Lawsuit Abandonment Options in Possibly Frivolous Litigation Games

Expert witness reform.

The legal system depends on the medical expert for evidence. Doctors readily complain about frivolous cases that go to trial, yet a lawyer cannot bring a frivolous claim to trial without a physician expert witness stating that the claim is not frivolous. An insurance company cannot raise premiums without medical expert witnesses servicing the increasing litigation against the insured. Physician...

A Frivolous Lawsuit May Destroy the Career of a Professional: Is There No Remedy?

Auditor Litigation, Audit Office Pricing and Client Acceptance

This study examines how lawsuits against auditors affect the audit pricing and client acceptance strategies of both the audit offices responsible for the failed audit and other audit offices of the same audit firm. We find that non-litigation offices of litigation audit firms decrease their fees following the filing of a lawsuit. However, audit offices involved in litigation increase their audi...

The Effect of Frivolous Lawsuits on the Settlement of Litigation

It is commonly alleged that a substantial proportion of lawsuits are frivolous and are filed only for their nuisance value. This paper models settlement bargaining in the presence of frivolous suits as a game of asymmetric information, where the plaintiff knows the true merits of his claim, and the defendant does not, apart from any inferences he can draw from the fact of suit. When there is fr...

Executive pay, earnings manipulation and shareholder litigation

The paper examines the role of executive compensation in inducing management behavior that triggers private securities litigation. Incentive pay in the form of options is found to increase the probability of securities class action lawsuits, holding constant a wide range of other firm characteristics. In contrast, base pay levels and share ownership do not have a significant impact on lawsuit i...