Yes, that’s the failing. Ideally, justice should be cheaper in both time and monetary costs.

I don’t know of any state that has ever tried to optimize for a low-overhead justice system “in the small” (e.g. many, more efficient, more convenient small-claims courts; or the introduction of another triage layer of “medium-claims” courts, where most all civil contractual disputes would land) which is an interesting fact all by itself. Speedy+cheap justice goes somewhat hand-in-hand with things like red-tape reduction, in that both are attempts to “oil the wheels” of the state apparatus—yet you’d never hear the same people (e.g. libertarians) espouse both.

Aren't small-claims courts precisely an attempt to optimize for a low-overhead justice system in the small? Doubtless you feel they don't succeed or don't go far enough, but it seems odd to claim that nobody's tried.

That's what cryptocurrencies allow, since Bitcoin. People can pick a dispute mediator who gets involved and can reverse the transaction only if there's a dispute. It's all done with OP_CHECKMULTISIG. The mediator is not an escrow service and can't steal the money. So you end up with a competitive market of tiny "courts".

> I don’t know of any state that has ever tried to optimize for a low-overhead justice system “in the small”

Both small-claims courts themselves and rules giving effect to binding arbitration agreements are attempts to do that, as are many specialized, domain-specific administrative forums.