>Lawyers already do this.
I'm not really sure what you mean by this, but how lawyers think about things is not really relevant to legal outcomes. Also, none of the lawyers I know employ anything like the reasoning I have in mind in their work. Finally, if your claim is that the outcomes produced by our byzantine legal system is equivalent to the outcomes that would be produced by a principled approach, then I think you are mistaken.
> You need to stop thinking of law as a product and think of it as a process.
You need to stop assuming that you know what I think :). I don't think it should be static. The law acts to model aspects of the world that society feels should relevant to legal outcomes. The world is far too complicated for that model to be perfect, in my preferred system or yours. So, of course, we will occasionally notice aspects of our world that are not modeled and deserve to be, and there should be a procedure for doing as much.
There are many problem with the process we have in place. First, there aren't clean principles to begin with. The courts are tasked with ruling on the written law, which is highly imperfect. To the extent that the courts "discover" new principles out of the written law, they are effectively writing new law, which in theory isn't their job.
Second, the principles should come before the outcomes. In your flow chart, the outcomes are decided first in a large body of cases and then eventually the pattern is recognized. But the whole point of a principled approach is to improve the quality of outcomes, not just to simplify the description of the poor outcomes that would have been arrived at by judges thinking hard about it.
In general, I think you greatly overestimate the number of principles that would be necessary, in the right framework, to improve the legal system. But I recognize that the onus is on me to back that up and I'm not really in a position to propose a specific alternative system.