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Working Paper #8

Litigation versus Legislation
Forum Shopping by Rent-Seekers


Abstract: To change the law, an interest group must choose between lobbying thelegislature and litigating for new precedent. Lobbying becomes more likely as the relative benefits from rule change become greater, as the costs of lobbying become smaller and as the voting strength of the interest groups becomes larger. Litigating becomes more likely as trial costs fall, as the relative benefits from rule change become greater, as the inclination of courts to change existing precedents increases, and as the interest group is involved in more trials. Examples of using a litigating strategy include the NAACP is its battle for racial integration and attorneys seeking change in tort law. Business, in resisting changes to tort law, has used the judicial process. The nature of equilibrium, if any, is not clear.

Paul H. Rubin is a Research Fellow at the Independent Institute, the Samuel Candler Dobbs Professor of Economics and Law at Emory University, and a contributing author to the book American Health Care: Government, Market Processes, and the Public Interest (Independent Institute).

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