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Legal Advertising and Frivolous Lawsuits

Author

Listed:
  • Yannick Gabuthy
  • Eve-Angéline Lambert

Abstract

Following a recent wave of deregulation, lawyers now use a large variety of media to advertise their services. A common argument against this increasing reliance on advertising is that it might stir up frivolous lawsuits. In this article, we investigate the relevance of this argument by developing an asymmetric information game of litigation. The main results show that this stirring-up effect does not necessarily occur in equilibrium and advertising may improve welfare by decreasing the social cost of accidents. Therefore, the liberalization of legal advertising should not necessarily be considered as a threat to the efficiency of the tort system.

Suggested Citation

  • Yannick Gabuthy & Eve-Angéline Lambert, 2018. "Legal Advertising and Frivolous Lawsuits," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 174(3), pages 570-593, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201809)174:3_570:laafl_2.0.tx_2-2
    DOI: 10.1628/jite-2018-0006
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    Cited by:

    1. Friehe, Tim & Gabuthy, Yannick & Lambert, Eve-Angéline, 2020. "Settlement implications of lawyer advertising," International Review of Law and Economics, Elsevier, vol. 61(C).

    More about this item

    Keywords

    litigation; advertising; deterrence; frivolous lawsuits;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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