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Discovery is the formal process of exchanging information under the supervision of the courts. Since managing discovery is costly, courts have implemented case management techniques to reduce motion practice in discovery. This study examines whether case management techniques can reduce the likelihood of a discovery dispute. We attempt to untangle the impact of specific judges from the use of a particular case management technique. We focus on the use of informal discovery conferences (IDCs) in which parties meet with the judge before filing a motion to compel. The problem with simply testing whether IDCs reduce the number of discovery motions is that the use of an IDC is likely endogenous. Our solution to this endogeneity is to use the random assignment of judges. Since some judges have a higher propensity to use IDCs and some courts have begun requiring them, we have two sources of policy variation. Using this estimation strategy, we find that IDCs reduce the number and presence of discovery motions. (JEL K13, K40, K41) [ABSTRACT FROM AUTHOR]

Oliver Williamson has coined the term "fundamental transformation." It captures the following situation: before they strike a deal, buyers and sellers are protected by competition. Yet, thereafter, they find themselves in a bilateral monopoly. With common knowledge of standard preferences, both sides would conclude the contract regardless if its expected value exceeds their outside options. We run an experiment to test whether additional behavioral concerns deter mutually beneficial trade. We test four concerns: If the risk materializes, another individual makes a windfall profit; she does so by intentionally exploiting another individual; the exploited individual may be her assigned partner; the individual that is let down is her contractual partner, and hence has voluntarily exposed herself to this risk. Behavioral effects are heterogeneous. About a quarter of participants from a standard student subject pool exhibit the hypothesized additional deterrent effect. This fraction is bigger than a third if participants interact with a random partner from somewhere in the world. [ABSTRACT FROM AUTHOR]

We explain a surprising effect of tort liability in the market for prescription drugs. Greater punitive damage risk seems to increase prescription drug utilization in states without non-economic damage caps but decrease utilization in states with such caps. We offer an explanation for this puzzle. The vertical production process for drugs involves national upstream producers (drug companies) and local downstream producers (doctors). When a single state reallocates liability from downstream to upstream producers, national drug companies see little reason to alter their nationwide output decisions, but local physicians have incentives to increase their prescriptions in that state. The net result is higher local output. We show how this dynamic can explain our puzzle by demonstrating that punitive damages shift liability upstream from doctors to drug companies, but not when non-economic damages caps limit physician malpractice liability. We provide evidence explaining when, how, and why this type of liability shifting occurs (JEL K13, I11, I18). [ABSTRACT FROM AUTHOR]

In many states, auto insurers rather than health insurers pay for a substantial fraction of the medical care following auto crashes. We examine whether payer identity affects the care received by auto injury patients. A 2003 Colorado reform shifted a large fraction of auto injury patients from coverage through auto insurers to the traditional health insurance system. Despite negligible changes in auto injury characteristics during this period, treatment supply increased following the reform. Procedure use rose by 5–10 percent and billed charges rose by 5 percent. These changes reflect an increase in resources devoted to treatment, yet do not improve mortality. [ABSTRACT FROM AUTHOR]

The Medicare Secondary Payer Act of 1980 and its subsequent amendments require that insurers and self‐insured companies report settlements, awards, and judgments that involve a Medicare beneficiary to the Centers for Medicare and Medicaid Services. The parties then may be required to compensate CMS for its conditional payments. In a simple settlement model, this makes settlement less likely. Also, the reporting delays and uncertainty regarding the size of these conditional payments are likely to further frustrate the settlement process. We provide results, using data from a large insurer, showing that, on average, implementation of the MSP reporting amendments led to a delay in the resolution of disputes involving auto accidents of about six months. [ABSTRACT FROM AUTHOR]

New York closing-statement data provide unique insight into settlement and selection. The distributions of settlements and adjudicated damages are remarkably similar, and the average settlement is very close to the average judgment. One interpretation is that selection effectsmay be small or nonexistent. Because existing litigationmodels all predict selection bias, we develop a simple, no-selection-bias model that is consistent with the data. Nevertheless, we show that the data can also be explained by generalized versions of screening, signaling, and Priest-- Klein models. [ABSTRACT FROM AUTHOR]

