Litigation Costs Research Articles

IPO information acquisition and investor protection

PurposeThe purpose of this study is to examine investors’ intention and behavior concerning ex ante information acquirement and ex post claims from the micro-level perspective with the deepening of the initial public offering (IPO) reform of China.Design/methodology/approachThe authors made surveys and collected 932 valid questionnaires from investors in China. The authors also conducted interviews with sophisticated investors, investment bankers and government regulators to obtain first-hand information. Based on the survey results, the authors make the empirical analysis.FindingsInvestors’ attention to the first-hand information of the IPO prospectuses is inadequate. Individuals rely more on second-hand information, while institutions conduct more surveys. The higher the institutional practitioners’ degree of education, the more surveys they make. Only 1/3 investors intend to seek judicial remedy when getting fraud information due to high litigation costs and proof collecting difficulties. The investors who read more about prospectuses in advance are more likely to seek judicial protection afterwards. Compared with investors who know less about government administrative protection measures, those who know more have a low probability to choose “not to seek judicial protection.”Originality/valueThe authors enrich the research studies of IPO information acquisition and investor protection by conducting surveys to get first-hand data. Previous literature mostly makes empirical tests by using proxy variables.

A theory of pre-filing settlement and patent assertion entities

An informed (prospective) plaintiff can send a take-it-or-leave-it demand to an uninformed (prospective) defendant with the threat of a lawsuit that may not be credible. In this context, the well-known perfect separating equilibrium in litigation bargaining game (Reinganum and Wilde, 1986) no longer exists, and all perfect Bayesian equilibria with pre-filing settlements exhibit a cutoff feature. These equilibria offer an explanation for the distinctive behaviors of Litigation PAEs, who aggressively file lawsuits for settlements, and Portfolio PAEs, who obtain licensing revenues through pre-filing settlements. Our comparative statics results lead to testable hypotheses regarding how litigation costs and the plaintiff’s reputation affect the settlement amount before and after the cases are filed, and the frequency of lawsuits from a given plaintiff.

Power and Statistical Significance in Securities Fraud Litigation

Event studies, a half-century-old approach to measuring the effect of events on stock prices, are now ubiquitous in securities fraud litigation. In determining whether the event study demonstrates a price effect, expert witnesses typically base their conclusion on whether the results are statistically significant at the 95% confidence level, a threshold that is drawn from the academic literature. As a positive matter, this represents a disconnect with legal standards of proof. As a normative matter, it may reduce enforcement of fraud claims because litigation event studies typically involve quite low statistical power even for large-scale frauds. This paper, written for legal academics, judges, and policy makers, makes three contributions. First, it contributes to a nascent literature demonstrating that the standard event-study methodology can be problematic in securities litigation. In particular, the paper documents the tradeoff between power and confidence level and the ensuing impact on the likelihood that valid claims of fraud will erroneously be rejected. In so doing, the article highlights that the choice of confidence level is a policy judgment about the appropriate balance between the costs of litigation and the costs of securities fraud. Second, the article argues that the SEC has both the legal power and the institutional competence to develop litigation standards that balance these costs. Third, the article provides a novel and feasible framework through which the SEC can implement such litigation standards. The framework relies on an assessment of the defendant firm’s market capitalization and abnormal returns distribution to determine the maximum confidence level (minimum significance level) that is consistent with the minimum required power of detecting a fraud of the benchmark magnitude. The SEC is uniquely positioned to make this determination based on the information it possesses about the level of fraud in the capital markets and the role of private litigation in deterring fraud.

Bribes and Audit Fees

We exploit the UK Bribery Act of 2010 to test whether the pricing of audit changes with the level of corruption/bribery in the firm’s business environment. Adopting a triple difference design, we show that affected firms operating in countries perceived as more corrupt, where bribery may be necessary to get contracts, pay higher audit fees after the law enforcement. Moreover, we show that the increase in audit fees (i) is not the result of changes in the financial reporting quality of these firms; and (ii) is not due to higher compliance costs for companies that have a larger number of subsidiaries in corrupt countries. The results are consistent with understanding this increase in audit fees mainly as a form of compensation for the higher perceived litigation and reputation costs for the auditors, rather than as an additional price paid for significant increases in the compliance and monitoring costs. Moreover, subject firms that operate in countries with low corruption indexes and low bribery risk experience no change in audit fees.

