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Advocatus, et non latro?: testing the excess of litigation in the Italian courts of justice

Listed author(s):
  • Buonanno, Paolo
  • Galizzi, Matteo M.

We explore the causality relationship between litigation rates and the number of lawyers, drawing on an original panel dataset for the 169 Italian first-instance courts of justice between 2000 and 2007. In this time period, both the number of lawyers and the civil litigation rate sharply increased, and a mandatory minimum fee was in place for lawyers’ services. We first document that the number of lawyers is positively correlated with different measures of the litigation rate. Then, using an instrumental variables strategy, we find that a 10% increase in lawyers over population is associated with an increase between 1.6 and 6% in civil litigation rates. Our empirical analysis supports the supplier-induced demand (SID) hypothesis for Italian lawyers: following a sharp increase in the number of lawyers, and in the impossibility of competing on price because of the minimum fee regulation, some lawyers may have opportunistically used their informational advantage to induce their clients to bring lawsuits into court more often than would have been optimal if they were acting in the exclusive interest of their clients.

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File URL: http://eprints.lse.ac.uk/60800/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 60800.

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Date of creation: 06 Nov 2014
Publication status: Published in Review of Law and Economics, 6, November, 2014, 10(3), pp. 285-322. ISSN: 1555-5879
Handle: RePEc:ehl:lserod:60800
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