Legal Contests with Unilateral Delegation

Abstract

We examine a legal contest in which only one litigant hires a delegate who expends his effort on behalf of the litigant. The delegation contract between the litigant and the delegate is either observable or unobservable. Comparing the equilibrium outcomes of the two legal contests, we derive the effect of the observability of the contract. We find that the favorite litigant and his delegate prefer the observable contract to the unobservable one. If the litigant is the underdog, however, there is conflict of interest between the litigant and his delegate as the litigant prefers the observable contract to the unobservable one while his delegate prefers the unobservable contract. We also show that the legal contest with the observable contract incurs more total expenditure than the legal contest with the unobservable contract if the litigant hiring the delegate is the favorite, and vice versa.

Asymmetric Reimbursement and Contingent Fees in Environmental Conflicts: Observable vs. Unobservable Contracts

“…Ref. [9] examines a contest with delegation and without asymmetric reimbursement. They consider the two games, the unobservable-and the observable-contract games, and examine whether the observability of the delegation contract increases the expected payoff of the plaintiff.…”

“…The assumptions of the studies do not match what is often done in real-world situations. This paper extends the environmental contests of [6,7] and the legal contests in [9] to the specific case where a losing defendant reimburses the attorneys' fees that the plaintiff pays to his attorney 2 . This altered assumption accounts for lawsuits in which an exception is made to civil cases in the United States, lawsuits which would otherwise be governed by the American rule.…”

“…First, they assume information about the delegation contract between a plaintiff and his attorney is disclosed. However, information about delegation contracts between the parties in the United States is protected [8,9]. The private information of the plaintiff and the attorney affects not only their strategic actions but also the defendant's, thereby affecting the outcomes of litigation, such as who prevails at trial and how much the attorney's fees and legal efforts become during trial.…”

A Virtuous Circle of Governance Contests with Externalities

“…This function implies that the highest effort level does not win with probability 1 and the players have equal ability for the contest [10][11][12]14,[18][19][20][21][22]. This logit function has been extensively used in the contest theory literature starting with Tullock's work [17] and continuing on for example to [22].…”

“…This function implies that the highest effort level does not win with probability 1 and the players have equal ability for the contest [10][11][12]14,[18][19][20][21][22]. This logit function has been extensively used in the contest theory literature starting with Tullock's work [17] and continuing on for example to [22]. Reference [23] considers a general logit function as p i (x i , x j ) = ax i ri /(ax i ri + x j rj ), in which a is the ability parameter reflecting the relative strength of players, and ri and rj reflect the marginal productivity of efforts (i = j).…”