Litigation Environment Research Articles

Credibility of Management Forecasts

We examine how the market's ability to assess the truthfulness of management earnings forecasts affects how managers bias their forecasts, and we evaluate whether the market's response to management forecasts is consistent with it identifying predictable forecast bias. We find managers' willingness to misrepresent their forwardlooking information as a function of their incentives varies with the market's ability to detect misrepresentation. We examine incentives induced by the litigation environment, insider trading activities, firm financial distress, and industry concentration. With regard to the stock price response to forecasts, we find the market varies its response with the predictable bias in the forecast. The efficiency of the market's response, however, varies with the forecast news.

Going-Concern Opinions in the “New” Legal Environment

The Securities and Exchange Commission (SEC 2000) recently asserted that the litigation environment facing auditors has changed significantly since 1994, and that the reduced threat of litigation can influence auditor behavior. This study examines the potential impact of the “new” legal environment described by the SEC by examining the audit reports on 1,871 companies under financial stress during the years 1992–93, 1996–97, and 1999–2000. We find that after controlling for financial stress, company size, and default status, going-concern audit reports were less likely (1) in 1996–97 than in 1992–93, and (2) in 1999–2000 than in 1996–97. Our results indicate that changes in the litigation environment are associated with the issuance of fewer going-concern-modified opinions to stressed companies in recent years. This finding is consistent with the SEC's claim that auditors' behavior in recent years has been influenced by reduced litigation pressures.

Sexual Abuse Litigation

Summary Practicing psychologist Janet Sonne and attorney Julian Hubbard illuminate how the different aims and languages of psychotherapy and law can be either an asset or a liability in the emotionally-charged environment of sexual abuse litigation. Properly understood, these differences can optimize the ability of each professional to assist their common client, the sexual abuse survivor, in the litigation process and beyond. Dr. Sonne reviews the psychological and behavioral sequelae of childhood sexual abuse and identifies six elements of the client's psychological functioning key to the litigation process, as well as posing questions for the attorney's self-evaluation for the unique demands of sexual abuse litigation. Mr. Hubbard then addresses what survivors and therapists need to know about the litigation process, exploring dynamics of legal strategy that can exacerbate the client's psychological problems. In the final section, both offer tips to enhance professionals' focus on education and communication as a means to better serving the sexually abused client.

The Development of a Legal Rule: The Federal Common Law of Public Nuisance

Scholars from across disciplinary lines are interested in understanding legal development. One impediment to the quest for a systematic explanation has been measures of legal change. Indicators like whether a court overturns an earlier ruling capture one facet of legal change but fail to capture the full range of courts' actions to develop legal doctrine. I introduce an alternative measure of legal change here—one based on Levi's (1949) focus on whether factual circumstances are or are not encompassed by the law. I use the U.S. Courts of Appeals decisions on the federal common law of public nuisance to illustrate this measure. Utilizing a multinomial logit model to explore the appellate judiciary's decisions to develop this legal doctrine, I find that the judges' decisions to develop the federal common law are explained by the judges' policy preferences; the litigation environment consisting of party resources, attorney experience, and amicus support; as well as the broader political context of public opinion and Supreme Court rulings.

The Life of the Law: Judicial Politics and Legal Change

To what extent is legal change influenced by judicial politics? This question, as initially posed by legal realists, provided the stimulus for much of the early study of the judicial process Although judicial scholars have since explored the impact of judicial policy views, the litigation environment, and the political environment, no systematic analysis of the impact of these factors on legal change has been undertaken. I develop a measure of legal change and use it to test the impact of judicial politics by examining search and seizure cases decided by the Supreme Court between 1962 and 1989 Using a multinomial logit model, I find that several aspects of the judicial process, particularly the Court's political composition, legal constraints, litigant resources, attorney experience, amicus support, and presidential preferences, affect the direction of legal change.

Book Review: The Modern Law of Evidence

The immediate impression made by The Modern Law of Evidence is one of academic rigour coupled with an engaging writing style. The book sets out all the key principles relevant to the study of evidence. The book is comprehensive and is an excellent resource both as a core text and supplementary reading. It would also be an excellent resource for litigation practitioners working both in civil and criminal proceedings. It is suitable for those in the training stage of their careers and will continue to provide an invaluable resource during a career in the litigation environment.

Long-Term Strategies in Japanese Environmental Litigation

Japan's reputation for unusually strong emphasis on the avoidance of public conflict and therefore for deemphasis of legal institutions suggests an arid, hostile environment for litigators, especially those who lack substantial resources. In a study of a quasi-class action lawsuit by Japanese air pollution victims, we find that litigation can be developed as a tool in the pursuit of a social movement's wider objectives despite the paucity of resources within the Japanese legal system. Our research documents the many ways in which the delays, obstacles, and costs that characterize the litigation environment in Japan have been either neutralized or turned to the advantage of a social movement because of its commitment to longer-term political objectives rather than short-term victories. The special role of professions in general, and the legal profession in particular, in such litigation combines with class-oriented social movements to produce a political/legal pattern that is neither traditionally harmonious nor a conflict “difficult to contain.”

Long-Term Strategies in Japanese Environmental Litigation

Japan's reputation for unusually strong emphasis on the avoidance of public conflict and therefore for deemphasis of legal institutions suggests an arid, hostile environment for litigators, especially those who lack substantial resources. In a study of a quasi-class action lawsuit by Japanese air pollution victims, we find that litigation can be developed as a tool in the pursuit of a social movement's wider objectives despite the paucity of resources within the Japanese legal system. Our research documents the many ways in which the delays, obstacles, and costs that characterize the litigation environment in Japan have been either neutralized or turned to the advantage of a social movement because of its commitment to longer-term political objectives rather than short-term victories. The special role of professions in general, and the legal profession in particular, in such litigation combines with class-oriented social movements to produce a political/legal pattern that is neither traditionally harmonious nor a conflict difficult to contain.

Economic Methodology and the Analysis of Employment Discrimination

Abstract No abstract available.

Litigation management and cost control: Using outside accountants as experts

This article discusses the skills and knowledge accountants possess that make them useful in the litigation environment. Further, the article provides information concerning appropriate applications for an accountant in assisting counsel and includes certain matters that should be considered. Finally, the article provides the corporate manager with the management principles necessary for consideration in using an accountant in litigation. This discussion is intended to provide the tools needed to assist with cost control and case management objectives.