Shifting Plaintiffs' Fees Versus Increasing Damage Awards
12 Pages Posted: 24 Jul 2007 Last revised: 27 Aug 2010
Date Written: January 1993
Shifting successful plaintiffs' fees to defendants and increasing damage awards are alternative ways to achieve similar results: increasing plaintiffs' incentives to sue and raising defendants' expected payments. This paper shows that relying on higher damage awards is more efficient than shifting plaintiffs' fees. The reason is that fee-shifting is, perversely, more valuable for plaintiffs with higher litigation costs. Thus, it is possible to substitute higher damage awards for fee-shifting in a manner that leaves deterrence unaffected while eliminating the suits of plaintiffs with the highest litigation costs.
Suggested Citation: Suggested Citation