Litigation as Feud

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

You may also like...

8 Responses

  1. Matt says:

    I’d say something more like a mix of legal agency costs and unadulterated hatred.

    But wait! We can tell a “rational actor” story about that, too- we just have to assume that the utility the party gets out of annoying the other side (even if they don’t win, and don’t even expect to) is higher than what they’d get from the money they spend. That’s what’s so “wonderful” about such stories- they can be made to fit any bit of behavior if you’re willing to be just a bit creative.

  2. Using the same reasoning about sunk costs, Posner would have to argue that playing the dollar auction game, losing your shirt is rational. At every play, the second highest bidder should regard his lost bid as a sunk cost and move to become the highest bidder. Of course this is nonsense that even Posner cannot defend.

    Although many argue that the only rational response to the dollar auction game is not to play, I believe that their is a coordinated solution:

    http://bizop.ca/blog/how_would_you_play_that/2009/03/shubiks-dollar-auction.html

  3. Jens Müller says:

    The problem becomes even worse in jurisdictions were attorney fees can be claimed from the opponent by the prevailing party: The expected benefit will increase during litigation …

  4. A.J. Sutter says:

    I second Matt’s view. As a client (very rich, but not the type of guy you’d want to buy a used car from) once calmly told the head litigation partner at a NY firm I worked at decades ago, “Y’know, I got a real hate on these people, so I’d like this to be an old-fashioned litigation, with interrogatories ‘n depositions ‘n everything …”

  5. A.W. says:

    btw, the link to the opinion is broken.

  6. A.W. says:

    I would say i can’t disagree more about Jen’s argument. First getting back attorneys fees are not a payout, so much as a chance to recoup all loses. of course it encourages litigation when you know you are right and know you can prove it, but that’s not a bad thing. by contrast, it discourages litigation carried out for harrassing or otherwise vexious purposes because if you know eventually you will have to pay for the other side’s lawyer you will realize you are only hurting yourself.

    and posner’s economic analysis is right to a certain extent. people get in a trap where the marginal costs of the next action are slight, but they are accumulating a cost far greater than any payout, but smaller than the marginal costs. an elightened rationality asks “how much will i have to pay, total” at the beginning of the litigation, however, which is where the rational actor often fails to be maximally rational.

    But the post is right to say that there is a high probability that these litigants are not rational actors and they just hate each other. it is funny how in law school you are taught it is always about money, but in real life you quickly discovery, it is almost never really about money.

  7. Leave it to Posner to put it perfectly: it is time for peace. When money is not an issue, the suit is as much about the pains and length of litigation to bother the other party as it is about the cause of action. That is not the purpose of our courts or American justice system as a whole.