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

Paolo Buonanno and Matteo Galizzi

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: 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.

Keywords: lawyers; litigation rates; credence goods (search for similar items in EconPapers)
JEL-codes: H41 J44 K41 (search for similar items in EconPapers)
Date: 2014-11-06
New Economics Papers: this item is included in nep-eur and nep-law
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Citations: View citations in EconPapers (9)

Published in Review of Law and Economics, 6, November, 2014, 10(3), pp. 285-322. ISSN: 1555-5879

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Journal Article: Advocatus, et non Latro? Testing the Excess of Litigation in the Italian Courts of Justice (2014)
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