Litigation, Judicial Path-Dependence, and Legal Change

ABSTRACT: In this paper we consider the role litigation and case selection play in the process of legal change. We build upon the existing literature on the evolution of common law, and develop a model of legal evolution to examine the conditions for stability in legal systems, once we assess changes in the scope of liability and legal remedies. This paper extends the recent findings of Fon and Parisi (2002) considering the effect of judicial path dependence in the case of litigation between parties wi th different goals and stakes driving their decisions to litigation. In the presence of such asymmetric stakes, judicial path dependence may alternatively lead to evolutionary expansion or contraction of legal rules. We seek here to set out the conditions and the likelihood of contraction or expansion of legal rules in various litigation and judicial environments. We consider the relevance of the degree of asymmetry in the litigation stakes, the existence and nature of positive litigation costs, and the weight of past precedents on the ongoing process of legal evolution