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Financially-Constrained Lawyers

Author

Listed:
  • Claudia M. Landeo

    (University of Alberta)

  • Maxim Nikitin

    (International College of Economics and Finance, NRU HSE)

Abstract

Financial constraints reduce the lawyers' ability to file lawsuits and bring cases to trial. As a result, access to justice for true victims, bargaining impasse, and care-taking incentives for potential injurers might be affected. We present the first cradle-to-grave model of legal disputes involving financially-constrained lawyers, third-party lawyer lending, and asymmetric information. In equilibrium, access to justice is denied to some true victims and bargaining impasse occurs. We demonstrate that policies that relax lawyers' financial constraints might be welfare reducing if the positive impact on access to justice is weak and the potential injurers are overdeterred.

Suggested Citation

  • Claudia M. Landeo & Maxim Nikitin, 2015. "Financially-Constrained Lawyers," Working Papers 52, Peruvian Economic Association.
    • Handle: RePEc:apc:wpaper:2015-052
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    References listed on IDEAS

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    More about this item

    Keywords

    Access to Justice; Social Welfare; Lawsuits; Litigation; Deterrence; Third-Party Litigation Funding; Third-Party Lawyer Lending Industry; Bargaining; Asymmetric Information;
    All these keywords.

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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