Choosing ADR or Litigation

We model the decision by two contestants to select one of two conflict resolution forums in which to address their conflict; alternative dispute resolution (ADR) or litigation. Given a forum, we represent the parties’ behavior by a Tullock contest. Because of the additional constraints disputants face in courts, we assume that the cost structure of providing effective legal arguments is higher under litigation. Paradoxically, litigation may be procedurally more efficient in equilibrium. The final choice of the parties is based on their respective utility and we show that a tension may arise with procedural efficiency. Finally, we also show that the timing of the decision of the conflict resolution mechanism (before or after the conflict arises) affects the choices the parties make

Litigation and the Timing of Settlement: Evidence from Commercial Disputes

Although an overwhelming proportion of all legal disputes end in settlement, the determinants of the timing of settlement remain empirically underexplored. We draw on a novel dataset on the duration of commercial disputes in Slovenia to study how the timing of settlement is shaped by the stages and features of the litigation process. Using competing risk regression analysis, we find that events such as court-annexed mediation and the first court session, which enable the disputing parties to refine their respective expectations about the case outcome, in general reduce case duration to settlement. The magnitude of the respective effects, however, varies with time. Completion of subsequent court sessions, in contrast, does not affect the time to settlement. Judicial workload affects the timing of settlement indirectly, via the effect on the timing of the first court session. We also examine the effect of other case and party characteristics

Justice: Greater Access, Lower Costs

Litigation imposes large costs on society; this justifies settlement considerations. In any case, access to justice is critical to socioeconomic development; as such, it needs to be balanced with litigation minimization. This study examines the tradeoff between litigation and access to justice and explicitly elucidates their relationship. In considering access issues, this study finds that the outcomes of policies that affect parties’ litigation decisions partially depart from those in the standard literature. For instance, increasing parties’ litigation costs does not necessarily promote settlement in the shadow of the court. Rather, effects depend on the elasticity of the demand for legal remedies. Furthermore, even while pushing litigation, enhancing access to justice is efficient as long as the claimant’s marginal propensity to litigate is smaller than the social opportunity-cost of access to justice. This finding offers further insight into the suitability of litigation subsidization through legal aid

Rev. Econ. Polit.

This paper analyses the behaviour of an agent under strict liability and negligence when he can influence both the probability of the accident and the probability of being found liable in case of accident. We aim to compare the normative properties of strict liability versus fault-based liability under such circumstances. The model demonstrates that only a negligence rule is efficient and that the optimal damages under strict liability is less than what is usually admitted in the literature, i.e. the expected fine, given the probability to escape the liability, should be less than the level of harm. Finally, the paper highlights the role played by the technologies of precaution and evasion in the results

The dynamics of the legal system

We present a dynamic model of noncontractual litigation in which the parties’ decision whether to litigate depends on information produced by courts and, vice versa, the courts’ involvement in the lawmaking process depends on the cases proposed by the parties. Thereby, we integrate in one model the two main functions of the judiciary (adjudication and lawmaking) and study their interplay. Our model offers a dynamic, cyclical perspective on the evolution of the legal system over time and sheds new light on the causes for high litigation rates and on judge-made law versus statutes