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Managerial Judges: An Economic Analysis of the Judicial Management of Legal Discovery

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  • Joel L. Schrag

Abstract

I analyze the effect of procedural rules that permit judges to limit pretrial discovery. In the presence of asymmetric information, a litigant may forgo settlement before discovery if his opponent interprets a serious offer as a sign that her discovery is likely to uncover useful evidence, leading her to invest more in discovery. Furthermore, a litigant may forgo settlement in order to strengthen his or her threat of future discovery. I show that by limiting pretrial discovery, the judge can simultaneously increase the probability of early settlement and reduce expected litigation costs, without reducing potential injurers' incentives to take care.

Suggested Citation

  • Joel L. Schrag, 1999. "Managerial Judges: An Economic Analysis of the Judicial Management of Legal Discovery," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 305-323, Summer.
    • Handle: RePEc:rje:randje:v:30:y:1999:i:summer:p:305-323
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    Cited by:

    1. Winand Emons & Claude Fluet, 2020. "Adversarial versus Inquisitorial Testimony," Revue économique, Presses de Sciences-Po, vol. 71(3), pages 429-457.
    2. Dominique Demougin & Claude Fluet, 2008. "Rules of proof, courts, and incentives," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 20-40, March.
    3. Bar, Talia & Kalinowski, Jesse, 2019. "Patent validity and the timing of settlements," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    4. Baumann, Florian & Friehe, Tim, 2014. "On discovery, restricting lawyers, and the settlement rate," DICE Discussion Papers 155, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    5. Andrew F. Daughety & Reinganum F. Reinganum, 2014. "Settlement and Trial: Selected Analyses of the Bargaining Environment," Vanderbilt University Department of Economics Working Papers 14-00005, Vanderbilt University Department of Economics.
    6. Koçkesen, Levent & Usman, Murat, 2012. "Litigation and settlement under judicial agency," International Review of Law and Economics, Elsevier, vol. 32(3), pages 300-308.
    7. Fluet, Claude, 2020. "L'économie de la preuve judiciaire," L'Actualité Economique, Société Canadienne de Science Economique, vol. 96(4), pages 585-620, Décembre.
    8. Amy Farmer & Paul Pecorino, 2013. "Discovery and Disclosure with Asymmetric Information and Endogenous Expenditure at Trial," The Journal of Legal Studies, University of Chicago Press, vol. 42(1), pages 223-247.
    9. Amy Farmer & Paul Pecorino, 2005. "Civil Litigation with Mandatory Discovery and Voluntary Transmission of Private Information," The Journal of Legal Studies, University of Chicago Press, vol. 34(1), pages 137-159, January.
    10. Philippe Choné & Laurent Linnemer, 2008. "Optimal Litigation Strategies with Signaling and Screening," Working Papers 2008-16, Center for Research in Economics and Statistics.
    11. Choné, Philippe & Linnemer, Laurent, 2010. "Optimal litigation strategies with observable case preparation," Games and Economic Behavior, Elsevier, vol. 70(2), pages 271-288, November.
    12. Ayouni, Mehdi & Friehe, Tim & Gabuthy, Yannick, 2023. "Asking for information prior to settlement or trial when misrepresentation of evidence is possible," Mathematical Social Sciences, Elsevier, vol. 121(C), pages 26-35.
    13. Steven Shavell, 2003. "Economic Analysis of Litigation and the Legal Process," NBER Working Papers 9697, National Bureau of Economic Research, Inc.
    14. Warren F. Schwartz & Abraham L. Wickelgren, 2009. "Credible discovery, settlement, and negative expected value suits," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 636-657, December.

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