Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2020
  • Working Paper

Financing the Litigation Arms Race

By: Samuel Antill and Steven R. Grenadier
  • Format:Print
  • | Language:English
ShareBar

Abstract

Using a continuous-time model of litigation, we show that the increasingly popular practice of third-party litigation financing has ambiguous welfare implications. A defendant and a plaintiff bargain over a settlement payment. The defendant takes costly actions to avoid deadweight losses associated with large transfers to the plaintiff. Litigation financing bolsters the plaintiff, leading to larger deadweight losses. However, by endogenously deterring the defendant from taking costly actions, litigation financing can nonetheless improve the joint surplus of the plaintiff and the defendant. In contrast to popular opinion, litigation financing does not necessarily encourage high-risk frivolous lawsuits.

Keywords

Litigation Financing; Dynamic Bargaining; Real Options; Law; Finance; Lawsuits and Litigation

Citation

Antill, Samuel, and Steven R. Grenadier. "Financing the Litigation Arms Race." Working Paper, November 2020.
  • SSRN

About The Author

Samuel B. Antill

Finance
→More Publications

More from the Authors

    • Journal of Financial Economics

    Do the Right Firms Survive Bankruptcy?

    By: Samuel Antill
    • April 2022 (Revised December 2022)
    • Faculty Research

    Hertz in Bankruptcy: A Wild Ride in Pandemic Times

    By: Kristin Mugford, Stuart C. Gilson and Samuel Antill
    • February 2022 (Revised March 2022)
    • Faculty Research

    Hertz in Bankruptcy: A Wild Ride in Pandemic Times

    By: Samuel Antill, Stuart Gilson and Kristin Mugford
More from the Authors
  • Do the Right Firms Survive Bankruptcy? By: Samuel Antill
  • Hertz in Bankruptcy: A Wild Ride in Pandemic Times By: Kristin Mugford, Stuart C. Gilson and Samuel Antill
  • Hertz in Bankruptcy: A Wild Ride in Pandemic Times By: Samuel Antill, Stuart Gilson and Kristin Mugford
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College