam.
So are we doomed to a judicial process that is logically infirm? Not quite. Game theory provides some useful insights.
Considered as a game, skillful play involves what are called heuristics -- decision strategies that do not guarantee always finding the best move, but which are highly likely to find an acceptably good move most of the time, and which are computationally tractable given constraints on time, cognitive capacity, and completeness and reliability of information about the state of the game.
Deontic logic, which is an extension of the first order predicate calculus, is designed to help us manage this kind of game playing, to optimize outcomes in general and over the long term. No guarantees of just decisions in every particular case, but a high likelihood of reasonably just decisions in most cases. The above five points represent attempts to use heuristics, whether with great skill and integrity or not.
Our job, in trying to decide and guide public policy, is therefore not to seek to impose strict first order logic on all of the decisionmaking of judges, but to improve the quality of such decisionmaking without excessively consuming scarce resources of dockets or personnel, and that involves reducing the susceptibility to error in each of the above five points. ("Error" being the euphemism for everything from incompetence to corruption.) By thus disaggregating the processes involved, we can better discern what might be done to improve them.
Now of course an important way is to improve the competence and integrity of judges. There is no substitute for that. But we also indeed to adjust our expectations of them.
Consider the recent case of Citizens United v. FEC. For me, with my background in constitutional study, it is an easy case. If I were to write the majority opinion in it, it would be very short:
1. The statute was passed by Congress.
2. The statute abridges freedom of speech and press.
3. The First Amendment says "Congress shall make no law .. abridging freedom of speech or press".
4. There are no later amendments to the Constitution that would supersede the First Amendment.
5. Therefore, the statute is unconstitutional.
6. Judgment for plaintiff.
It took me less than three minutes to write that. No need for extensive written or oral arguments (although I read the written arguments in about an hour). I can generally do the same with almost any case that turns on constitutional issues. (Statutory or regulatory construction can take longer.)
If we had nine justices on the Supreme Court with my background and skills, we could decide all 8000 cases submitted each year and the Supreme Court at least would not be a bottleneck. Now of course it would only be a handful of libertarian constitutionalists that would applaud those decisions. Most others would probably be very upset, if only because so many opinions would likely consist of only a few lines like the above. Not much for them to chew over, and their professional standing depends on having lengthy court opinions to chew over.
I am not unique. I'm sure we could find enough others like me to fill all the judicial positions. Of course, reliance interests, especially prosecutors, would go nuts.
But we can identify a large part of the problem. Judges want to avoid criticism, so they might overdo their deliberation and opinion writing. Now, most of the ones we have presently need to take even more time deliberating, because their subject matter knowledge and reasoning ability is weak. But that could be solved by requiring them to be much better educated. They should also be socially, as well as financially, isolated from the many interests and their lawyers that might appear before them, without lacking practical experience of many kinds.