Ulen, Thomas S. --- "The Economics of Class Action Litigation" [2012] ELECD 305; in Backhaus, G. Jürgen; Cassone, Alberto; Ramello, B. Giovanni (eds), "The Law and Economics of Class Actions in Europe" (Edward Elgar Publishing, 2012)

Book Title: The Law and Economics of Class Actions in Europe

Editor(s): Backhaus, G. Jürgen; Cassone, Alberto; Ramello, B. Giovanni

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847208033

Section: Chapter 6

Section Title: The Economics of Class Action Litigation

Author(s): Ulen, Thomas S.

Number of pages: 24

Extract:

6. The economics of class action
litigation
Thomas S. Ulen1


1. INTRODUCTION
The United States is almost unique in many aspects of its legal system ­ for
example, in allowing contingent fee contracts between lawyers and clients
and in making legal education exclusively graduate education, in using
juries in civil disputes, and allowing class action litigation. This last practice
­ facilitating and regulating the consolidation of numerous similar lawsuits
into a single action ­ is practiced elsewhere, but it has reached its most
extensive use in the highly competitive U.S. legal market. The principal
argument in favor of class action litigation is straightforward: it is likely to
be more efficient to litigate the same general complaint once rather than to
do so in a series ­ perhaps a large number ­ of similar complaints. To put
the matter in economic parlance, there are likely to be economies of scale
for both plaintiffs and defendant or defendants in having one large trial
than in having individual trials.
However compelling this simple argument in favor of class action litiga-
tion may be, the practice of class action litigation in the modern United
States' legal system has not commanded universal approval. While there are
those who see it as a socially beneficial practice that allows, for example,
appropriate redress to small claimants against major corporations, there
are those who see class action litigation as socially costly in that it fosters
frivolous litigation that threatens to erode business confidence and com-
petitiveness. The public debate between these opposing ...