Northwestern Searle Center - Events and Activities

Public Nuisance Issue Briefing Page

2009-11-16 10:45:00.0

The Searle Center has launched a new Issue Briefing Page on the important and timely issue of Public Nuisance Litigation.

This briefing page is a comprehensive accumulation of research and presentations from judicial symposia, research roundtables, and commissioned papers.

Click here to visit the Public Nuisance Issue Briefing Page.

IN THE NEWS: Increasing Use of the Alien Tort Statute

2009-10-30 00:00:00.0

Writing on his blog and in the National Law Journal, Russell Jackson provides his take on the growing use of the Alien Tort Claims Act:

Oil companies, fruit growers, beverage producers, automotive companies, tire producers, pharmaceutical companies -- name an industry, and its members likely have been subject to suits brought in the U.S. in the last decade or so under the Alien Tort Claims Act. Despite direct Supreme Court precedent cautioning against liberal expansion of the ATCA beyond its narrow 18th Century applications (piracy, crimes against ambassadors, and violating "safe conduct" requests), certain courts have continued to entertain ever-broadening interpretations of international law to broaden its scope. As a result, companies have defended suits in the U.S. alleging that they were responsible for a host of activities that occurred abroad, including environmental harm, civil war violence, and even apartheid.

As our own Linda Kelly details in the video below, this is an issue being looked at closely by the Searle Center, and will be the topic of an upcoming event next spring:

IN THE NEWS: PointofLaw.com Highlights New Papers on Third Party Litigation Finance

2009-10-30 00:00:00.0

PointofLaw.com highlights the papers we are showcasing on the topic of Third Party Finance of Litigation:

Northwestern's Searle Center is showcasing two excellent papers by Stephen Presser (Northwestern) and Paul Rubin (Emory) from a public policy roundtable on the topic held at Northwestern. From Prof. Presser's draft, which is entitled A Tale of Two Models: Third Party Litigation in Historical and Ideological Perspective:

In this modest paper I argue that we have two different models of litigation in this country. One is a traditional model, best exemplified by Sir William Blackstone and Abraham Lincoln, that litigation is something pernicious that ought to be discouraged. A second model, one that has recently captured the popular imagination (or at least the imagination of our policy makers and elite lawyers), is that litigation is a noble tool that can lead to transformative social change, just as it did, for example, in the struggle for civil and educational rights in the fifties and sixties. What one thinks about third-party financing of litigation may turn simply on the choice of which model or ideology seems more appealing, and what is now happening in the American states is confusion over which of these models ought to predominate. In addition to much interesting detail on the subject of societal views of litigation, Presser goes on to discuss key recent decisions on litigation finance from Texas and Ohio, and the general relaxation of restaints against champerty and maintenance.

From Prof. Rubin's paper, On the Efficiency of Increasing Litigation, the abstract:

The common law has long forbidden third party investment in lawsuits based on "champerty" and related doctrines. More recently, these restrictions have been relaxed, although they may not have been entirely eliminated in the U.S. While it might appear efficient to allow such investment, in fact it is not. The effect of relaxing restrictions will be to increase litigation. When there are benefits of litigation these are deterrence of harmful activities. However, the U.S. already goes much farther than any other country in allowing class actions and other group based litigation, and so any benefits of increased litigation are likely to be small or nonexistent. There are two external costs from increasing litigation. First, the plaintiff must pay his own fees, but also imposes costs - sometimes quite significant costs - on defendants when a lawsuit is filed. In many cases, the costs imposed on defendants are greater than costs borne by plaintiffs, especially when plaintiffs are individuals or class members and defendants are business firms. Second, the type of lawsuits that would likely result from increased third party investment would probably move the legal system away from efficiency. Overall increasing third party financing of litigation is likely to be harmful.

This coverage is yet another example of the Searle Center helping to frame the debate on a timely issue with high-quality, thoughtful academic work product.

Searle Civil Justice Institute Honored with Research Award

2009-10-28 00:00:00.0

We are honored to report that the U.S. Chamber Institute for Legal Reform (ILR) just presented the Searle Civil Justice Institute with its 2009 Research Award for our in-depth empirical research on consumer arbitrations.

