The duration of personal injury litigation

• Date: 06 September 2000
• DOI: https://doi.org/10.1016/S0193-5895(00)19006-2
• Published date: 06 September 2000
• Pages: 223-246
• Author: Stephen J Spurr

THE DURATION OF PERSONAL

INJURY LITIGATION

Stephen J. Spurr

ABSTRACT

This paper examines and tests the implications of the court congestion

hypothesis of Posner (1972) and Priest (1989). This hypothesis suggests

that the effects of delay reduction programs may be largely or completely

offset by a resulting increase in demand for litigation. We also analyze the

effect on the pace of litigation of certain factors not explicitly considered

by the Posner-Priest model.

We find that a delay reduction program was successful in reducing the

time to settlement, and the time to verdict for tried cases, over the period

covered by the data. As for behavioral responses, there is no evidence of

an increase in the trial rate; there is, however, strong evidence of an

increase in the number of cases filed annually in the court in question.

Other results are consistent with the model's predictions about the effects

of the prejudgment rate of interest.

1. INTRODUCTION

These days it is increasingly difficult to find areas of legal research untouched

by economic analysis. The problem of court delay is no exception to this

generalization. The application of the economic approach by Posner (1972) and

Priest (1989) has enriched the literature of this subject by providing a new set

of issues to be considered and new hypotheses to be tested. Their analysis of

court congestion suggests that the effects of delay reduction programs may be

Research in Law and Economics, Volume 19, pages 223-246.

Copyright © 2000 by JAI/Eisevier Inc.

All rights of reproduction in any form reserved.

ISBN: 0-7623-0308-5

223

224 STEPHEN J. SPURR

only transitory, since initial improvements may be swamped by an offsetting

increase in demand for litigation.

This paper has two objectives. One is to examine and test the implications of

the court congestion hypothesis of Posner and Priest. The other objective

(required in order to achieve the first) is to analyze the factors that determine

the duration of litigation. We first review the model developed formally by

Priest, which concerns the choice the parties make between settling the case

and going to trial. The theory has implications for the effect of certain

variables, such as the expected time to trial and the rate of pre-judgment

interest. We consider how an increase in demand for litigation would be

reflected on various intensive and extensive margins. We then analyze the

determinants of duration with two data sets, one from Michigan and the other

from New York.

2. THE DATA

We have used two new data sets to test the court congestion hypothesis and to

investigate the factors which affect the duration of litigation. These data sets are

complementary, in that each one has variables relevant to duration not available

in the other one. The first data set has 7,270 medical malpractice claims filed

in Michigan, almost all of which were closed between 1978 and 1990. This

data set is of interest because of concerns about delay in medical malpractice

cases, which have prompted procedural reforms aimed specifically at this type

of litigation. In Illinois, for example, a special trial division was created to

enable certain judges of the Cook County Circuit Court to specialize in

handling medical malpractice litigation. 1

The second data set has 113,965 claims for personal injuries or wrongful

death filed in various courts in the First Judicial Department of New York

(Manhattan and the Bronx) during the period from 1974 through 1984. This

data set includes variables that are rarely available, indicating how the attorney

obtained the case, and whether the case was referred by one attorney to another

under an arrangement whereby the contingent legal fee is divided between the

attorneys. Any lawyer who receives a referral from another lawyer under these

circumstances is sure to be a specialist in personal injury litigation.

3. THE PROGRAM TO REDUCE COURT DELAY IN

WAYNE COUNTY

Forty-five per cent of the claims in the Michigan data set were filed in Wayne

County, which accounted for about 25% of the state's population in 1980. 2