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Advocatus, et non latro?: testing the excess of litigation in the Italian courts of justice

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  • Buonanno, Paolo
  • Galizzi, Matteo M.

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.

Suggested Citation

  • Buonanno, Paolo & Galizzi, Matteo M., 2014. "Advocatus, et non latro?: testing the excess of litigation in the Italian courts of justice," LSE Research Online Documents on Economics 60800, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:60800
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    1. Castro Massimo Finocchiaro & Guccio Calogero, 2015. "Bottlenecks or Inefficiency? An Assessment of First Instance Italian Courts’ Performance," Review of Law & Economics, De Gruyter, vol. 11(2), pages 317-354, July.
    2. Stefan Voigt, 2016. "Determinants of judicial efficiency: a survey," European Journal of Law and Economics, Springer, vol. 42(2), pages 183-208, October.
    3. Virginia Rosales & Dolores Jiménez-Rubio, 2017. "Empirical analysis of civil litigation determinants: The Case of Spain," European Journal of Law and Economics, Springer, vol. 44(2), pages 321-338, October.
    4. Lampach, Nicolas & Wijtvliet, Wessel & Dyevre, Arthur, 2020. "Merchant hubs and spatial disparities in the private enforcement of international trade regimes," International Review of Law and Economics, Elsevier, vol. 64(C).
    5. Bielen, Samantha & Peeters, Ludo & Marneffe, Wim & Vereeck, Lode, 2018. "Backlogs and litigation rates: Testing congestion equilibrium across European judiciaries," International Review of Law and Economics, Elsevier, vol. 53(C), pages 9-22.
    6. Alessandro Melcarne & Giovanni B. Ramello, 2020. "Bankruptcy delay and firms’ dynamics," Small Business Economics, Springer, vol. 54(2), pages 405-419, February.
    7. Pedro C. Magalhães & Nuno Garoupa, 2020. "Judicial Performance and Trust in Legal Systems: Findings from a Decade of Surveys in over 20 European Countries," Social Science Quarterly, Southwestern Social Science Association, vol. 101(5), pages 1743-1760, September.
    8. Antonio Peyrache & Angelo Zago, 2020. "The (in)efficiency of Justice. An equilibrium analysis of supply policies," CEPA Working Papers Series WP042020, School of Economics, University of Queensland, Australia.
    9. Massimo Finocchiaro Castro & Calogero Guccio, 2018. "Measuring Potential Efficiency Gains from Mergers of Italian First Instance Courts through Nonparametric Model," Public Finance Review, , vol. 46(1), pages 83-116, January.

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    More about this item

    Keywords

    lawyers; litigation rates; credence goods;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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