This paper uses a dynamic model to study the development of judge-made law. Judges learn about the proper scope of the legal rule from the facts in the litigated cases. To the extent the rule of law entails treating like cases alike, we show that the rule of law is inconsistent with rational or cost-justified judicial learning. One must be sacrificed to achieve the other. We further show that judges seeking to maximize social welfare will change their “interpretation” of prior case law over time. Common, but often critiqued judicial practices, such as distinguishing prior cases that are indistinguishable or writing inconsistent opinions, are beneficial because they foster learning. Finally, we consider the convergence of legal rules. We find that convergence can result in a subset of imperfect or inefficient rules, even if all judges share efficiency as their normative goal. It is efficient, in other words, for judge-made law to contain errors.