The selection effects in litigation data are one of the most daunting problems facing legal researchers.We develop a bounds approach to dealing with multiple levels of selection.We build on work by Helland and Yoon on the English rule's effect on litigation outcomes. The English rule prescribes that the loser of a lawsuit pays the winner's litigation costs. When we take selection due to settlement and to drops into account, the bounds analysis suggests that some conclusions in the works of Hughes and Snyder (1990 and 1995) may not be robust to the most extreme forms of selection. [ABSTRACT FROM AUTHOR]

The English rule prescribes that the loser of a lawsuit pays the winner's litigation costs. Previous research on the English rule finds that plaintiffs win more often at trial, receive higher awards, and receive larger settlements. Theory predicts that the English rule discourages settlement by raising the threshold payment necessary for settlement. In this paper, we reexamine the Florida experiment with the English rule by placing bounds on the selection effects. We find that the mean and median settlement amount increases. Collectively these findings are consistent with the predictions of the simplest models of the English rule's impact. [ABSTRACT FROM AUTHOR]

We examine the quasi-randomization of alcohol consumption created by state-level alcohol prohibition laws passed in the United States in the early part of the twentieth century. Using a large dataset of World War II enlistees, we exploit the differential timing of these laws to examine their effects on adult educational attainment, obesity, and height. We find statistically significant effects for education and obesity that do not appear to be the result of pre-existing trends. Our findings add to the growing body of economic studies that examine the long-run impacts of in utero and childhood environmental conditions. ( JEL I18, D10, N41, N42) [ABSTRACT FROM AUTHOR]

Legal cases are won or lost on the basis of statistical discrimination measures, but workers' perceptions of discriminatory behavior are important for understanding labor supply decisions. Workers who believe that they have been discriminated against are more likely to leave their employers, and workers' perceptions of discrimination likely drive formal complaints to the Equal Employment Opportunity Commission. Yet the relationship between statistical and self-assessed measures of discrimination is far from obvious. We expand on the previous literature by using data from the After the J.D. study to compare standard Blinder-Oaxaca measures of earnings discrimination to self-reported measures of client discrimination, other work-related discrimination, and harassment. Our results indicate that conventional measures of earnings discrimination are not closely linked to the racial and gender bias that new lawyers believe they have experienced on the job. Moreover, statistical earnings discrimination does not explain the disparity in self-assessed bias across gender and racial groups. [ABSTRACT FROM AUTHOR]

Single-firm event studies play an important role in both scholarship and litigation despite the general invalidity of standard inference. We use a broad cross-section of 2000–2007 CRSP data and find that the standard approach performs poorly in terms of both Type I and Type II error rates. We discuss a simple-to-use alternative, the SQ test, based on sample quantiles of the empirical distribution of pre-event fitted excess returns, which has correct asymptotic Type I error rate. Results suggest that the test will be useful in studying the impact of firm-specific events such as regulation, anti-trust rulings, and corporate or securities litigation. [ABSTRACT FROM PUBLISHER]

On November 15 and 16, 2019, several hundred scholars from across the United States and the globe gathered in Claremont, California, for the 14th Annual Conference on Empirical Legal Studies (CELS). The paper presenters, discussants, and attendees encompassed legal scholars, finance professors, economists, political scientists, psychologists, criminologists, and sociologists. As has been true of past CELS, the discussants took their roles very seriously, and authors had the opportunity to hear detailed feedback from an experienced scholar in their field. [Extracted from the article]

