Schacht asserts that hadiths, particularly from Muhammad, did not form, together with the Qur'an, the original bases of Islamic law and jurisprudence as is traditionally assumed. Rather, hadiths were an innovation begun after some of the legal foundation had already been built. "The ancient schools of law shared the old concept of sunna or ‘living tradition’ as the ideal practice of the community, expressed in the accepted doctrine of the school." And this ideal practice was embodied in various forms, but certainly not exclusively in the hadiths from the Prophet. Schacht argues that it was not until al-Shafi`i that ‘sunna’ was exclusively identified with the contents of hadiths from the Prophet to which he gave, not for the first time, but for the first time consistently, overriding authority. Al-Shafi`i argued that even a single, isolated hadith going back to Muhammad, assuming its isnad is not suspect, takes precedence over the opinions and arguments of any and all Companions, Successors, and later authorities. Schacht notes that:
Two generations before Shafi`i reference to traditions from Companions and Successors was the rule, to traditions from the Prophet himself the exception, and it was left to Shafi`i to make the exception the principle. We shall have to conclude that, generally and broadly speaking, traditions from Companions and Successors are earlier than those from the Prophet.
Based on these conclusions, Schacht offers the following schema of the growth of legal hadiths. The ancient schools of law had a ‘living tradition’ (sunna) which was largely based on individual reasoning (ra'y). Later this sunna came to be associated with and attributed to the earlier generations of the Successors and Companions. Later still, hadiths with isnads extending back to Muhammad came into circulation by traditionists towards the middle of the second century. Finally, the efforts of al-Shafi`i and other traditionists secured for these hadiths from the Prophet supreme authority.
Goldziher maintains that, while reliance on the sunna to regulate the empire was favoured, there was still in these early years of Islam insufficient material going back to Muhammad himself. Scholars sought to fill the gaps left by the Qur'an and the sunna with material from other sources. Some borrowed from Roman law. Others attempted to fill these lacunae with their own opinions (ra'y). This latter option came under a concerted attack by those who believed that all legal and ethical questions (not addressed by the Qur'an) must be referred back to the Prophet himself, that is, must be rooted in hadiths.These supporters of hadiths (ahl al-hadith) were extremely successful in establishing hadiths as a primary source of law and in discrediting ra'y. But in many ways it was a Pyrrhic victory. The various legal madhhabs were loath to sacrifice their doctrines and so they found it more expedient to fabricate hadiths or adapt existing hadiths in their support. Even the advocates of ra'y were eventually persuaded or cajoled into accepting the authority of hadiths and so they too "found" hadiths which substantiated their doctrines that had hitherto been based upon the opinions of their schools’ founders and teachers. The insistence of the advocates of hadiths that the only opinions of any value were those which could appeal to the authority of the Prophet resulted in the situation that "where no traditional matter was to be had, men speedily began to fabricate it. The greater the demand, the busier was invention with the manufacture of apocryphal traditions in support of the respective theses."
In summary, Goldziher sees in hadiths "a battlefield of the political and dynastic conflicts of the first few centuries of Islam; it is a mirror of the aspirations of various parties, each of which wants to make the Prophet himself their witness and authority." Likewise,
Every stream and counter-stream of thought in Islam has found its expression in the form of a hadith, and there is no difference in this respect between the various contrasting opinions in whatever field. What we learnt about political parties holds true too for differences regarding religious law, dogmatic points of difference etc. Every ra'y or hawa, every sunna and bid`a has sought and found expression in the form of hadith.
And even though Muslim traditionalists developed elaborate means to scrutinize the mass of traditions that were then extant in the Muslim lands, they were "able to exclude only part of the most obvious falsifications from the hadith material." Goldziher, for all his scepticism, accepted that the practice of preserving hadiths was authentic and that some hadiths were likely to be authentic. However, having said that, Goldziher is adamant in maintaining that:
In the absence of authentic evidence it would indeed be rash to attempt to express the most tentative opinions as to which parts of the hadith are the oldest material, or even as to which of them date back to the generation immediately following the Prophet’s death. Closer acquaintance with the vast stock of hadiths induces sceptical caution rather than optimistic trust regarding the material brought together in the carefully compiled collections.