Fee-Shifting Rules in Litigation with Contingency Fees

Chen, Kong-Ping; Wang, Jue-Shyan

doi:10.2139/ssrn.798044

Cited by 9 publications

(6 citation statements)

References 36 publications

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“…They find that the English rule shifts the settlement amount away from the best estimate of the proper settlement amount-where such estimate is based on aggregating the information that is privately received by each of the parties. Chen and Wang (2007) also analyze a multi-stage model that includes both settlement negotiation and litigation spending. Chen and Wang's model differs from Gong and Mcafee's in several important respects.…”

Section: Multi-phase Modelsmentioning

confidence: 99%

Fee Shifting in Litigation: Survey and Assessment

Katz

Sanchirico

2010

SSRN Journal

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Should the party who loses in litigation be forced to pay the legal fees of the winner? This paper surveys the economic literature regarding the effects of legal fee shifting on a variety of decisions arising before and during the litigation process. Section 2 provides a brief survey of the practical situations in which legal fee shifting does and does not arise. Section 3 analyzes the effects of indemnification on the incentives to expend resources in litigated cases. Section 4 examines how indemnification influences the decisions to bring and to defend against suit, and Section 5 assesses its effects on the choice between settlement and trial. Section 6 addresses the interaction between the allocation of legal fees and the parties' incentives for efficient primary activity behavior. Section 7 considers two important variants on simple indemnification: rules that shift costs based on the parties' settlement negotiations (such as US Federal Rule 68 and the English practice of payment into court), and rules that shift costs based on the margin of victory (such as US Federal Rule 11 and the common law tort of malicious prosecution). Section 8 reviews the brief but instructive empirical literature on legal cost shifting, and Section 9 summarizes the discussion and offers conclusions.

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Section: Multi-phase Modelsmentioning

confidence: 99%

Fee Shifting in Litigation: Survey and Assessment

Katz

Sanchirico

2010

SSRN Journal

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“…This latter assumption follows the existing literature on litigation contests and seems realistic as lawsuits unfold dynamically, so that the decision on the marginal unit of effort is made after a substantial amount of information has been revealed in court. Chen and Wang (2007) in the same way as it is in our coarse all-or-nothing modeling of settlement. 6…”

Section: The Modelmentioning

confidence: 91%

“…5 For instance, Chen and Wang (2007) consider a model of settlement bargaining with incomplete information with an ensuing litigation contest at trial. They argue that it is reasonable to assume that only the pretrial negotiation is governed by asymmetric information, whereas the private information is revealed after the trial has started but before effort decisions are made.…”

Section: The Modelmentioning

confidence: 99%

“…A biased contest success function has subsequently been used, always assuming that parties have full information about all relevant aspects when determining the level of effort, to analyze issues such as fee-shifting rules (e.g. Farmer and Pecorino (1999), Chen and Wang (2007) or Gürtler and Kräkel (2010)), delegation to lawyers and their compensation (Wärneryd (2000), Baik and Kim (2007a) or Baik and Kim (2007b)), the comparison between adversarial and inquisitorial rules (Parisi (2002)), the comparison between common and civil law in general (Luppi and Parisi (2012)) or legal presumptions (Bernardo, Talley, and Welch (2000)).…”

Section: Introductionmentioning

confidence: 99%

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Rent Seeking and Bias in Appeals Systems

Friehe¹,

Wohlschlegel

2019

The Journal of Legal Studies

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We analyze a litigation contest in which plaintiff and defendant seek to win in trial court, and the losing litigant may appeal. In our setup, the appeals court's judgment depends on the trial court's judgment, the merits of the litigants' arguments, and their efforts in the appeals stage. We find that the possibility of appeal increases the favorite's probability of winning as compared to that in a single-stage system, as the favorite has higher effort incentives in the first-instance authority than the underdog. Moreover, we show that the possibility of appeal may increase total rent-seeking efforts and make the case less likely to be tried, or that it surprisingly may have the opposite effects, and how the direction of these effects depends on the model parameters.

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“…9 As many as 689 cases in our sample (37 percent) were resolved with a default judgment because one of the two parties failed to appear in court. In 173 cases, the defendant recognized the plaintiff´s claim.…”

Section: Datamentioning

confidence: 93%

Determinants of in-court settlements: empirical evidence from a German trial court

Berlemann

Christmann

2018

Journal of Institutional Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Zusammenfassung / AbstractBecause verdicts are typically the more costly resolution of legal disputes, most governments are interested in high settlement rates. In this paper, we use a unique dataset of 860 case records from a German trial court to explore which factors have a significant impact on the decision to settle in civil law litigation. We find that case-specific factors, procedural aspects and individual characteristics of the involved judge have a significant impact on settlement probability. Interestingly, we find supporting evidence for the hypothesis that the gender of the involved judge has an impact on settlement probabilities in certain subfields of law. Based on our empirical results, we derive some conclusions for legal policies that aim at increasing settlement rates. To be able to construct legal systems that facilitate early settlements of legal disputes, it is necessary to identify the factors that have a significant impact on settlement probability. 1 However, little empirical knowledge is available on this issue as yet. A major reason for the scarcity of empirical evidence on the determinants of settlement probability is that suitable data to study this issue are often unavailable. Databases on verdicts are often available; however, according to the well-established Case Selection Hypothesis put forward by PRIEST and KLEIN (1984), verdicts (and thus settlements) are not a random draw from the pool of all legal disputes. Empirical evidence that is solely based on verdict databases is thus likely biased. To gain unbiased evidence on the determinants of settlement probability, a random sample of legal disputes that contains both court decisions and settlements is necessary. However, these types of data are mostly unavailable as yet.In this paper, we contribute to filling the described gap in the literature. Using a novel, hand-collected dataset consisting of 860 case records from a German trial court, we employ the logit regression technique to identify factors that influence the probability of 1 Note that we do not argue that promoting settlements is in fact always s ocially efficient. For critical assessments of settlements and judicial discretion to achieve them, see, e.g., RESNIK (2002) The remainder of the paper is structured as follows: Section 2 reviews the related literature. Section 3 introduces and summarizes the dataset. In section 4, we report the empirical results of our analysis ...

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Fee-Shifting Rules in Litigation with Contingency Fees

Cited by 9 publications

References 36 publications

Fee Shifting in Litigation: Survey and Assessment

Fee Shifting in Litigation: Survey and Assessment

Rent Seeking and Bias in Appeals Systems

Determinants of in-court settlements: empirical evidence from a German trial court

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