Empirical Legal Studies

Call for Papers: 7th Annual Penn-NYU Empirical Contracts Workshop

As hints of our "pre-COVID" lives begin to emerge, including in-person conferences, I am delighted to pass along the following call for papers from a long-time ELS-blog reader:

The 7th Annual Penn-NYU Empirical Contracts Workshop is scheduled to place in-person at the New York University School of Law on 23 May 2023.

The Workshop is a forum for the presentation and discussion of early and mid-stage projects analyzing contract law and practice from a variety of empirical perspectives. Papers are selected through a peer review process.  Attendees of the conference are expected to cover their own travel and lodging costs, but there are no conference fees.

Submitted papers must be unpublished (and expected to be unpublished at the time of the conference). If accepted, authors will have an opportunity to submit a revised draft prior to the conference for presentation and discussion. Please note that accepted papers will be made available to all conference participants.

Please note that the Workshop paper submission deadline is 1 March 2023.

Organizing committee:  Dave Hoffman (Penn); Florencia Marotta-Wurgler (NYU) and Tess Wilkinson-Ryan (Penn).  Please email submissions to: wurglerf@exchange.law.nyu.edu   

Modeling Rare Events--SCOTUS Clerkships

Of the approximate 36,000 law school students who graduate each year, only 36 or so end up securing a SCOTUS clerkship. While a handful of biographical and anecdotal accounts exist, very few systematic data exist on the "1-in-1,000" clerkship lottery.

A recent paper by Tracey George (Vanderbilt), Albert Yoon (Toronto), and Mitu Gulati (Virginia), Some Are More Equal Than Others: U.S. Supreme Court Clerkship, digs into 40 years worth of data and provides rich granularity about this statistical rare event. In the main, while some unexpected twists emerge, what the authors find generally comports with perceived wisdoms. For example, a disproportionate number of clerks emerge from five elite law schools. One interesting change, however, is that while a SCOTUS clerkship once led "primarily to government and universities [law faculties]," former clerks now increasingly land at "law firms and corporations." An excerpted abstract follows.

"... Yet, we lack a clear story about who wins this clerkship lottery. This Essay seeks to provide that story. Our analysis relies on new datasets of all Court clerks who served between 1980 and 2020, including the details of their path to the Court and their road after. We amend and expand on theories of success in this important labor market. All clerks are highly qualified, yet the same is true for many not chosen. We find that educational pedigree, as opposed to academic performance or any other qualification, often distinguishes the winners from the also-rans. The Court clerkship selection process, like other elite labor markets, proves to be a blend of status and merit where status often prevails. Our analysis does not end there, however. We go on to look at where this forty-year cohort is currently working and confirm that once attained, a Court clerkship does lead to a bounty of opportunities including a return to the Court as a justice. Thus, the Court clerkship lottery is an important labor market not only to lawyers but also to society writ large. In the elite legal labor market, some people are, in fact, more equal than others."

More Evidence of a Racialized Death Penalty

Notably, race does not emerge as a central concern in the Court’s Furman decision, now more than fifty years old. In the decades since Furman, however, empirical evidence continues to mount documenting that "racial discrimination infects the administration of the death penalty." A recent paper by Jeffrey Fagan et al. (Columbia), Getting to Death: Race and the Paths of Capital Cases after Furman, represents a recent and important contribution to this literature. Researchers visited each judicial circuit in Georgia to record the details of every murder case that entered the courts from 1994–2005. Analyses of the 1,317 death-eligible murders suggest that “race continues to matter, and that the statutory aggravators that distinguish death cases from other killings are themselves racialized.” A more detailed description of the paper's core findings appears in the Abstract (below).

“Decades of research on the administration of the death penalty have recognized the persistent arbitrariness in its implementation and the racial inequality in the selection of defendants and cases for capital punishment. This Article provides new insights into the combined effects of these two constitutional challenges. We show how these features of post-Furman capital punishment operate at each stage of adjudication, from charging death-eligible cases to plea negotiations to the selection of eligible cases for execution and ultimately to the execution itself, and how their effects combine to sustain the constitutional violations first identified 50 years ago in Furman. Analyzing a dataset of 2,328 first- degree murder convictions in Georgia from 1995–2004 that produced 1,317 death eligible cases, we show that two features of these cases combine to produce a small group of persons facing execution: victim race and gender, and a set of case-specific features that are often correlated with race. We also show that these features explain which cases progress from the initial stages of charging to a death sentence, and which are removed from death eligibility at each stage through plea negotiations. Consistent with decades of death penalty research, we also show the special focus of prosecution on cases where Black defendants murder white victims. The evidence in the Georgia records suggests a regime marred less by overbreadth in its statute than capriciousness and randomness in the decision to seek death and to seek it in a racially disparate manner. These two dimensions of capital case adjudication combine to sustain the twin failures that produce the fatal lottery that is the death penalty.”

