Can Markets Stimulate Rights? On the Alienability of Legal Claims
Posted: 5 Jun 2017
Date Written: June 27, 2015
The alienability of legal claims holds the promise of increasing access to justice and fostering development of law. I develop a principal-agent framework where litigation funders provide expertise in reducing uncertainty in agents’ disutility of production. The model leads to the counterintuitive prediction that litigation funders prefer cases with novel issues, and social surplus is positively correlated with legal uncertainty. Consistent with the model, court backlog, court expenditures, and a slowing in average time to completion are associated with third-party funding; cases with third-party funding receive more citations and are reversed less often than comparable cases without such arrangements.
Keywords: Litigation Rights, Legal Services Market
JEL Classification: K10, K40, K41
Suggested Citation: Suggested Citation