Procedural Law and Economics, edited by Chris William Sanchirico. Edward Elgar Publishing Company, 2012. 531 pages. $245.00, hardcover edition.
Procedural Law and Economics is a collection of information detailing the effect of economics on the areas of litigation, legal procedure, and evidence. In this, the second edition of this volume, the authors analyze some important aspects of the law and how monetary issues insert themselves in a variety of ways. The authors look at some of the more mundane aspects of the law (e.g., the economics of class actions and fee-shifting) but also some apparent aberrations (e.g., “negative-expected-value suits,” where the final expected judgment is actually less than the cost of litigation).
This volume begins at the very basics, analyzing the economic benefits of both the adversarial and inquisitorial systems. From this basic analysis, the book sets forth its attempt to deal with theoretical issues (e.g., which system should be instituted to make the most economic sense) as much as practical issues (e.g., the actual costs of each system). The authors of this section, and throughout, justify their conclusions through the use of many equations, some of which are beyond this reviewer’s capacity to fully comprehend. But still, even with limited understanding of these equations, one can follow the thought process of the authors through the detailed narrative analysis.
While the authors analyze the economics of such items as appeals, class actions, evidence, and fee shifting, one of the more interesting chapters (at least to this reviewer) was the chapter on “negative-expected-value suits.” As previously stated, this chapter analyzes suits where the cost of litigation is expected to outweigh the expected judgment. Even with the expected costs outweighing the potential judgment, many Defendants still agree to settle such suits in a manner which makes these negative suits result in a positive gain for the Plaintiff; the authors take an economic approach to this puzzle to determine why Defendants would agree to such settlements.
Procedural Law and Economics is written in manner that is suitable for both economists and lawyers. Each chapter gives a basic introduction to the area of law in a manner that provides a basic understanding of the area of litigation being discussed; economic formulas are discussed sufficiently in detail to allow lawyers to grasp the concepts that are being discussed.
This volume is a valuable tool for those interested in procedural law, economics, and the convergence of the two. While much of the volume is theoretical, much of Procedural Law and Economics provides tools to understand why parties act certain ways when litigating. Still, a reader of this item must remember at all times while reviewing these chapters that Procedural Law and Economics only analyzes these topics based on financial incentives and disincentives; there may be many other non-economic reasons affecting how parties act throughout litigation, but Procedural Law and Economics leaves these justifications for other authors to analyze.