Data on Whether Lawyers Add Value in IPOs

A common complaint is that lawyers provide the "grit" while the I-bankers provide the "grease" when it comes to commercial transactions, especially IPOs. Existing research on lawyers' transactional roles focuses on two alternative perspectives: The skilled advice and the passive execution hypotheses. To test these two competing hypotheses, in a recent paper, Do Lawyers Matter in Initial Public Offerings?, Bates (ASU--Finance) et al. draw from the Thomson Financial Securities Data Company (SDC) new issues database to identify U.S. IPOs over the period of 1986–2016. After filtering, the study's final sample includes data on 7,460 IPOs.

What the paper finds may--or may not--surprise. Specifically, the results imply that issuer law firm fixed effects account for an "economically significant portion of the variation in IPO outcomes, even after accounting for underwriter fixed effects." Specifically, the paper notes that "legal advisor fixed effects explain approximately 16.7% of the variation in IPO underpricing, which is about 70% of the variation attributable to underwriters documented in this and prior studies." Thus, if these effects are real, the paper evidences "the economic importance of legal advisors in the IPO process." The abstract follows.

"This study provides novel evidence that law firms representing issuers have a material impact on economic outcomes in the IPO market. Fixed effects for legal counsel explain a significant portion of the variation in IPO underpricing, comparable to underwriter fixed effects documented in prior studies. Issuer law firms also exhibit differential skill in moderating the likelihood of IPO-related litigation, and have an idiosyncratic influence on the structure of IPO disclosures. Accounting for endogenous selection, we document that law firms associated with lower rates of IPO-related litigation are also associated with less first-day underpricing and receive higher fees from their clients."

An Online Resource of Note

For those new to ELS, and even those with more sophisticated questions, UCLA's statistical consulting site, festooned with an array of resource links (here), remains quite helpful. While the site continues to evolve over time, some well-organized and useful links will help orient and guide those engaged in ELS-related work. Examples include a quick reference chart on "choosing the correct statistical test" (which includes command syntax for SAS, Stata, SPSS, & R), illustrated examples of how to interpret annotated output for standard commands, and robust "FAQ" links that are, again, program-specific (complemented by a "general FAQ" link (here)).

Judges' Financial Holdings, Case Outcomes, and Recusal

Fundamental to the notion of a fair trial and the rule of law is the principle that a judge shall apply the law impartially and free from the influence of any personal biases. When real or perceived conflicts of interest emerge, judges are expected to recuse themselves. Despite such an expectation, however, recent Wall Street Journal reporting revealed many cases where judges violated U.S. law and judicial ethics (28 U.S.C. Section 455) by overseeing cases that involve companies in which they or their family-owned stock. Unsurprisingly, several of the cases with conflicts have been appealed.

While Chief Justice John Roberts downplayed the significance of the Wall Street Journal reporting, characterizing the judges' failures to recuse as "isolated violations" and "unintentional oversights," empirical explorations of the potential influence of judges' financial holdings on case outcomes remain rare. To address this scholarly gap, a recent paper, Judge Financial Holdings and Case Outcomes: Evidence from Judge Financial Disclosures, examines whether there is a relation between the financial holdings of judges and the outcomes of the trials over which they preside.

To construct the judges' investment data set, Harit (Univ. Texas-Dallas—mgmt.) et al. extracted judge financial disclosure data from the Free Law Project website. Their sample includes 33,726 annual disclosure reports involving 3,250 federal judges from 2000 to 2020. The authors lever the random assignment of cases to judges and examine whether a judge's rulings are related to his or her stock ownership in one or more of the parties in the case. The paper finds robust evidence that judges rule more favorably and take longer when deciding over conflicted cases as compared to unconflicted ones. It also notes that investors are positively surprised by these outcomes. The abstract follows.

