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Financially-Constrained Lawyers

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  • Landeo, Claudia

    (University of Alberta, Department of Economics)

  • Nikitin, Maxim

    (National Research University Higher School of Economics)

Abstract

Financial constraints reduce the lawyers’ ability to file lawsuits and bring cases to trial. As a result, access to justice for true victims, bargaining impasse, and care taking incentives for potential injurers might be affected. We present the first cradle-to-grave model of legal disputes involving financially-constrained lawyers, third-party lawyer lending, and asymmetric information. In equilibrium, access to justice is denied to some true victims and bargaining impasse occurs. We demonstrate that policies that relax lawyers’ financial constraints might be welfare reducing if the positive impact on access to justice is weak and the potential injurers are overdeterred.

Suggested Citation

  • Landeo, Claudia & Nikitin, Maxim, 2015. "Financially-Constrained Lawyers," Working Papers 2015-8, University of Alberta, Department of Economics.
    • Handle: RePEc:ris:albaec:2015_008
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    References listed on IDEAS

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    More about this item

    Keywords

    Access to Justice; Social Welfare; Lawsuits; Litigation; Deterrence; Third-Party Litigation Funding; Third-Party Lawyer Lending Industry; Bargaining; Asymmetric Information;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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