Product liability law reduces the costs of accidents to consumers, thus reducing their incentives to invest in safety. We estimate the impact of tort liability on a subset of consumers who have significant control over the probability of an accident: the consumers of general aviation aircraft. The General Aviation Revitalization Act of 1994 exempted manufacturers of small aircraft from product liability claims when their aircraft reached 18 years of age. We use the exemption at age 18 to estimate the impact of tort liability on accidents as well as on a wide variety of behaviors and safety investments by pilots and owners. The results are consistent with moral hazard. When an aircraft is exempted from tort liability, the probability that the aircraft will be involved in an accident declines. Direct evidence of pilots' and owners' behavior is also consistent with moral hazard. [ABSTRACT FROM AUTHOR]

The Supreme Court's trilogy of evidence cases, Daubert, Joiner, and Kumho Tire, appear to mark a significant departure in the way scientific and expert evidence is handled in federal court. By focusing on the underlying methods used to generate the experts' conclusions, Daubert has the potential to impose a more rigorous standard on experts. Given this potential, some individuals have called for states to adopt the Daubert standards to purge "junk science" from state courts. However, there is relatively little empirical support for the notion that Daubert affects the quality of expert evidence. Using a large data set of state court litigation, we examine whether state adoption of the Daubert standards has a systematic effect on the observable characteristics of experts retained in civil cases. We find very little evidence in support of a significant Daubert effect, even when we do a more detailed analysis of experts in products liability cases, an area of particular concern in the expert evidence debate. These results suggest that, at the state level at least, adoption of the Daubert standards has not led to increasing rigor in expert testimony. [ABSTRACT FROM AUTHOR]

Despite claims of a judicial funding crisis, there exists little direct evidence linking judicial budgets to court utilization. Using data on thousands of auto injuries covering a 15-year period, we measure the relationship between state-level court expenditures and the propensity of injured parties to pursue litigation. Controlling for state and plaintiff characteristics and accounting for the potential endogeneity of expenditures, we show that expenditures increase litigation access, with our preferred estimates indicating that a 10 percent budget increase increases litigation rates by 3 percent. Consistent with litigation models in which high litigation costs undermine the threat posture of plaintiffs, increases in court resources also augment payments to injured parties. We present suggestive evidence that these effects are driven by general expenditures rather than judicial salaries. [ABSTRACT FROM AUTHOR]

This study investigates the significance of confidentiality and disclosure for medical malpractice litigation. Starting in the mid-1990s, seventeen states began posting information on a doctor’s specific history of medical malpractice claims on state-run websites. The laws creating these sites altered the level of confidentiality that would accompany litigation and settlement. Taking into account the varying disclosure requirements across the states, we examine the impact of the altered levels of confidentiality on litigant behavior. We find evidence of two, non-exclusive effects of disclosure. First, we find evidence that defendants value confidentiality and are no longer willing to pay a confidentiality premium when websites disclose settlement outcomes. Second, we find evidence that website disclosure changes the composition of claims. [ABSTRACT FROM PUBLISHER]

California's Attorney General was pleased to announce that "An unintended but positive consequence of 'Three-Strikes' has been the impact on parolees leaving the state¿.The growth in the number of parolees leaving California is staggering." Law enforcement officers in other states were presumably less pleased. A displaced criminal is a benefit to California but a cost to other states. If such criminal spillovers are important, law enforcement will over-invest in policies that encourage displacement. We test whether California's three-strikes law led to significant criminal spillovers. [ABSTRACT FROM AUTHOR]

The existing literature does not agree on the optimal jury size. We demonstrate that the probability of type I and type II errors is not sensitive to the number of jurors under the following three conditions: jurors receive independent signals about a defendant’s guilt during the evidence stage of the trial; the jurors truthfully reveal their signals before deliberations begin through their votes on the first ballot; and the jury’s deliberation follows a random walk. Since the opportunity cost of jury service is positive, this implies an optimal jury size of one. [ABSTRACT FROM AUTHOR]

