حجم شکایت های قانونی فدرال و اقتصاد کلان
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|17825||2004||17 صفحه PDF||سفارش دهید||7137 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : International Review of Law and Economics, Volume 24, Issue 2, June 2004, Pages 191–207
In this paper we examine the extent to which fluctuations in a number of macroeconomic variables impact on the volume of federal litigation cases. In particular, the impact of aggregate U.S. GDP, consumption, inflation, unemployment, and interest rates on the volume of antitrust, bankruptcy, contract, personal injury, and product liability cases between the years 1960 and 2000 is examined using Granger causal analysis and vector autoregression models [see e.g., Granger, C. W. J. (1988). Some recent developments in a concept of causality. Journal of Econometrics, 39, 199–211]. Our empirical findings suggest that there are several linkages between macroeconomic variables and the volume of litigation cases, in broad agreement with the findings of Siegelman and Donohue [1995; The selection of employment discrimination disputes for litigation: using business cycle effects to test the Priest–Klein hypothesis. Journal of Legal Studies, 24, 427–462], who find that unemployment is an important determinant of the (number and) quality of employment cases filed. Most noteworthy, we find that there is a causal linkage from output, consumption and inflation to the total volume of federal litigation, so that predictions of future litigation volume can be improved by using information contained in current macroeconomic aggregates. Causation in the other direction (i.e. from the volume of litigation to macroeconomic activity) is not found in the data, however. Based on impulse response analysis, it is seen that shocks to income, consumption and inflation immediately lead to an increase in the volume of litigation, with shocks to inflation having the largest impact, and shocks to consumption having a rather moderate impact. In addition, the long run impact that shocks to each of these variables has on the volume of litigation is positive, regardless of whether the VAR or VEC model is used. Here, again, the impact of consumption is quite moderate, though. Additionally, similar results arise when examining the relation between various individual measures of federal litigation volume and the macroeconomy. Thus, the volume of federal litigation does not appear to be immune to the business cycle, a finding which is in broad agreement with the findings of Siegelman and Donohue.
Some attorneys are of the belief that their market is relatively immune from the volatility of business cycles. The recent front page headline from the New Jersey Law Journal summarizes this view: “However Hard the Market Falls, Soft Landing Seen for IP Lawyers Also likely to thrive in sluggish times: employment, bankruptcy, and practice areas relatively immune to the business cycle” 1 The litigation business consists primarily of attorneys who, in turn, generate a demand for the services of a range of other professionals. These range from real estate companies who lease space to attorneys, to professionals such as support staff, outside experts, and other “litigation support professionals and their employees, as well as other workers who provide services directly to the court system.” National Economic Research Associates, for instance, conducts a “legal leading indicators” survey to forecast spending by corporations on outside legal counsel over the coming year. One of the purposes of this survey is to determine whether current economic conditions are expected to affect the litigation business. Given that firms are willing to pay for this information, forecasts of the volume of litigation must play an important role when decisions are made. 2 For some types of lawsuits, such as bankruptcy litigation, one would expect there to be a significant relationship between slowdowns in the economy and the volume of bankruptcy lawsuits. However, for other types of lawsuits considered in this study, such as contract cases, antitrust lawsuits and various types of tort litigation, there is no obvious relationship. For example, are individuals more likely to pursue a personal injury lawsuit in better or poorer economic times? Litigation is a costly endeavor, and individual plaintiffs and their attorneys, who may be financing the expenses of the lawsuit and are paid through contingency arrangements, would presumably be influenced by economic conditions. Contingency fee arrangements further cloud the picture. Attorneys may be funding current and future lawsuits from the proceeds of prior lawsuits. However, cases may not conclude in a manner that relates to the economy. There is a significant lag between when a lawsuit is filed and when it reaches an end in the form of one of several potential outcomes: settlement, plaintiff dropping the case, dismissal, or trial. In the case of commercial litigation, will declining demand and cash flows make companies more reluctant to engage in this expensive activity? Are the reasons for commercial lawsuits somehow linked to the performance of the economy? For example, will intellectual property lawsuits more likely occur in an up or down economy? Will a