Costly Pretrial Agreements

Luca Anderlini, Leonardo Felli and Giovanni Immordino

The Journal of Legal Studies, 2019, vol. 48, issue 1, 159 - 188

Abstract: Settling a legal dispute involves some costs that the parties have to incur ex ante for the pretrial negotiation and possible agreement to become feasible. Even in a full-information world, if the distribution of these costs is sufficiently mismatched with the distribution of the parties’ bargaining powers, a pretrial agreement may never be reached even though litigation is overall wasteful. Our results shed light on two key issues. First, a plaintiff may initiate a lawsuit even though the parties fully anticipate that it will be settled out of court. Second, the likelihood that a given lawsuit goes to trial is unaffected by how trial costs are distributed among the litigants. The choice of fee-shifting rule can affect only whether the plaintiff files a lawsuit in the first place. It does not affect whether it is settled before trial or litigated.

Date: 2019
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Costly pretrial agreements (2019)
Working Paper: Costly Pretrial Agreements (2018)
Working Paper: Costly Pre-Trial Agreements (2018)
Working Paper: Costly Pretrial Agreements (2016)
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