We take advantage of the fortuitous randomization of trial outcome to provide a novel strategy to identify the deterrent effect exclusive of incapacitation. We compare the post-sentencing criminal activity of criminals who were convicted of a strikeable offense with those who were tried for a strikeable offense but convicted of a nonstrikeable offense. As a robustness check, we also make this comparison in states without three-strikes laws. The identification strategy lets us estimate the deterrent effect nonparametrically using data solely from the three-strikes era. We find that California's three-strike legislation significantly reduces felony arrest rates among the class of criminals with two strikes by 17-20 percent. [ABSTRACT FROM AUTHOR]

Judges facing exogenous constraints on their pecuniary income have an incentive to reduce their workload to increase their private welfare. In the face of an increase in caseload, this incentive will induce judges to attempt to terminate some cases more rapidly. In class action cases, failing to grant an attorney fee request will delay termination. This conflict is likely to lead judges to authorize higher fees as court congestion increases. Using two data sets of class action settlements, we show that attorney fees are significantly and positively related to the congestion level of the court hearing the case. [ABSTRACT FROM AUTHOR]

If private securities class actions alleging fraudulent behavior by officers or directors of a company are meritorious, directors and officers should pay a reputational penalty when they sit on a board of a company whose officers and directors are accused of fraud. I find little evidence of a negative effect associated with allegations of fraud. Using various definitions of board positions as a proxy for the reputation of directors who are accused of fraud, I find that the net number of board positions is consistently increased. Only in shareholder class actions in the top quartile of settlements or in which the Securities and Exchange Commission has initiated a case do directors appear to suffer a reputational penalty when a board they serve on is accused of fraud. The results call into question the merits of private securities class actions. [ABSTRACT FROM AUTHOR]

The corporate governance literature is rich with empirical tests of the relation between board composition and firm performance. We consider the effect of board composition on a different measure of performance, the probability a firm will be sued by shareholders. We find firms that are defendants in securities litigation have higher proportions of insiders and of gray directors and have smaller boards than a matched group of firms that are not sued, even when controlling for firm value and industry. The results suggest that boards with higher proportions of outside directors do a better job of monitoring management. [ABSTRACT FROM AUTHOR]

This article discusses data available for researchers interested in the U.S. civil justice system and illustrates the uses of the various datasets with some interesting findings. One fundamental question is whether tort awards are rising. The roots of the tort crisis have traditionally been traced to the 1960s and 1970s, when tort law shifted from a standard where damages were only owed after negligence was proven to strict liability, where no proof of negligence was needed. There are three especially useful sources for cross-sectional research on tort cases: the Federal data set, Jury Verdict Research, and the Civil Justice Survey of State Courts, 1992, 1996, 2001. A limitation of the Civil Justice Survey data is that because it was constructed to examine large urban counties, it covers only 21-22 states. Most of the data sets on specific types of civil action deal with medical malpractice, although limited data are also available on auto accidents, product liability and certain other specific areas. A second useful data set on medical malpractice arose out of the Health Care Quality Improvement Act of 1986. The vast majority of the payment amounts in the National Practitioner Data Bank (NPDB) are settlements, a great improvement over data sets that contain only trials. For example, NPDB data showed that medical malpractice payments per doctor vary widely by state, ranging from a low of $5,174 in Wisconsin to $30,841 in Pennsylvania.

On the day of their trial, a substantial number of felony defendants fail to appear. Public police have the primary responsibility for pursuing and rearresting defendants who were released on their own recognizance or on cash or government bail. Defendants who made bail by borrowing from a bond dealer, however, must worry about an entirely different pursuer. When a defendant who has borrowed money skips trial, the bond dealer forfeits the bond unless the fugitive is soon returned. As a result, bond dealers have an incentive to monitor their charges and ensure that they do not skip. When a defendant does skip, bond dealers hire bounty hunters to return the defendants to custody. We compare the effectiveness of these two different systems by examining failure-to-appear rates, fugitive rates, and capture rates of felony defendants who fall under the various systems. We apply propensity score and matching techniques. [ABSTRACT FROM AUTHOR]