A Theory of Pre-Litigation Settlement and Patent Assertion Entities

An informed (prospective) plaintiff can send a take-it-or-leave-it demand to an uninformed (prospective) defendant with the threat of a lawsuit that may not be credible. In this context, the well-known perfect sepa- rating equilibrium in litigation bargaining game (Reinganum and Wilde, 1986) no longer exists, and all perfect Bayesian equilibria with pre-filing settlements exhibit a cutoff feature. These equilibria offer an explanation for the distinctive behaviors of Litigation PAEs, who aggressively file lawsuits for settlements, and Portfolio PAEs, who obtain licensing revenues through pre-filing settlements. Our comparative statics results lead to testable hypotheses regarding how litigation costs and the plaintiff’s reputation affect the settlement amount before and after the cases are filed, and the frequency of lawsuits from a given plaintiff.

Auditor Litigation Risk: A Review of Past Perspectives, Recent Developments, and Emerging Issues

This review synthesizes key perspectives and trends in research and practice on the topic of auditor litigation, beginning with the immediate post-SOX era and ending in 2019. Although fears of catastrophic auditor liability in this period have not yet materialized, audit firms may be facing new vulnerabilities. This paper provides a summary of emerging concerns for the near future, with a focus on the outcome of recent court cases, SEC enforcement actions, increased litigation and insurance costs, changes in audit reporting standards, technological advancements, and cybersecurity. Future research is suggested to explore these topics.

A Contemporary Analysis of Medicolegal Issues in Obstetric Anesthesia Between 2005 and 2015

(Anesth Analg. 2019;128(6):1199–1207) The study of closed malpractice claims provides the ability to improve medical practice procedures, examine rare complications, and help researchers understand circumstances connected to medical litigation. Professional societies such as The American Society of Anesthesiologists (ASA) and American College of Obstetricians and Gynecologists have used previously closed malpractice claims to enhance patient safety and reduce the likelihood of serious complications. Obstetric anesthesia bears a higher malpractice risk than other anesthesia subspecialties, and numerous safety efforts in the discipline have been implemented to reduce the occurrence of maternal and infant mortality. In this study, the investigators used data from closed claims to identify recent trends in obstetric anesthesia litigation, such as the type of patient injury, associated factors related to the injury, and resulting indemnity payments and litigation costs.

The Importance of Quantifying Intangible Litigation Costs

Members of the CPR Institute, which publishes this newsletter, know that intangible litigation costs—not just potential liability and legal expenses—are extremely important to clients. CPR's excellent Early Case Assessment Toolkit (available at http://bit.ly/35HSKQ1) provides a good list of intangible business concerns that lawyers and clients should consider in assessing cases.

Choice of Court Agreements in Intellectual Property: ILA Guidelines in the EU and Iran

While substantive private law related to intellectual property (IP) is advanced in terms of international harmonization, international jurisdiction remains national. The 2005 Hague Choice of Court Convention does not apply to many IP issues. Similarly, the Convention on the Recognition and Enforcement of Foreign Judgments, which was adopted in July 2019, but is yet to enter into force, does not apply to IP. IP is enforced on a country-by-country basis. This leads to multiple parallel proceedings, which raise the risk of conflicting judgments and litigation costs. These costs cause inequality between multinational and small- and medium-size enterprises. As a model for future states’ negotiations of an international agreement on IP and private international law, the International Law Association (ILA) Committee on “Intellectual Property and Private International Law” aims to consolidate cross-border IP disputes. To achieve this consolidation, the Committee Guidelines on choice of court agreements in IP are relevant since these enable the applicant to identify the court in which he may sue and the defendant to foresee before which court he may be sued. This paper will first analyze the ILA Guidelines on “choice of court agreements” and “submission and appearance”. The paper will then question whether these Guidelines can be adopted as models for arbitrators, legislators and any other competent authorities in two legal systems: the European Union (in light of the recent case law of the European Union Court of Justice) and Iran (in light of the opposite situation characterized by the absence of case law on the topic).

