An Early Assessment of the Civil Justice System After the Financial Crisis

An Early Assessment of the Civil Justice System After the Financial Crisis: Something Wicked This Way Comes?

Michael D. Greenberg
Geoffrey McGovern
Copyright Date: 2012
Published by: RAND Corporation
Pages: 72
https://www.jstor.org/stable/10.7249/j.ctt3fh0gv
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  • Book Info
    An Early Assessment of the Civil Justice System After the Financial Crisis
    Book Description:

    The financial collapse of 2008 has had a lasting, disruptive effect on many aspects of the U.S. economy, including the civil justice system. A preliminary assessment of the impact of the financial crisis on various facets of the civil justice system identified a set of priority areas that warrant further empirical research and additional data collection.

    eISBN: 978-0-8330-7950-3
    Subjects: Law, Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. Figures and Tables
    (pp. vii-viii)
  5. Summary
    (pp. ix-xii)

    The financial collapse of 2008 has had a lasting, disruptive effect on many aspects of the U.S. economy. Whenever unforeseen economic disruptions produce widespread losses, there will predictably be some civil justice system aftereffects as people seek compensation for those losses. The shock of the financial collapse arguably may have had a deep justice system impact: The subsequent erosion in state budgets has placed stress on court mechanisms at the same time that particular kinds of litigation, such as disputes over foreclosure, seem to have increased.

    In 2009 and 2010, RAND researchers engaged in a series of investigations and conversations...

  6. Acknowledgments
    (pp. xiii-xiv)
  7. Abbreviations
    (pp. xv-xvi)
  8. CHAPTER ONE Introduction
    (pp. 1-4)

    The financial collapse of 2008 has had a lasting, disruptive effect on many aspects of the U.S. economy and on society more broadly. Whenever unforeseen economic disruptions produce widespread losses, there will predictably be some civil justice system aftereffects as people seek opportunities to compensate for those losses. The shock of the financial collapse arguably may have had a deeper justice system impact: The subsequent erosion in state budgets has placed stress on courts at the same time that particular categories of litigation, such as disputes over foreclosure, appear to have experienced heightened demand.

    In 2009 and 2010, RAND researchers...

  9. CHAPTER TWO State Court Funding
    (pp. 5-12)

    Perhaps the most obvious dimension of the fallout from the financial crisis has been its impact on state governments and their budgets. The collapse and the recession that followed have arguably hit the states more than once since 2007–2008: first through the effect on tax revenues via the erosion of the states’ tax base and then again through the impact on state public pension funds, credit ratings, and so on. Meanwhile, federal stimulus spending, which initially helped blunt the impact of the financial crisis on the states, has now largely ebbed away. The fiscal environment in which the states...

  10. CHAPTER THREE Patterns of Civil Litigation
    (pp. 13-22)

    In the previous chapter, we presented a summary of recent trends in resourcing for state court systems. Our intuition is that the supply of judicial services and the ultimate capacity of the trial courts are constrained by state budgets. Consequently, we reviewed recent evidence pertaining to possible budget distress. From a public policy perspective, however, we were equally interested in the effects of the financial collapse on the demand for judicial services and on the volume of new litigation claims brought before the courts. In the wake of the collapse, a broad range of individuals, businesses, state governments, and municipalities...

  11. CHAPTER FOUR Securities Litigation and Enforcement
    (pp. 23-30)

    In the wake of the financial collapse, litigation involving securities claims, shareholder suits, and allegations of corporate misgovernance spiked upward. Various financial (and other) institutions that were negatively affected by the crisis might have mismanaged risk, provided deficient disclosures, engaged in fraud, or otherwise failed in their duties to protect shareholder interests. The crisis also revealed a series of high-value Ponzi schemes masquerading as legitimate hedge fund investments—schemes that came apart with closer accounting scrutiny and loss of market liquidity and that ultimately left their investors with billions of dollars in losses (Wayne, 2009). Given that the direct impact...

  12. CHAPTER FIVE Legal Services Industry
    (pp. 31-38)

    The financial collapse and credit market freeze beginning in late 2008 have had lasting economic ramifications that stretch far beyond financial markets and firms. Business operations for firms in many sectors, notably including the legal services economy, have been adversely affected by the collapse. Particularly for large law firms that conduct a mixture of business, litigation, and corporate practice, a litany of anecdotes suggest numerous ill effects. Many law firms struggled in 2008 and 2009 to find the credit necessary to leverage their business operations, and several major firms either collapsed or merged during that period.¹ Many corporate in-house counsel,...

  13. CHAPTER SIX Provision of Legal Aid Services
    (pp. 39-44)

    The financial crisis has been a disaster for many lower-income Americans. Job losses, persistent unemployment, and home foreclosures were among the harms meted out during the financial crisis and Great Recession, and the impact is disproportionately likely to reach lower-income earners. As we noted in Chapter Three, there is also burgeoning evidence that some of these harms are working their way into the justice system, through increased foreclosure filing rates in many states, for example.

    Another dimension of the civil justice impact of the financial crisis may well involve its effect on the funding and provision of legal aid services....

  14. CHAPTER SEVEN Conclusions
    (pp. 45-50)

    The financial collapse in 2008 found its origins in wildly opportunistic and fraudulent mortgage lending practices, the securitization of the resulting bad loans, and the eventual deterioration of large financial firms and markets (Financial Crisis Inquiry Commission, 2011). In the years since 2008, economic fallout from the collapse has been widespread and has moved far beyond the financial services sector where the crisis initially erupted. Based on our review of evidence concerning several facets of civil justice system activity, processes, and participants, some effects from the financial crisis have indeed been felt in recent years. There are preliminary data to...

  15. References
    (pp. 51-56)