It's worth checking out Jonah Goldberg's critique of Pragmatism before I make a few comments on his own conclusions. Like Jonah, I rely on the excellent book The Metaphysical Club for most of my knowledge about Pragmatism, in addition to some old college philsophy courses. Oliver Wendell Holmes's impact on legal theory was partly due to his belief in creating law based on the idea of the "reasonable man." From Jonah:
How does one determine what is reasonable? By in effect taking a statistical average of the community's standards. Early Pragmatists were deeply enamored with statistical techniques like the law of errors, which held — sorta kinda — that you could find the true answer to a problem by averaging out the wrong answers.
So Pragmatism in this sense is seen as a stripping away of "metaphysical irrelevancies," and in their place creating law based on the common, or average, man's standards. In such a way, there would be no need and no place in the law for talk of morality or for overly sentimental criteria. As Goldberg quotes Holmes saying, "A man may have as bad a heart as he chooses, if his conduct is within the rules." The epitome of this reasonable man doctrine is the trial jury, where a defendant is supposedly being judged by a representative sample of the community who are, by Holmes's statistically-inclined thinking, themselves representing the community's standards.
Jonah's objections, roughly, seem to be the following:
1) The reasonable man doctrine leads to "corrosion," so that eventually it is the fringes of society that are defended at all costs regardless of where the common man stands.
2) Law should be based on what is right and wrong, not on what is efficient.
Jonah is eloquent and thoughtful in his arguments for both points, particularly the second. If there are only utilitarian underpinnings for a society's laws, rather than learning any sense of right or wrong people merely learn to "play the odds" with regard to the law, i.e. to see what you can get away with. The question is how we agree on right and wrong, and Jonah's conclusion that the law is not value-free and that the only question is "which values will triumph" suggests that his piece is simply a long-winded reminder that this is a culture war.
He is less convincing on the first point and never really explains his fatalistic attitude about the corrosion of the reasonable man doctrine. His description of the mainstream having to bow to the fringes of society is typical of the conservative reaction to the gay rights movement, and I think he actually gets the weakness of the reasonable man doctrine completely wrong: if this doctrine were always upheld, would integration have ever occurred in the South? The reasonable man doctrine is precisely not overly concerned with outliers. In other words, Pragmatism in law doesn't exactly look out for the fringes of society.
The other weakness of using statistics in law, which Goldberg seems to miss in his critique, is that it is not the most helpful technique in a country that is neatly polarized on key issues. If 50% support the availability of legal abortion and 50% oppose abortion, who is the reasonable man? Where does the compromise lie?
I have my own problems with Pragmatism. On a general note, it seems like an excuse to let religion back into serious philosophy (which I think was precisely William James's goal), though that has little bearing here on Holmes and legal theory. As far as creating a society's laws, I find the Rawlsian approach to be the most persuasive, especially the veil of ignorance. It basically poses the hypothetical question of what kind of society you would create if you had no idea what role you would play in that society. Rawls argues that fairness would be your priority when constructing a justice system, as you would want good opportunities regardless of the lot in life into which you were born.
Goldberg once dismissed Rawlsians as people who prioritized fairness over freedom, but I think he misses the crucial point that for a good majority of people -- especially on the lower ends of society -- fairness is a kind of freedom. Julian Baggini not long ago argued that conservatives fail to see that there are two types of freedom, negative and positive. The libertarian strain of conservatism really only recognizes the first.