IDEAS home Printed from https://ideas.repec.org/a/ucp/jlstud/v25y1996i2p445-62.html
   My bibliography  Save this article

Settling Multidefendant Lawsuits: The Advantage of Conditional Setoff Rules

Author

Listed:
  • Klerman, Daniel

Abstract

In cases involving multiple defendants, each defendant's incentive to settle is influenced by the setoff rule enforced in the relevant jurisdiction. This article suggests that the effect of a setoff rule depends on whether the setoff is conditional on a finding that the settling defendant or defendants were legally liable. Previous research, which assumed that the setoff was unconditional, found that the two principal rules applied by modern courts - the pro tanto and proportionate share rules - often discourage settlement when the plaintiff's probabilities of prevailing against each defendant are not perfectly correlated. This article shows that the disincentive to settlement can be reduced or eliminated by making the setoff conditional on the liability of the settling defendant or defendants. The conditional setoff rules are of practical as well as theoretical interest because several states currently apply them. Copyright 1996 by the University of Chicago.

Suggested Citation

  • Klerman, Daniel, 1996. "Settling Multidefendant Lawsuits: The Advantage of Conditional Setoff Rules," The Journal of Legal Studies, University of Chicago Press, vol. 25(2), pages 445-462, June.
  • Handle: RePEc:ucp:jlstud:v:25:y:1996:i:2:p:445-62
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/467984
    Download Restriction: Access to the online full text or PDF requires a subscription.

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

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Howard F. Chang & Hilary Sigman, 1999. "Incentives to Settle Under Joint and Several Liability," NBER Working Papers 7096, National Bureau of Economic Research, Inc.
    2. Nakkas Alper, 2010. "Settling with Multiple Litigants," Review of Law & Economics, De Gruyter, vol. 6(1), pages 125-144, June.
    3. Chang, Howard F. & Sigman, Hilary, 2007. "The effect of joint and several liability under superfund on brownfields," International Review of Law and Economics, Elsevier, vol. 27(4), pages 363-384, December.
    4. Hviid, Morten & Medvedev, Andrei, 2010. "The role of contribution among defendants in private antitrust litigation," International Review of Law and Economics, Elsevier, vol. 30(4), pages 306-316, December.
    5. Yeon-Koo Che & Kathryn E. Spier, 2008. "Exploiting Plaintiffs through Settlement: Divide and Conquer," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(1), pages 4-23, March.

    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:jlstud:v:25:y:1996:i:2:p:445-62. 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: (Journals Division). General contact details of provider: http://www.journals.uchicago.edu/JLS/ .

    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.

    We have no references for this item. You can help adding them by using 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.

    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.