Institutional Causes of Delay in the Settlement of Legal Disputes

in the Journal of Law, Economics and Organization, Vol. 12, No. 2 (1996).

Posted: 9 May 1997

See all articles by Daniel P. Kessler

Daniel P. Kessler

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Abstract

Social costs created by delay in the resolution of legal disputes have motivated an extensive theoretical literature studying the causes of delay. However, much less work has investigated a related, more policy-relevant question: how do legal institutions empirically affect delay in settlement? Based on analysis of the timing of settlement of automobile bodily injury insurance claims, I present two major findings on this topic. First, delay in trial courts increases delay in settlement. Second, state tort laws designed to reduce delay in settlement do not work as intended. Reforms imposing prejudgment interest, which were designed to reduce delay, actually increase delay in settlement, controlling for other state-level institutional factors and the characteristics of claims.

Suggested Citation

Kessler, Daniel Philip, Institutional Causes of Delay in the Settlement of Legal Disputes. in the Journal of Law, Economics and Organization, Vol. 12, No. 2 (1996).. Available at SSRN: https://ssrn.com/abstract=10438

Daniel Philip Kessler (Contact Author)

Stanford Graduate School of Business ( email )

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650-723-4492 (Phone)
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National Bureau of Economic Research (NBER)

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