Advocatus, et non Latro? Testing the Excess of Litigation in the Italian Courts of Justice

Abstract

We explore the causality relationship between litigation rates and the number of lawyers, drawing on an original panel dataset for the 169 Italian first-instance courts of justice between 2000 and 2007. In this time period, both the number of lawyers and the civil litigation rate sharply increased, and a mandatory minimum fee was in place for lawyers’ services. We first document that the number of lawyers is positively correlated with different measures of the litigation rate. Then, using an instrumental variables strategy, we find that a 10% increase in lawyers over population is associated with an increase between 1.6 and 6% in civil litigation rates. Our empirical analysis supports the supplier-induced demand (SID) hypothesis for Italian lawyers: following a sharp increase in the number of lawyers, and in the impossibility of competing on price because of the minimum fee regulation, some lawyers may have opportunistically used their informational advantage to induce their clients to bring lawsuits into court more often than would have been optimal if they were acting in the exclusive interest of their clients.

Measuring Potential Efficiency Gains from Mergers of Italian First Instance Courts through Nonparametric Model

“…The author concludes that a relevant portion of resources seems to be dedicated to enforce the huge number of Italian laws leading to low efficiency of the judicial system. Finally, Buonanno and Galizzi (2014) raise the attention on the application of the supplier-induced-demand hypothesis to the analysis of determinants of judicial system. Their main common result is that the rising quantity of lawyers causes an increase in the number of unnecessary civil trials (due to asymmetric information, imperfect agency relation between lawyer and client, tougher competition, and uniform minimum fees for service) lowering the efficiency of the judicial system.…”

Determinants of judicial efficiency: a survey

“…Scholars began to ask whether there is such a thing as ''supply-induced-demand'' for lawyerly services Buonanno and Galizzi (2014). In fact, it might also induce more homogenous decisions across court levels which does not necessarily imply better decisions.8 The quality of legislation could be yet another determinant.…”

Judicial Performance and Trust in Legal Systems: Findings from a Decade of Surveys in over 20 European Countries

“…Fortunately, the CEPEJ has systematically collected comparable objective data on judicial systems in Europe, particularly on judicial resources and pending and resolved cases in courts. The use of these data has become standard in the literature, including studies on the determinants of litigation (Buonanno and Galizzi, 2014; Bielen et al., 2018), aggregate judicial quality (Cross and Donelson, 2010) and judicial performance (Bielen, Marneffe, and Vereeck, 2015; Voigt and El‐Bialy, 2016), entrepreneurship (Ippoliti, Melcarne, and Ramello, 2015), and favorable economic outcomes (Lorenzani and Lucidi, 2014). In particular, CEPEJ collects two performance measures: Disposition time and Clearance rate .…”