IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/v38y1995i1p225-50.html
   My bibliography  Save this article

Litigation and Settlement under the English and American Rules: Theory and Evidence

Author

Listed:
  • Hughes, James W
  • Snyder, Edward A

Abstract

In contrast to the American rule, whereby each party bears its own costs, the English rule requires losers at trial to pay the winner's legal fees, up to a reasonable limit. We develop six hypotheses regarding how these two cost-allocation rules might affect settlements and litigated outcomes through changes in (1) the selection of cases reaching the settle-versus-litigate stage and (2) behavior thereafter. Using data from Florida, which applied the English rule to medical malpractice claims during the period 1980-85, we examine the rules' effects on the probability of plaintiffs' winning at trial, jury awards, and out-of-court settlements. The English rule increased plaintiff success rates at trial, average jury awards, and out-of-court settlements. Our interpretation of these findings emphasizes that the overall quality of the claims reaching the settle-versus-litigate stage must improve to generate the combination of effects observed. Copyright 1995 by the University of Chicago.

Suggested Citation

  • Hughes, James W & Snyder, Edward A, 1995. "Litigation and Settlement under the English and American Rules: Theory and Evidence," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 225-250, April.
  • Handle: RePEc:ucp:jlawec:v:38:y:1995:i:1:p:225-50
    DOI: 10.1086/467330
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/467330
    Download Restriction: Access to the online full text or PDF requires a subscription.

    File URL: https://libkey.io/10.1086/467330?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jennifer F. Reinganum & Louise L. Wilde, 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 557-566, Winter.
    2. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-1097, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lewis, Tracy R & Poitevin, Michel, 1997. "Disclosure of Information in Regulatory Proceedings," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 50-73, April.
    2. Virginia Rosales-López, 2008. "Economics of court performance: an empirical analysis," European Journal of Law and Economics, Springer, vol. 25(3), pages 231-251, June.
    3. Michael R. Baye & Dan Kovenock & Casper G. Vries, 2005. "Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach," Economic Journal, Royal Economic Society, vol. 115(505), pages 583-601, July.
    4. Dari-Mattiacci, Giuseppe & Saraceno, Margherita, 2020. "Fee shifting and accuracy in adjudication," International Review of Law and Economics, Elsevier, vol. 63(C).
    5. Baptiste Massenot & Maria Maraki & Christian Thoeni, 2016. "Legal compliance and litigation spending under the English and American rule: Experimental evidence," Cahiers de Recherches Economiques du Département d'économie 16.19, Université de Lausanne, Faculté des HEC, Département d’économie.
    6. Luca Anderlini & Leonardo Felli & Giovanni Immordino, 2019. "Costly Pretrial Agreements," The Journal of Legal Studies, University of Chicago Press, vol. 48(1), pages 159-188.
    7. Jean Lanjouw & Josh Lerner, 1998. "The Enforcement of Intellectual Property Rights: A Survey of the Empirical Literature," Annals of Economics and Statistics, GENES, issue 49-50, pages 223-246.
    8. Reiko Aoki & Jin-Li Hu, 1996. "Allocation of Legal Costs and Patent Litigation: A Cooperative Game Approach," Industrial Organization 9612001, University Library of Munich, Germany.
    9. Yasutora Watanabe, 2005. "Learning and Bargaining in Dispute Resolution: Theory and Evidence from Medical Malpractice Litigation," 2005 Meeting Papers 440, Society for Economic Dynamics.
    10. J.J. Prescott & Kathryn E. Spier & Albert Yoon, 2014. "Trial and Settlement: A Study of High-Low Agreements," NBER Working Papers 19873, National Bureau of Economic Research, Inc.
    11. Jeon, Haejun, 2015. "Patent infringement, litigation, and settlement," Economic Modelling, Elsevier, vol. 51(C), pages 99-111.
    12. Samantha Bielen & Peter Grajzl & Wim Marneffe, 2017. "Understanding the Time to Court Case Resolution: A Competing Risks Analysis Using Belgian Data," CESifo Working Paper Series 6450, CESifo.
    13. J.J. Prescott & Kathryn E. Spier & Albert Yoon, 2014. "Trial and Settlement: A Study of High-Low Agreements," Journal of Law and Economics, University of Chicago Press, vol. 57(3), pages 699-746.
    14. Daniela Marchesi, 2007. "The Rule Incentives that Rule Civil Justice," ISAE Working Papers 85, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    15. Amy Farmer Curry & Paul Pecorino, 1993. "The Use of Final Offer Arbitration as a Screening Device," Journal of Conflict Resolution, Peace Science Society (International), vol. 37(4), pages 655-669, December.
    16. Hans K. Hvide & Eirik Gaard Kristiansen, 2012. "Management of Knowledge Workers," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 815-838.
    17. Jost, Peter-J., 1995. "Disclosure of Information and Incentives for Care," International Review of Law and Economics, Elsevier, vol. 15(1), pages 65-85, January.
    18. Peter Grajzl & Katarina Zajc, 2017. "Litigation and the timing of settlement: evidence from commercial disputes," European Journal of Law and Economics, Springer, vol. 44(2), pages 287-319, October.
    19. Yannis Bakos & Chrysanthos Dellarocas, 2011. "Cooperation Without Enforcement? A Comparative Analysis of Litigation and Online Reputation as Quality Assurance Mechanisms," Management Science, INFORMS, vol. 57(11), pages 1944-1962, November.
    20. Rasmusen, Eric, 1995. "Predictable and unpredictable error in tort awards: The effect of plaintiff self-selection and signaling," International Review of Law and Economics, Elsevier, vol. 15(3), pages 323-345, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:v:38:y:1995:i:1:p:225-50. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://www.journals.uchicago.edu/JLE .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.