The Economics of Courts and Litigation

The Economics of Courts and Litigation

New Horizons in Law and Economics series

Francisco Cabrillo and Sean Fitzpatrick

Dissatisfaction with the working of courts is ubiquitous. Legal inertia and maladministration are the norm in many countries and have significant social and economic repercussions. No longer a theme relegated to the peripheries of economic analysis, the administration of justice is now recognised by most economists as being of fundamental importance for economic development, a factor increasingly being acknowledged by policymakers at all levels. The departure point for this book is the authors’ belief in the need for a systematic analysis of the incentive structures facing key players in the courts and litigation process. They focus not only on structures pertaining to the common law tradition, but offer analysis of issues not normally found in the North-American literature, such as the Latin notary and the selection and values of judges in civil law systems. They further propose an ample list of considerations for a reform agenda.

Chapter 7: Conclusion: Considerations for a Reform Agenda

Francisco Cabrillo and Sean Fitzpatrick


1. STRATEGIES FOR REFORM Poorly functioning courts run contrary to both legal principles of justice and economic principles of social welfare maximization. Courts and the judicial framework are not secondary or complementary to political economy, but play a fundamental role in the well-being of a market economy. Failure to guarantee and enforce legal rights and norms can have disastrous economic and social consequences, a factor now well recognized by economic, legal and political scholars, leading to national and international efforts to further court capacity. Judicial reform has become a popular theme in many countries; as the informed reader will know, the issue is of much greater importance than merely the courts, touching on features that extend to broader state reform. Whilst a state of general dissatisfaction with the courts is commonplace in many countries, it is not uncommon for populist opinions to shape the debate surrounding causes and recommendations. The term ‘litigation crisis’ seems to represent the popular ills that have beset many judiciaries,1 but the situation is far more complex and nuanced than first suggested. In some countries, such as the United States, politicians, celebrities, comedians, media, novelists and mass culture have accepted the idea of litigiousness and the greed of their citizens and lawyers.2 Similar observations – though generally not as widespread – can be found in other countries.3 Shorthand terminology, such as ‘litigation crisis’ or ‘litigation explosion’, is not helpful for understanding the general incentive crisis facing many courts and their users. Caseloads have constantly fluctuated throughout history....

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