IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Impact of Fee-Shifting Tort Reform on Out-of-Court Settlements

Listed author(s):
  • Lisa L. Posey
Registered author(s):

    Among the goals of proponents of tort reform is the goal of encouraging out of- court settlement of claims, rather than burdening the court system. Congressional discussions of tort reform have included a proposal aimed at promoting out-of-court settlement by making the party rejecting an offer not improved upon at trial responsible for the other party’s attorney’s fees as well as litigation costs. This plan is similar to Federal Rule 68, adopted in 1938 and infrequently used. This paper analyzes the impact of Rule 68 on the optimal range of settlement offers. Under certain conditions, the settlement range—the range of settlements over which the plaintiff and defendant are willing to negotiate—is qualitatively different than previously shown. The range may be shifted upward, in favor of the plaintiff in that the lowest (greatest) offer that the plaintiff (defendant) has an incentive to accept (make) may be greater than the expected payoff at trial after the offer is rejected. Comparative statics are performed to show how changes in attorneys’ fees, court costs, and the probability of a high judgment affect the characteristics of the outcome.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by Western Risk and Insurance Association in its journal Journal of Insurance Issues.

    Volume (Year): 23 (2000)
    Issue (Month): 2 ()
    Pages: 124-139

    in new window

    Handle: RePEc:wri:journl:v:23:y:2000:i:2:p:124-139
    Contact details of provider:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wri:journl:v:23:y:2000:i:2:p:124-139. 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: (James Barrese)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.