Offer-of-Judgment Rules and Civil Litigation: An Empirical Study of Automobile Insurance Litigation in the East
University of Toronto - Faculty of Law
University of Pennsylvania Law School
Vanderbilt Law Review, Vol. 59, No. 1, pp. 155-196, 2006
Legal scholars have long debated the efficacy of offer-of-judgment rules in promoting the resolution of civil disputes. Unfortunately, measuring the rules' effect in actual litigation has proven difficult because federal and most state courts adopted a version that has long been in place and is generally regarded as toothless and inconsequential. This Article overcomes this measurement obstacle by studying the recent experience of New Jersey, which in 1994 allowed bilateral pre-trial offers with uncapped attorneys' fees as a cost-shifting measure. Using individual-level data from a large national insurer, we analyze insurance-based suits filed in New Jersey and neighboring states between 1992 and 1997. We find that in the aftermath of the rule revision damage awards did not significantly change, but litigants took systematically less time to resolve their disputes and markedly lowered their attorneys' fees for the insurer. These findings suggest that offer-of-judgment rules, if properly designed, can provide an effective and arguably social welfare-enhancing mechanism for resolving civil disputes.
Number of Pages in PDF File: 42Accepted Paper Series
Date posted: June 28, 2013
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