IDEAS home Printed from
   My bibliography  Save this paper

The effect of joint and several liability on the bankruptcy rate of defendants: evidence from asbestos litigation


  • Anup Malani

    (University of Virginia)

  • Charles Mullin

    (Bates White, LLC)


The Effect of Joint and Several Liability on the Bankruptcy Rate of Defendants: Evidence from Asbestos Litigation - Under the doctrine of joint and several liability, if two defendants jointly share a liability and the first becomes insolvent, his unpaid liabilities may be reallocated to the second, solvent defendant. While the second defendant's assets may be sufficient to cover his own share of the liability, they may be insufficient to also cover the first defendant's unpaid liability. As a result the first defendant's insolvency may trigger the second defendant's insolvency (White 2002, Cupp 2003). The purpose of this paper is to quantify the pressure that one defendant's bankruptcy places on the solvency of co-defendants in the context of mass torts subject to joint and several liability. The specific tort we examine is asbestos poisoning. We choose this example because of the large number of companies -- over 61 since 1982 (Stiglitz et al. 2003) -- that have gone bankrupt due to asbestos litigation and the even larger number of companies -- perhaps as many as 8,000 (Brickman 2004) -- that have been named as defendants in asbestos suits. Using 10-K data from a number of large asbestos defendants and a data set of all judgments in asbestos trials, we estimate that the mean per-claim payments by major defendants grew an additional 5 to 10 percent annually or 56 to 157 percent altogether between 1990 and 2002 due to the bankruptcy of jointly liable defendants during this period. To put it another way, if no companies had gone bankrupt between 1990 and 2002, the asbestos liabilities of solvent defendants might have been less than two-fifths their present size.This result is also a contribution to the literature on bankruptcy and on mass torts. First, numerous scholars have suggested tort claimants ought to be given superpriority in bankruptcy to reduce their exposure to the risk of a defendant's insolvency. We demonstrate that, with joint and several liabilities,
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Anup Malani & Charles Mullin, "undated". "The effect of joint and several liability on the bankruptcy rate of defendants: evidence from asbestos litigation," American Law & Economics Association Annual Meetings 1070, American Law & Economics Association.
  • Handle: RePEc:bep:alecam:1070

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Joseph E. Aldy & W. Kip Viscusi, 2004. "Age Variations in Workers' Value of Statistical Life," NBER Working Papers 10199, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    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:bep:alecam:1070. 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: (Christopher F. Baum). General contact details of provider: .

    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 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.

    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.