Legal Error, Litigation, and the Incentive to Obey the Law

Abstract

The occurrence of legal error seems inevitable: evidence brought before courts often will be incomplete or subject to misinterpretation and courts sometimes will misconstrue the law.' This article studies the effects of legal errors on the decision to bring a suit and on the incentive to obey the law. It also examines how various policies can be used to lessen problems caused by legal errors. The first section of the article considers the influence of legal errors on litigation. It is observed that type I errors-in which truly guilty defendants escape liability-discourage suits because such errors reduce a plaintiff's probability of prevailing. Conversely, type II errors-in which truly innocent defendants are found liable-encourage suits because such errors raise the probability of success.2 The effects of legal errors on the propensity

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