Brief of Trademark and Internet Law Professors as <i>Amici Curiae</i> in Support of Respondent

In assessing trademark validity and trademark, courts, examiners, and litigants analyze trademark meaning through the lens of consumer perception. Marks wax and wane as consumer use bestows and withdraws trademark meaning. Like the meaning of other communicative symbols, trademark meaning can change over time. Indeed, change is an essential feature of the trademark system, as it is in any other communicative system. The touchstone of trademark validity analysis is perception. It is critical to consider use in commerce and use in context — consumers’ understanding of and reaction to claimed trademarks—when determining whether a mark qualifies for trademark protection and registration. In a troubling distortion of this framework, the government proposes a rigid rule that would require courts and examiners to ignore evidence of consumer use and consumer perception. Instead, decision makers would base registration determinations on a static snapshot of the origin of the term or terms comprising a trademark. Rather than engage in the standard context-sensitive inquiry, examiners at the Patent and Trademark Office (“PTO”) would be forced to conclude that any mark combining an ostensibly generic term and a top-level domain like “.com” is generic, irrespective of the trademark meaning consumers have vested in the term. The government’s approach is inconsistent with the best understanding of how language changes and how consumers create trademark meaning. Government’s proposed rule stems in large part from a failure to appreciate that language — including commercial symbols like trademarks — is subject to constant change. Determining the genericness question solely by an appeal to dictionaries, as urged by the government, invites courts and claimants to over-rely on a term’s history, including obsolete meanings, instead of how it is actually used by sellers and consumers in commerce. As linguists understand, words and symbols — including commercial trademarks — are neither fixed nor unchangeable. Thus, a term’s meaning in one context does not determine the meanings consumers will generate from it in a different context. The government’s proposal also relies on mistaken error-cost analysis. One might recognize that a generic term can acquire trademark meaning, but incorrectly presume it happens so rarely that error is best avoided by ignoring that creation of trademark meaning when it occurs. The shift from the generic name of a good or service to the name of a source is what linguists call a narrowing shift. Research into language change shows that narrowing is not at all rare and, in fact, may be the most frequent type of language change. The government’s proposal further relies on a flawed analysis of competitive harm. When a majority of consumers perceives an ostensibly generic mark as a source signifier, those consumers are not indifferent to or unharmed by the use of a confusingly similar third-party mark. In fact, ignoring the development of source significance may well increase error costs in trademark litigation by reducing efficiency and increasing search costs imposed on consumers. But applying the primary significance test in cases where consumers have vested trademark meaning in an ostensibly generic term will properly manage potential competitive harm by setting a sufficiently high threshold for demonstrating that consumers view the claimed trademark as a source signifier.

Climate change litigation as financial risk

Climate change litigation has been increasing rapidly and steadily for the past ten years, yet our understanding of the costs associated with this litigation are still very poor: policy frameworks are too shallow, estimations of these costs in the private sector are scarce and simplistic, and the academic literature on this issue is still very incipient and has a very fragmented focus. This essay provides a comprehensive analysis of the different types of costs that can arise from climate change litigation. Financial institutions provide an ideal focal point for this analysis because their role as enablers of some of the activities that contribute to aggravate the climate emergency make their exposure to the risk of climate change litigation unique and complex: they can be directly exposed to the risk of litigation as potential defendants in a case, facing potential pay-outs and fines, legal and administrative costs, insurance costs, financing costs, and reputational costs; but they can also be exposed indirectly, through litigation that targets their counterparties, especially their clients, which can lead to losses if the client's solvency is affected, and can impose additional reputational costs. This typology, as well as the exploration of several methodological challenges, can support the incipient efforts to estimate the costs of climate change litigation for financial institutions that we observe among financial supervisors, credit rating agencies, and financial institutions themselves. It can also help guide attempts to estimate these costs in other industries that are particularly vulnerable to climate change litigation.