"This paper examines the association between a judge's financial holdings and the outcome of legal cases. Using novel data on financial disclosures of judges and the civil case information of public firms across district courts in the United States between 2000 and 2021, we document multiple instances in which judges fail to recuse themselves in cases where they hold common stock. We find robust evidence that judges rule more favorably and take longer when deciding over conflicted cases as compared to unconflicted ones. We also find that investors are positively surprised by these outcomes, as reflected by stock returns to trial outcomes. Collectively, our results provide the first large-scale evidence of the relation between judges' financial holdings and case outcomes."

Interpreting DID Output

While one may quibble about how the questioner designed her DID estimation, the question itself--how to understand and interpret standard DID output (in Stata)--elicited some helpful replies in a recent StataList discussion (here).

The Two-Part Metascience 2023 Confernece(s)

At the request of a loyal Elsblog reader--who is also helping organize the Metascience 2023 conference--I pass along the following.

Metascience is an organization that promotes "global gathering for knowledge sharing, community building, and opportunities to define a roadmap of research and intervention priorities to accelerate science." To this end, "Metascience 2023" involves two separate--though related--conference components. The in-person component is scheduled for 9-10 May 2023, at the National Academy of Sciences in Washington, DC (USA). The organizing group is also mounting a free virtual component, set for "late April and early May," 2023.

For anyone interested in additional information, click here for general conference information, and here for the conferences' call for papers/proposals.

Civilian Complaints Against Police & Prosecutor "Upcharging"

Citizens’ engagement with police serves as a valuable resource. One particular form of citizen engagement—civil complaints—can impose a serious cost to the targeted police officer as well as the police department. To try to reduce the potential negative effects of a citizen complaint against law enforcement agents, other criminal justice actors could act to re-frame the encounter such that the optics look unfavorably on the complaining citizen. Since a defendant cannot seek monetary damages in civil court unless his/her conviction or sentence was declared invalid, prosecutors may increase the number or the severity of charges that the defendant faces to propel the defendant toward accepting a plea deal, which would prevent the defendant from seeking further financial reparations. In a new paper, Do Civilian Complaints Against Police Get Punished?, DeAngelo (Claremont Colleges) et al. pursue this question empirically.

To do so, the authors examine arrest, complaint and charging data from Cook County (Illinois). The results indicate that a positive, causal link between citizen complaints and an increased number of total charges filed against a defendant exists. The paper also notes that a civilian complaint yields a larger plea discount, likely to induce a plea agreement. Notably, the main findings are entirely driven by charges filed directly by the prosecutor’s office rather than directly by the police. Given that prosecutors are likely filing charges after civilian complaints have been filed against law enforcement, it appears that prosecutor behavior is leading to upcharging in response to civilian complaints and not police decisions. An excerpted abstract follows.

“… This paper empirically investigates one way in which criminal justice institutions respond to civilian complaints. Namely, criminal prosecutors can upcharge a defendant who files a civil complaint against law enforcement. By upcharging, the prosecutor can increase the likelihood that a defendant will accept a plea deal, thus preventing the defendant from seeking monetary damages in civil court (Heck vs. Humphrey, 1994). Using data on citizen complaints and criminal charge outcomes from Cook County (Illinois), we find a strong causal link between a citizen filing a complaint and the total number of charges filed.”

The Empirics of Sobriety Checkpoint Stops

Motor vehicle crashes remain the leading cause of death for Americans under age 25, and many of these crashes involve substance use. To help reduce the volume of impaired drivers, many--but not all--states allow for sobriety checkpoints (SC). While historically checkpoint stops were used to enforce drunk driving laws, they are increasingly being used to deter and prosecute drugged drivers, especially in states where marijuana is legal.

Although “no-cause” traffic stops remain controversial, comparatively little data exist that helps inform related debates. While the SCOTUS permits such stops as a general matter, courts in eleven states have ruled that state constitutional provisions preclude sobriety checkpoints. And those states that discontinued sobriety checkpoints provide a critical source of data that a recent paper, Sobriety Checkpoint Law, Fatal Car Crashes and Arrests, exploits. In their paper, Lauren Jones (OSU—public affairs) and C. Blain Moran (OSU—public affairs) compare trends in event frequencies “across states that did and did not turn off their SC laws, net of confounding factors.” The paper finds, at bottom, that when states make sobriety checkpoints illegal, annual fatal crashes and DUI arrests increase. The paper also notes a racial effect relating to DUI and cannabis arrests. The abstract follows.

“Sobriety checkpoints have been used since the early 1980s to enforce laws prohibiting driving while intoxicated (DWI), and to deter DWI. However, their constitutionality has been questioned, as they allow police to stop drivers without cause. As a result, eleven states have banned their use. