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Access Type

WSU Access

Date of Award

January 2017

Degree Type

Dissertation

Degree Name

Ph.D.

Department

Economics

First Advisor

STEPHEN J. SPURR

Abstract

This paper investigates the determinants of the market for lawyers with a focus on demand variables including tort reform laws. In this study, I used the Feasible Generalized Least Squared method and a Panel Corrected Standard Error method, with year and State identifiers applied to a panel of U.S states, to estimate the determinants of the Number of Lawyers. I also used the Fixed Effect model with year and state identifiers to evaluate the effects of these determinants on the Earnings of Lawyers.

The findings show that the Lagged Number of Lawyers and the Lagged Alternative Earnings are both significant non-tort determinants of the Number of Lawyers. Other non-tort determinants such as Real GDP per Capita, Divorce Rate, the Amount of Insurance Losses per Registered Vehicle, and the Number of Bankruptcy Filed at the Federal District Courts have negligible impacts. I also found evidence that the three year lagged of the Earnings of Alternative Professions is the only non-tort determinant that has a significant increasing impact on the Earnings of Lawyers. Additionally, I found no evidence that any of the tort reforms affect the Number of Lawyers.

However, I found that Split Recovery Rule and Punitive Damages (Evidence) Rule significantly decreased the Earnings of Lawyers although Contingency Fee Rule increased the earnings of Lawyers.

I further investigated the impact of passing all three Punitive Damages reforms and all tort reforms. I found that states that passed all three Punitive Damages reforms or all tort reforms experienced no change in the Number of Lawyers although the Earnings of Lawyers significantly decreased. However, the individual impacts of these reforms seem larger than their combined effects. This may be because Split Recovery and Punitive Damages (Evidence) Rule are picking up the impact of previously implemented Caps on Punitive Damages. Perhaps, different reforms such as Contingency Fee Rule that increases the Earnings of Lawyers, are being offset by other reforms such as the Split Recovery that decreases the Earnings of Lawyers. In any case, the combined negative effects of tort reforms are greater than their combined positive effects on the market for lawyers.

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