Research Paper #5: Costs and Funding Commissions in Class Actions

In this paper, we examine the problem of costs in class actions in Australia. We review factors giving rise to substantial costs; costs in civil litigation more generally; current methods for the regulation; review and control of costs and possible reforms; reasons for excessive costs in some class actions, including problematic or unethical practices; and costs in North American jurisdictions. Empirical data on litigation funding and legal fees in class action settlements is examined. We also discuss the intersection of legal costs with fiduciary duties and other ethical obligations which may exist in the context of class actions. In our view, in many class actions the legal and transaction costs are excessive. This is, of course, a matter of some significance, not only from the perspective of professional and commercial beneficiaries, class members and judicial officers presiding over applications for approval of settlements, but also in considering the price of access to justice and in evaluating the operation of the civil justice system. We recommend the imposition of more focused and specific affirmative statutory obligations on all participants in the conduct of class actions with broad ranging sanctions and penalties for noncompliance and the establishment of an independent statutory fund, in which funding is secured on the basis of access to justice considerations, rather than the pursuit of profit.

Vergi Uyuşmazlıklarının Yargısal Çözümünde Vergi Mahkemelerinin Rolünün Değerlendirilmesi

Tax is the most important, and continuous, source of funding for the state. Taxpayers are people who live in the community and enter the field of taxation. With tax, the state obtains some of the economic resources of individuals using compulsion and utilizes it to fulfill public needs. Since taxes are monetary payments, there may be disagreements from time to time between taxpayers and the tax authority who want to receive taxes. These disputes may be caused by tax errors, or may be due to the taxpayer's refusal to pay the tax debt or to comply with the financial and formal requirements of taxation. In the event of a dispute between taxpayers and the administration regarding taxation, it is expected that the dispute will be resolved and eliminated. There are two options for both sides to remedy the tax dispute. The parties can choose administrative solutions such as reconciliation, reduction in penalties, regret, redress, and corrections that satisfy tax errors, as well as to resolve the issue of dispute by litigation through the tax judiciary. The law offers the parties the right to choose between the two options of resolution. In other words, both the tax administration and taxpayers prefer peaceful solutions in the event of a tax dispute, and if a solution cannot be found by these means, they are not required to apply to the tax jurisdiction. If tax litigation is the preferred option of resolution, it is inevitable that both sides will face a number of judicial costs, and other cost elements if the issue of the tax dispute is moved to the tax jurisdiction. If the issue of dispute is moved to the tax judiciary, expenditure from the petition being written, the costs of filing the relevant litigation, lawyer and expert costs in the matter, time spent in awaiting a judicial decision and the possibility that the result will be for or against may result in extra costs on the parties. Nevertheless, if this path is preferred by the parties, generally the first judicial body to apply to is the "tax court", which is the court of first instance in tax disputes. In this study, using qualitative research techniques, the duties and functions of tax courts and their procedure were investigated while focusing on their role in resolving tax disputes.

The Indian Securities Fraud Class Action: Is Class Arbitration the Answer?

In 2013, India enacted one of the most robust private enforcement regimes for securities fraud violations in the world. Unlike in most other countries, Indian shareholders can now initiate securities fraud lawsuits on their own, represent all other defrauded shareholders unless those shareholders affirmatively opt out, and collect money damages for the entire class. The only thing missing is a better financing mechanism: unlike the United States, Canada, and Australia, India does not permit contingency fees, so class action lawyers cannot front the costs of litigation in exchange for collecting a percentage of what they recover. On the other hand, the 2013 law enacted a public financing regime for securities fraud class actions and it is possible third-party financing will be permitted; these mechanisms may make up some of the loss in effectiveness caused by the lack of contingency fees. It is still too early to tell. Yet, commentators are very pessimistic that the Indian securities fraud class action will do much good because the Indian court system is glacially slow. For example, it takes over six years on average to resolve some civil appeals. The solution to this problem in the 2013 law was to channel the securities fraud class action to a special tribunal, the National Company Litigation Tribunal (“NCLT”). Yet, this type of solution has been tried before in India: special tribunals tend to quickly take on the negative characteristics of the general courts. This may be why very few securities fraud lawsuits have been filed since the 2013 law was enacted. We propose a different solution to the problem of the Indian court system: class arbitration. As we explain, although class arbitration is not perfect, it may better facilitate robust private enforcement than the Indian court system.

