Settlement Pressure

This paper cautions against extrapolation of traditional economic analysis of litigation to the problem of settlement pressure in high-stakes class action litigation. Existing economic models can explain the existence of settlement pressure by relying on notions of defendant risk aversion, but risk aversion is an inappropriate concept to apply directly to the large public corporations that actually face class action settlement pressure. Deeper insights into complex civil litigation involving corporations are likely to come from better understanding corporate - not individual - behavior and decision-making.