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Private versus Socially Optimal Provision of Ex Ante Legal Advice

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  • Kaplow, Louis
  • Shavell, Steven

Abstract

This article considers whether the demand for legal advice about potential liability for future acts is socially excessive. using the standard model of accidents, we find that the answer depends on the type of advice and the form of liability. When advice provides information about properly determined liability, the demand for advice is socially optimal under strict liability but is socially excessive under the negligence rule. When advice identifies errors the legal system is expected to make, the demand for advice is socially excessive under both liability rules.
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Suggested Citation

  • Kaplow, Louis & Shavell, Steven, 1992. "Private versus Socially Optimal Provision of Ex Ante Legal Advice," Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 306-320, April.
  • Handle: RePEc:oup:jleorg:v:8:y:1992:i:2:p:306-20
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    References listed on IDEAS

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    1. Shavell, Steven, 1988. "Legal Advice about Contemplated Acts: The Decision to Obtain Advice, Its Social Desirability, and Protection of Confidentiality," The Journal of Legal Studies, University of Chicago Press, vol. 17(1), pages 123-150, January.
    2. Craswell, Richard & Calfee, John E, 1986. "Deterrence and Uncertain Legal Standards," Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(2), pages 279-303, Fall.
    3. Kahan, Marcel, 1989. "Causation and Incentives to Take Care under the Negligence Rule," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 427-447, June.
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    Cited by:

    1. Lang, Matthias, 2017. "Legal uncertainty as a welfare enhancing screen," European Economic Review, Elsevier, vol. 91(C), pages 274-289.
    2. Giuseppe Dari-Mattiacci & Bruno Deffains, 2007. "Uncertainty of Law and the Legal Process," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 627-656, December.
    3. Kaplow, Louis & Shavell, Steven, 1994. "Accuracy in the Determination of Liability," Journal of Law and Economics, University of Chicago Press, vol. 37(1), pages 1-15, April.
    4. Benito Arruñada, 2017. "How to Make Land Titling more Rational," Working Papers 983, Barcelona Graduate School of Economics.
    5. Kaplow, Louis & Shavell, Steven, 1996. "Accuracy in the Assessment of Damages," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 191-210, April.
    6. Ram Singh, 2001. "Efficient Liability Rules When Courts Make Errors in Estimation of the Harm : Complete Characterization," Working papers 99, Centre for Development Economics, Delhi School of Economics.
    7. Goeschl, Timo & Pfrommer, Tobias, 2015. "Learning by Negligence - Torts, Experimentation, and the Value of Information," Working Papers 0598, University of Heidelberg, Department of Economics.
    8. Ram Singh, 2001. "Effects of Courts' Errors on Efficiency of Liability Rules: When Individuals are Imperfectly Informed," Working papers 97, Centre for Development Economics, Delhi School of Economics.
    9. repec:eee:indorg:v:53:y:2017:i:c:p:326-352 is not listed on IDEAS
    10. Kaplow, Louis, 1998. "Accuracy, Complexity, and the Income Tax," Journal of Law, Economics, and Organization, Oxford University Press, vol. 14(1), pages 61-83, April.
    11. Harald Hau & Marcel Thum, 2000. "Lawyers, Legislation and Social Welfare," European Journal of Law and Economics, Springer, vol. 9(3), pages 231-254, May.

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