It is generally agreed that boards are endogenously determined institutions that serve both oversight and advisory roles in a firm. While the oversight role of boards has been extensively studied, relatively few studies have examined the advisory role of corporate boards. We examine the participation of political directors on the boards of natural gas companies between 1930 and 1998. We focus on the expansion of federal regulation of the natural gas industry in 1938 and 1954 and subsequent partial deregulation in 1986. Using data sets covering the periods from 1930 to 1990 and 1978 to 1998, we test whether regulation and deregulation altered the composition of companies' boards as the firms' environment changed. In particular, did regulation cause an increase and deregulation a decrease in the number of political directors on corporate boards? We find evidence that the number of political directors increases as firms shift from market to political competition. Specifically, the regulation of natural gas is associated with an increase in the number of political directors and deregulation is associated with a decrease in the number of political directors on boards. [ABSTRACT FROM AUTHOR]

We reexamine Mustard and Lott's controversial study on the effect of ‘shall-issue’ gun laws on crime using an empirical standard error function randomly generated from ‘placebo’ laws. We find that the effect of shall-issue laws on crime is much less well-estimated than the Mustard and Lott (1997) and Lott (2000) results suggest. We also find, however, that the cross equation restrictions implied by the Lott-Mustard theory are supported. A boomlet has occurred in recent years in the use of quasi-natural experiments to answer important questions of public policy. The intuitive power of this approach, however, has sometimes diverted attention from the statistical assumptions that must be made, particularly regarding standard errors. Failing to take into account serial correlation and grouped data can dramatically reduce standard errors suggesting greater certainty in effects than is actually the case. We find that the placebo law technique (Bertrand, Duo and Mullainathan 2002) is a useful addition to the econometrician's toolkit. [ABSTRACT FROM AUTHOR]

Although flat fees are common for divorces, wills and trusts, and probate, lawyers in personal injury cases generally are paid by contingency fee or at an hourly rate. Arguments have been made that contingency fees increase low-quality, "frivolous" litigation but counterarguments suggest that contingency fees actually limit such litigation and instead it is hourly fees that increase low-quality litigation. Using a difference in differences test and data on a cross section of states in 1992, we test whether legal quality is lower under contingency or hourly fees. We also examine medical malpractice claims in Florida using a time series centered around a law change that limited contingency fees. We also examine the impact of fee arrangements on the expected time to settlement. We find that hourly fees encourage the filing of low-quality suits and increase the time to settlement (i.e., contingency fees increase legal quality and decrease the time to settlement). [ABSTRACT FROM AUTHOR]

With the dramatic increase in federal and state environmental regulation in the 1970s, the cost of compliance also rose. While compliance costs have been discussed elsewhere, the implications for the competitiveness of markets have been evaluated using case studies of specific law changes and specific industries. This study examines the role of environmental regulations as barriers to entry using a panel of industries over ten years. The results indicate that environmental costs increase the value of q for the top quartile of firms, which suggests that compliance cost constitutes a barrier to entry and creates rents for larger existing firms. [ABSTRACT FROM AUTHOR]

Investigates the impact of the race and income of the jury pool on trial awards in the United States. Overview of poverty torts and jury awards; Mean tort awards by poverty rates; Increase in the average tort award by poverty rate; Density functions for counties with low. medium and high poverty rates; Civil juries and the politics of reform; Determinants and importance of punitive awards.

We argue that partisan elected judges have an incentive to redistribute wealth from out-of-state defendants (nonvoters) to instate plaintiffs (voters). We first teat the hypothesis by using cross-state data. We find a significant partisan effect after controlling for differences in injuries, state incomes, poverty levels, selection effects, and other factors. One difference that appears difficult to control for is that each state has its own ton law. In cases involving citizens of different states, federal judges decide disputes by using state law. Using these diversity-of-citizenship cases, we conclude that differences in awards are caused by differences in electoral systems, not by differences in state law. [ABSTRACT FROM AUTHOR]

