Litigant Resources and the Evolution of Legal Precedent
University of Toronto - Faculty of Law
September 8, 2009
This paper develops an informational model of litigation in which court decisions are a function of legal representation. In this model, resource constraints determine how much parties expend on legal representation. The allocation of resources across parties influences court decisions in two important ways. First, in individual cases the party with greater resources can produce more information, thereby increasing her probability of a favorable decision by the court. Second, as the cost of litigation increases relative to parties’ resources, courts have less information upon which to make decisions. We model the evolution of precedent as a dynamic externality under stare decisis. These factors determine the evolution of legal precedent. In areas of law in which parties on a particular side have persistently greater resources, the law is likely to evolve in a direction that favors that side. The extent of information provided determines the variability of outcomes.
Number of Pages in PDF File: 30
Keywords: Litigation, Legal Precedent, Litigation Costs
JEL Classification: C15, C67, C73, K41, D31working papers series
Date posted: September 21, 2009 ; Last revised: January 16, 2012
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