ІНСТИТУТ МЕДІАЦІЇ: ЗАРУБІЖНИЙ ДОСВІД ТА ОСОБЛИВОСТІ ВПРОВАДЖЕННЯ В УКРАЇНІ

The article examines the institute of mediation in foreign countries and in Ukraine. The judicial system of each state plays an important role in regulating public relations. The efficiency of the judicial system is characterized by the ability to protect the rights and freedoms of man and citizen in accordance with the law. Today in Ukraine there are problems with the effectiveness of dispute resolution in court. The most common international method of alternative dispute resolution is the institution of mediation. The effectiveness of mediation is proven in practice in those countries where it is implemented. Mediation is the resolution of disputes involving an independent third party, the mediator. The institution of mediation is a positive phenomenon and its consolidation at the legislative level in Ukraine will reduce the duration of civil, commercial, family and labor cases, reduce the cost of litigation from the state budget, significantly reduce the workload of judges. In Ukraine, the institute of mediation is at the stage of formation and establishment, as, despite the prevalence of the institute in the legislation of foreign countries, for the legal system in Ukraine it is a new, little-studied institution. The article analyzes the world experience of European countries in the use of mediation and the provisions of the legislation governing its implementation, taking into account the peculiarities of existing legal systems. A comparative analysis of foreign legislation and the draft Law of Ukraine "On Mediation" was also conducted. The analysis shows that the bill in Ukraine needs to be finalized, so proposed amendments to the draft Law of Ukraine "On Mediation", namely: 1) to determine the places of mediators in the system of state bodies: to create an autonomous body to exercise a controlling function over the activities of intermediaries or to give the Ministry of Justice of Ukraine appropriate powers; 2) regulate the procedure for referring parties to mediation; 3) to enshrine a rule that would prohibit judges from being mediators; 4) as a result of completion of basic training in the field of mediation, to provide in the Law of Ukraine, the obligation to pass the qualifying examination of a mediator.

Competition and the Reputational Costs of Litigation

We study the role of competition in customers’ reactions to litigation against firms, using anonymized mobile phone location data. A class action lawsuit filing results in a 4% average reduction in customer visits to target firms’ outlets in the following months. The effect strongly depends on competition. Outlets facing more competition experience significantly larger negative effects. Closer competition matters more, both in terms of geographic and industry proximity. Announcement returns and quarterly accounting revenues around lawsuit filings also strongly depend on competition. Our results suggest that competition is an important component in customers’ ability to discipline firms for misbehavior.

A Summary of the Research on the Judicial Application of Artificial Intelligence

The use of artificial intelligence technology in the field of judicial trials is becoming more widespread. Intelligent software includes functional modules, such as guidance, prompting, and deviation warning, which can assist trials judges in sentencing, case push, and automatic document generation throughout the litigation process, thereby helping to save litigation costs and improve trial efficiency. However, in the application process, intelligent auxiliary software has displayed essential, prerequisite, procedural, and result defects and thus poses ethical risks and challenges. Therefore, we should clarify such technology’s auxiliary trial status, determine the scope of specific applications, and formulate ethical norms for judicial artificial intelligence. Additionally, differential trials and post hoc monitoring should be used to standardize the application of such technology.

Manna from Heaven for Judges – Judges’ Reaction to a Quasi-Random Reduction in Caseload

What is the impact of caseload on judicial decision-making? Is increasing judicial staff effective in improving judicial services? To address these questions, we exploit a natural, near-randomized experiment in the Israeli judiciary. In 2012, six senior registrars were appointed in two of the six magistrate’s court districts. The choice of districts was motivated by reasons unrelated to judicial performance. In these two districts, the civil caseload per judge was substantially reduced. We find that the reduction had a significant impact on the process and outcomes of judicial decision-making. Judges working in courts with reduced caseload invested more resources in resolving each case. The effect is mostly to the advantage of plaintiffs, who were more likely to win, recover a larger fraction of their claim, and be reimbursed for litigation costs. We discuss the implications for judicial management and theories about judicial decision-making.

Poreski i računovodstveni aspekt rezervisanja

At the end of the reporting period, when preparing financial statements, it is necessary to pay attention to whether the financial statements include all expenses of the accounting period. Provisions are recognized as an expense in the period only when their recognition in the current period meets certain requirements prescribed by accounting standards. The use of provisions is usually recorded by forming a liability to the supplier, employee and other persons by directly reducing the provision, is the cost is recorded in the Income Statement. IAS 37 Reservation, Contingent Liabilities and Contingent Assets defines a provision as a liability with an uncertain maturity or an uncertain amount, and a liability is a present obligation of an entity based on past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. represent economic benefits from the business entity. We must emphasize that provisions are also defined by other standards - for example, IAS 19 - Employee Benefits, which defines provisions for benefits and other employee benefits. However, in this paper, the author deals with the tax and accounting treatment of certain provisions that appear in practice, such as: reservation for severance pay, reservation for costs in the warranty period, reservation for awards and other benefits, reservation for litigation costs, etc.

