Refinancing Civil Litigation

Abstract

This article argues that most of the important phenomena of modern litigation are best understood as results of changes in the financing and capitalization of the bar. During the twentieth century civil litigation has moved its focus from trial to discovery and settlement. Two elements coalesced to transform litigation practice: changed discovery rules and the spread of liability insurance. Much of that transformation involved changes in financial arrangements, both among defendants, with the spread of liability insurance, and among lawyers, with growth in firm size, and better diversification and capitalization of the plaintiffs' bar, and regulatory changes that enabled better marketing of firms' services. This reconfiguration was both necessary -- because modern discovery required substantial investment -- and profitable -- because good discovery yielded improved settlements. As a consequence of these changes, lawyers at the end of the twentieth century offered clients improved, though more expensive, litigation services in a more competitive market with resources more evenly balanced between plaintiffs and defendants than at the start of the century.