How Diversifying Helps a Lawsuit

A related set of lawsuits involving billions of dollars has provided employment opportunities for a number of consulting economists specializing in antitrust issues or labor economics issues. I’ve been involved in three of the cases, and they have been great fun (and a good way of paying dental bills).

I was crestfallen to find out that I am not likely to be asked to work on the other cases, so I asked the attorneys why. They said very simply: if the other side finds a mistake or problem in your work on one case, they can use it on all the other cases; so we like to diversify.

I had never thought of risk aversion as being a basis for choosing workers in this kind of activity, but it makes good sense. No doubt it characterizes lots of other decisions about hiring individuals to work on related projects.

(Hat tip: DE)

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  1. sarahCMS says:

    This is definetly a smart strategy and beneficial for lawyers and some economists. Since they gain money from their success, which they are able to achieve because of the economic downfall; a great example of how lemons serve for a lemonade! Economists, this is your season to sell those lemonades! Just be sure your “lemonade” is clever, since one small mistake in your work case, can easily make someone else take your job.

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  2. SHUN-CMS says:

    I agree with Peke, I am surprised how economic downturn can actually benefit some people. This indeed creates a virtuous (great) cycle as Maxi said – however on the flip side, is it really a positive externality which benefits everyone? I am not arguing about how it helps the economists, but as Mr. Hamermesh mentioned: “if the other side finds a mistake or problem in your work on one case, they can use it on all the other cases.” In a “fair” world of the court, one’s mistake or weakness should also be brought up, and the final decision by the judge should be made rationally according to the lawyer’s argument specific to each case. Hence, though lawyers/economists caring about each other’s future is a normal human (irrational) behaviour, one must not forget to sell the quality of their lemons and not hide the rotten, dark side of the moon.

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  3. HildaCMS says:

    The idea of alternating their lawyers so that no negative assumptions or declarations can be made towards that lawyer is actually pretty well thought. It is bad though because it takes away the incentive to work as hard as possible. I mean if you are going to be taken off the job a few cases later what’s the point of giving your best? Also, they will only be able to alternate for a certain amount of time. After all, there is a limited amount of economists in the world..

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  4. Rob says:

    The comment moderation is working well, then?

    Anyway, this sort of litigation is so utterly stifling; America’s unrelenting legalism is frankly pathetic. Not that we’re (UK) so far behind.

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