Decisions to Retain Attorneys and File Lawsuits: An Examination of the Comparative Negligence Rule in Accident Law

Abstract

The article examines the impact on litigation behavior of a basic feature of tort reform--replacement of the standard of contributory negligence with comparative negligence. We focus on the differential impact of the two negligence standards on incentives to hire attorneys and litigate claims. The evidence is based on a large sample of auto injury accident claims during a period of considerable cross-state variation in liability rules. We find that, on average, comparative negligence provides stronger incentives to hire attorneys and file lawsuits and is associated with higher dollar awards. The average claimant in a contributory negligence state is predicted to have a 36.0 percent likelihood of obtaining representation compared to 47.3 percent in a comparative state. The joint probabilities of representation and filing are 12.5 percent in contributory negligence states versus 21.2 in comparative states. Other findings support the view that litigation is sometimes used as a variance-increasing strategy.