rising economy create more innovations and more opportunities for parties to file lawsuits? On the other hand, does a weak economy force firms to seek opportunities within the legal system to replace diminished opportunities in the marketplace? Clearly, there are numerous questions one may ask with regard to the impact of macroeconomic and business conditions on the volume of litigation. Interestingly, with the exception of Donohue and Siegelman (1993) and Siegelman and Donohue (1995), little empirical research into the above questions has been undertaken. In their empirical study, Siegelman and Donohue (1995) focus on a variety of questions, including testing the Priest–Klein model of litigation. Specifically, they test the relationship between economic fluctuations and the number of employment lawsuits filed. Their results show an inverse relationship between economic performance and the number of employment cases filed. They additionally show that recessions tend to generate lower quality cases, which the Priest and Klein (1984) model suggests would settle more quickly. Our study differs from the Siegelman and Donohue (1995) study in several respects. Most fundamentally, we focus on a broad variety of cases, including different types of personal and corporate litigation. In addition, our data set covers four decades while the Siegelman and Donohue analysis uses quarterly data for the time period 1977:2–1988:3. In a sense, our work can we viewed as an extension and update of the analysis conducted by Siegelman and Donohue, as we consider a longer historical period, include other economic variables, and apply a number of different econometric tools. (However, as noted earlier, Siegelman and Donohue consider other questions such as factors that determine settlement.) In summary, our study focuses exclusively on modeling the incidence of lawsuits across different types of litigation as a function of changing macroeconomic conditions; as reflected in fluctuations in GDP, consumption, unemployment, inflation, and the term structure of interest rates. While the primary focus of our study is the impact of macroeconomic variables on the volume of litigation, we also study the impact of the volume of litigation on the macroeconomy. One argument is that litigation is costly, causing higher production costs and therefore higher prices and lower output. On the other hand, litigation may be viewed as a tool for eliminating distortions, and as such will not have negative effects on the economy (see e.g. Shapiro, 1991). Successful antitrust suits will reduce monopoly power, leading to higher output and lower prices. Further, with imperfect information, there may be economic benefits to firms that produce unsafe products, and changes in the legal system may allow individuals to recover the damages resulting from use of these products. From this perspective, there is no reason why changes in the volume of litigation should have a systematic effect on macroeconomic variables. Based on the application of a number of empirical time series tools, including Granger causality tests and impulse response function analysis (constructed from fitted vector autoregression models), we find evidence that economic fluctuations do indeed appear to have an impact on the volume of litigation. Most noteworthy, we find that there is a causal linkage from output, consumption and inflation to the total volume of litigation, suggesting that predictions of the future volume of litigation can be improved by using information contained in these variables. Causation from the volume of litigation to macroeconomic activity is not found in the data, however. Based on impulse response analysis, it is seen that shocks to income, consumption and inflation immediately lead to an increase in the volume of litigation, with shocks to inflation having the largest impact, and shocks to consumption having a rather moderate impact. In addition, the long run impact that shocks to each of these variables has on the volume of litigation is positive, regardless of whether the VAR or VEC model is used. Here, again, the impact of consumption is quite moderate, though. Additionally, similar results arise when examining the relation between various individual measures of litigation volume and the macroeconomy. Thus, litigation volume does not appear to be immune to the business cycle, a finding which is in broad agreement with the findings of Siegelman and Donohue. The rest of the paper is organized as follows. In Section 2, the data used in our study are discussed. Section 3 contains a summary of the results based on our empirical investigation of the data. Finally, Section 4 concludes.
نتیجه گیری انگلیسی
We have carried out an empirical analysis of the impact of macroeconomic activity on the volume of federal litigation in the U.S. economy. Our findings suggest a variety of strong linkages among the variables. Most noteworthy, we find that there is a causal linkage from output, consumption and inflation to the total volume of litigation, so that predictions of future litigation volume can be improved by making use of information contained in macroeconomic aggregates. Causation from the volume of litigation to macroeconomic activity is not found in the data, however.