NEW REPORTS: Third Party Financing of Litigation

2009-10-28 00:00:00.0

The Searle Legal and Regulatory Studies program commissioned several papers on the topic of "Third Party Financing of Litigation." These papers were then discussed at a Public Policy Roundtable held at Northwestern University School of Law.

Here are three of those papers:

A Tale of Two Models: Third Party Litigation in Historical and Ideological Perspective
Stephen B. Presser
Northwestern University School of Law

On the Efficiency of Increasing Litigation
Paul H. Rubin
Emory University Department of Economics

How Would Third Party Financing of Litigation Change the Face of American Tort Litigation?
David Dana and Max Schanzenbach
Northwestern University School of Law

INCENTIVES MATTER: With or Without Sox

2009-09-15 15:26:00.0

“There’s no such thing as a free lunch.”

This favorite line of the late Nobel laureate economist Milton Friedman is more than just a catchy slogan. It is also a sound, common sense principle that underlies the work that we do here at the Searle Center on Law, Regulation, and Economic Growth.

Simply put: any law or regulation does not happen in a vacuum. Every one of these government actions has benefits – and costs.

Common sense tells us that if benefits are greater than costs, then the activity will provide a net benefit to society. If the costs are greater than the benefits, then moving forward with the government activity will do more harm than good. Implementing this common sense notion, however, is easier said than done. In the political world, politicians and regulators are prone to exaggerate the ostensible benefits of their pet projects and ignore the costs.

Case in point: the Sarbanes-Oxley (SOX) Act.

Hastily passed by Congress in the summer of 2002, following the implosions of Enron and WorldCom, we were assured this legislation would force firms and their auditors to clean up their books and to disclose their "internal controls" and procedures for ensuring the accuracy of their financial reporting.

Instead, SOX has imposed huge direct and indirect costs on American businesses and the American economy – without achieving its professed goal of promoting transparency and accuracy in corporate reporting and preventing another financial crisis.

The act could also prove to be a litigation time bomb. SOX has created potential liability for all corporate employees, not just officers and directors -- and for contractors and sub-contractors too. Innocent individuals may have to defend themselves against SEC investigations or civil suits.

Disgruntled employees may exploit more expansive whistleblower protections to sock it to their supervisors. American companies may forgo expansion or close their doors. Foreign companies may avoid setting up shop on our shores.

In fact, the constitutionality of SOX is currently being challenged in the U.S. Supreme Court in Free Enterprise Fund et al., v. Public Company Accounting Oversight Board – a case in which I have signed on as amicus curiae with the Cato Institute and University of Illinois Law Professor Larry Ribstein.

So, is there a way to circumvent the serious side effects of SOX, short of scrapping the whole thing?

How about giving American companies and American investors a say on SOX?

Let SOX stand, but give American firms the option of letting shareholders vote to opt out of some or all of its provisions. Or let the firms themselves opt in or out, and leave it to potential investors to buy or avoid their stock.

Talk about shareholder power! If shareholders should have a say on executive compensation, as many corporate governance reformers insist, surely they should have a say on SOX. Let’s empower American firms and shareholders and let them decide if SOX is a luxury they can afford.

Larger firms may consider the costs of compliance less burdensome than the stigma of going SOX-less. Smaller firms may suffer the stigma for the sake of the savings. Either way, the shareholders have the final say.

If Say on Pay is a step toward corporate democracy, Say on SOX is a veritable leap forward. If you truly believe in shareholder power, give the shareholder a Say on Sox.

VIDEO: Christopher R. Drahozal Testimony in the U.S. House of Representatives

2009-07-22 15:19:00.0

On July 22, 2009, Christopher R. Drahozal, chair of the Consumer Arbitration Task Force of the Searle Civil Justice Institute (SCJI) at Northwestern University School of Law, today testified before the House Oversight and Government Reform Domestic Policy Subcommittee on the use of arbitration to collect consumer debts. Please watch the video below:

SCJI Report on Consumer Arbitration

2009-03-11 00:00:00.0

The Searle Civil Justice Institute (SCJI) at Northwestern University School of Law has released this in-depth study of consumer arbitrations. As the policy debate over pending legislation to ban pre-dispute arbitration agreements in consumer and other contracts heats up, this study offers an empirical look at consumer arbitrations that were administered by the American Arbitration Association (AAA).

Please visit SearleArbitration.org to view the full study and learn more.