Delay and Settlement in Litigation

Abstract

Delay in litigation is a policy concern in many jurisdictions. Little evidence is available on the causes of such delay, however. We present a version of Spier's (1992) bargaining model of litigation and derive directly a functional form for the conditional probability of case settlement. We then estimate this and test predictions about the effects of legal costs and uncertainty over damages and liability on the conditional probability of settlement, using data from negligence claims against several NHS Trusts. Our results provide a direct test of the model and shed light on the causes of settlement delay in England.