A Research on the Discourse for Constitutional Acceptance of ADR - Focusing on Latin American legislation

오늘날 다양한 이익집단의 이해관계가 첨예하게 대립되는 이익사회의 심화로 법적 분쟁이 빈번히 발생하고 있다. 이러한 문제는 국내에 국한된 것은 아니며, 세계화로 인하여 국제분쟁도 빈번하게 발생하고 있는 것이 현실이다. 정식재판에 의한 분쟁해결은 그 절차가 복잡하고 종국적 해결까지 시일이 오래 걸리며, 소송비용과 관련한 경제적 부담 등의 문제가 있다. 법원을 통한 해결을 도모하는 것은 지식재산권 분쟁이나 스포츠 분야에서의 분쟁과 같이 그 사안이 복잡하고 그 분야에 대한 전문성을 요하는 경우에 실정법에 대한 유권적 해석을 전문으로 하는 법원을 통한 해결은 한계가 있다. 이러한 문제점을 해결하기 위하여 ADR이 활발하게 활용되고 있다. 국내 중재제도가 발달하고 이후 국제중재제도로 그 적용영역과 연구를 확장하는 일반적인 추세와 달리 우리나라는 수출 중심의 정책을 펼치면서 발생한 다양한 국제분쟁을 해결하는 과정에서 국제중재가 먼저 발달하고 국내에 영향을 미쳐 국내중재제도가 발전하는 양상을 보이고 있다. 우리나라의 경우 ADR을 헌법적으로 수용하고자 하는 노력을 보이고 있는 중남미 국가의 법제에 대하여 검토하고 헌법소송인 amparo소송의 남용으로 인하여 중재의 장점이라 할 수 있는 신속한 권리구제를 막고 국제중재와 관련한 중재결정의 미준수로 인한 국제적 신뢰상실 이라는 문제점이 발생하면서 중남미 각국에서 이에 대하여 제한을 하는 경향에 대하여 검토해 보고자 한다. 국제중재에 있어 중재결정에 대한 존중을 통하여 국제적 신뢰를 유지하고 런던국제중재법원(LCIA)과 같이 법원의 기능을 수행하는 기구를 적극적으로 활용함과 동시에 대한상사중재원의 국제중재센터의 위상제고와 함께 중재법원의 설립을 위한 제도적 마련이 요구된다. 우리나라의 ADR 적용에 있어 제공하는 시사점을 살펴보고 신속한 권리구제 방안의 도입을 위한 합리적 해결책을 모색해 보고자 한다.Today, legal disputes frequently occur due to the deepening of interest society where sharp interests of various interest groups are sharply opposed. This problem is not limited to Korea, and international disputes are frequently occurring due to globalization. Dispute resolution by formal trial is complicated in its process, takes a long time to finalize, and there are problems such as economic burden related to litigation costs. Promoting court resolution is limited by courts that specialize in constitutional interpretation of the law in cases where the issue is complex and requires expertise in the field, such as intellectual property disputes or disputes in the sports field. There is. In order to solve this problem, ADR is actively used. Review the Latin American legislative system that is making efforts to accept ADR constitutionally, and prevent abuse of the constitutional lawsuit amparo lawsuit to prevent prompt remedy, which is an advantage of arbitration, and to comply with the arbitration decision regarding international arbitration. As a result of the loss of international credibility, I would like to examine the tendency of countries in Latin America to limit it. In international arbitration, through respect for the arbitration decision, the international arbitration center of the Korean Commercial Arbitration Board will be strengthened, while the international trust center will be actively maintained and the institutional functions such as the LCIA will be used. In addition, institutional arrangements for the establishment of an arbitration court are required. This study examines the implications of Korea s ADR application and seeks a rational solution for the rapid introduction of rights remedies.