The Coase theorem presents two criteria for evaluating regulation: regulations efficiency relative to private solutions and how the regulation affects the distribution of wealth. Previous studies of the impact of municipal zoning have focused on Coase's first criteria: whether zoning raises land values overall. This study estimates the transfer of wealth between owners of existing homes that results from the creation of a municipal zoning ordinance. We find that property best suited to residential use gains in value while property with relatively higher potential as commercial property experiences a decline in the value. We find that zoning is distributive. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of the EPA's litigation strategy between 1977 and 1996 focusing on the tenure of Ann Gorsuch. Two hypotheses about this period are tested: (1) that changes in the EPA's litigation strategy were in fact an effort to reduce the expected penalty for violating environmental laws or (2) that the changes made in litigation strategy were consistent with efforts to reduce transaction cost. Contrary to previous research, I find no conclusive evidence of an overall shift toward business interests in EPA prosecutions. There is, however, clear evidence of shifts in the EPA's litigation strategy across administrations. [ABSTRACT FROM AUTHOR]

We investigate the forces that explain why trial awards differ across the United States. In 23 states judges are elected and in 10 they are elected via partisan elections. Elections have two important effects. First, defendants are often out-of-state nonvoters while plaintiffs are typically in-state voters. We predict, therefore, that elected judges will redistribute wealth from out-of-state businesses to in-state plaintiffs. Second, the realities of campaign financing require judges to seek and accept campaign funding from trial lawyers, who uniformly are interested in larger awards. We hypothesize that these two forces cause awards to be larger in states where the judiciary is elected rather than appointed. We also hypothesize that the demand for redistribution will increase as poverty increases and, thus, that awards will be larger in states with greater poverty. Using a sample of over 7,000 cases across 48 of the 50 states, we find significant evidence in support of these hypotheses. [ABSTRACT FROM AUTHOR]

Recent growth in Medicaid spending has forced states to look for ways to slow the program's rate of growth. Under the Medicaid program's rules, state governments must submit a waiver to the federal government in order to implement a cost-saving program. The time required to process a waiver varies from 14 days to over three years. This study examines the determinants of the time it takes to process a waiver and the number of revisions required before final approval. The results indicate that an increase in the tenure of the state's delegation to the House oversight committee reduces the time to approval for Freedom of Choice waivers. However, more liberal committee members appear to delay waivers. The results complement the existing literature on the pork barrel by showing that seniority on a committee is an important determinant--not only of monetary benefits but also of nonmonetary benefits. (JEL H51, I 18) [ABSTRACT FROM AUTHOR]

Targeting is the practice of inspecting firms most likely to violate a regulation. This paper provides empirical evidence on the role of targeting in regulatory compliance. I propose that self-reporting by a firm is used to demonstrate that firms are willing to cooperate. The results indicate that there is a one-quarter penalty period following a violation. Inspections are also determined by the economic situation of the surrounding community, demonstrating that targeting opens the door to interestgroup influence. Inspections that detect violations encourage selfreporting, showing that firms demonstrate their desire to cooperate with regulators by disclosing violations. [ABSTRACT FROM AUTHOR]

Examines the consequences of the delegation of regulatory authority to local officials. Evaluation of three hypotheses of the role delegation plays in the implementation of regulatory policy; Allowance of local interests to alter national standards; Examination of environmental protection policies; Violation and effluent discharge variables.

Reports about runaway jury awards have become so common that it is widely accepted that the U.S. jury system needs to be 'fixed'. Proposals to limit the right to a jury trial and increase judicial discretion over awards implicitly assume that judges decide cases differently than juries. We show that there are large differences in mean awards and win rates across juries and judges. But if the types of cases coming before juries are different from those coming before judges, mean award and win rates may differ even if judges and juries would make the same decisions when faced with the same cases. We find that most of the difference in judge and jury mean awards can be explained by differences in the sample of cases coming before judges and juries. On some dimensions, however, there remain robust and suggestive differences between judges and juries. [ABSTRACT FROM AUTHOR]