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Review of Law & Economics

Editor-in-Chief: Parisi, Francesco / Engel, Christoph

Ed. by Cooter, Robert D. / Gómez Pomar, Fernando / Kornhauser, Lewis A. / Parchomovsky, Gideon / Franzoni, Luigi

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CiteScore 2017: 0.30

SCImago Journal Rank (SJR) 2017: 0.195
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1555-5879
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Volume 10, Issue 3

Issues

Advocatus, et non Latro? Testing the Excess of Litigation in the Italian Courts of Justice

Paolo Buonanno / Matteo M. Galizzi
  • Department of Social Policy, London School of Economics, Cowdray House, Houghton Street, London, UK
  • School of Law, University of Brescia, Via San Faustino 41, Brescia, Italy
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Published Online: 2014-11-06 | DOI: https://doi.org/10.1515/rle-2014-0022

Abstract

We explore the causality relationship between litigation rates and the number of lawyers, drawing on an original panel dataset for the 169 Italian first-instance courts of justice between 2000 and 2007. In this time period, both the number of lawyers and the civil litigation rate sharply increased, and a mandatory minimum fee was in place for lawyers’ services. We first document that the number of lawyers is positively correlated with different measures of the litigation rate. Then, using an instrumental variables strategy, we find that a 10% increase in lawyers over population is associated with an increase between 1.6 and 6% in civil litigation rates. Our empirical analysis supports the supplier-induced demand (SID) hypothesis for Italian lawyers: following a sharp increase in the number of lawyers, and in the impossibility of competing on price because of the minimum fee regulation, some lawyers may have opportunistically used their informational advantage to induce their clients to bring lawsuits into court more often than would have been optimal if they were acting in the exclusive interest of their clients.

Keywords: lawyers; litigation rates; credence goods

JEL Classification: H41; J44; K41

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About the article

Published Online: 2014-11-06

Published in Print: 2014-11-01


Citation Information: Review of Law & Economics, Volume 10, Issue 3, Pages 285–322, ISSN (Online) 1555-5879, ISSN (Print) 2194-6000, DOI: https://doi.org/10.1515/rle-2014-0022.

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