Bruce Kobayashi, Larry Ribstein
Date Posted: 2004
Private lawyers are significant participants in legislative and judicial lawmaking. However, since law is a public good, lawyers face a significant free-rider problem in investing time and other resources in law-creation other than to the extent necessary to win the case for their client. This Article focuses on the lawmaking incentive problem inherent in class actions, and specifically on class action complaints. Because a class action lawyer prepares a complaint without knowing whether a court ultimately will select her as counsel for the class, the lawyer may have less incentive to put effort into the complaint than if she had been hired prior to drafting the complaint. This Article discusses ways such lawyers can be given adequate incentives to maximize the law-creation value of their complaints. It shows that direct protection, as through intellectual property rights, is not legally available, primarily because of due process concerns for public access to the law. We suggest that protection is best provided by the institutions for choosing the lead plaintiffs and lead counsel in class actions.