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Full-Text Articles in Law
A Price Theory Of Legal Bargaining: An Inquiry Into The Selection Of Settlement And Litigation Under Uncertainty, Robert J. Rhee
A Price Theory Of Legal Bargaining: An Inquiry Into The Selection Of Settlement And Litigation Under Uncertainty, Robert J. Rhee
Robert Rhee
Conventional wisdom says that economic surplus is created when the cost of litigation is foregone in favor of settlement, a theory flowing from the Coase Theorem. The cost-benefit analysis weighs settlement against the expected value of litigation net of transaction cost. This calculus yields the normative proposition that settlement is a superior form of dispute resolution and so most trials are considered errors. While simple in concept, the prevailing economic model is flawed. This article is a theoretical inquiry into the selection criteria of settlement and trial. It applies principles of financial economics to construct a pricing theory of legal …
Tort Arbitrage, Robert J. Rhee
Tort Arbitrage, Robert J. Rhee
Robert Rhee
The economic models of bargaining and tort law have not been integrated into a coherent theory that reflects the operational realities of the dispute resolution process and the negligence standard. Applying a theory of bargaining based on asset pricing principles of financial economics, this Article argues that there is systematic devaluation of tort claims in the civil litigation system. This results because in essence the parties value different tort transactions, even when they are tied together in a common dispute and view the facts and laws similarly. For the party that can mitigate the risk exposure, the discount to value …
The Effect Of Risk On Legal Valuation, Robert J. Rhee
The Effect Of Risk On Legal Valuation, Robert J. Rhee
Robert Rhee
From a financial economic perspective, the governing condition of a meritorious civil action is the uncertainty of outcome. Expectation and outcome deviate, and the spread is the measure of uncertainty (or variance). During litigation each party has an option to settle or select trial. The decision standard can be seen as an option strike price and a finding of liability as an “in-the-money” call option. This apparent optionality suggests the application of an option pricing model to legal valuation, and a small but growing body of scholarship endorses this concept. However, option theory is not the only concept. Under an …
A Price Theory Of Legal Bargaining: An Inquiry Into The Selection Of Settlement And Litigation Under Uncertainty, Robert Rhee
A Price Theory Of Legal Bargaining: An Inquiry Into The Selection Of Settlement And Litigation Under Uncertainty, Robert Rhee
Robert Rhee
Conventional wisdom says that economic surplus is created when the cost of litigation is foregone in favor of settlement, a theory flowing from the Coase Theorem. The cost-benefit analysis weighs settlement against the expected value of litigation net of transaction cost. This calculus yields the normative proposition that settlement is a superior form of dispute resolution and so most trials are considered errors. While simple in concept, the prevailing economic model is flawed. This article is a theoretical inquiry into the selection criteria of settlement and trial. It applies principles of financial economics to construct a pricing theory of legal …
Toward Procedural Optionality: Private Ordering Of Public Adjudication, Robert J. Rhee
Toward Procedural Optionality: Private Ordering Of Public Adjudication, Robert J. Rhee
Robert Rhee
Private resolution and public adjudication of disputes are commonly seen as discrete, antipodal processes. There is a generally held understanding of the dispute resolution processes. The essence of private dispute resolution is that the parties can arrange the disputed rights and entitlements per agreement and without judicial intervention. In public adjudication, however, the sovereign mandates the substantive and procedural laws to be applied, many of which cannot be changed by either a party’s unilateral decision or both parties’ mutual consent. Neither approach allows a party an option to unilaterally alter important aspects of the process, such as the standards of …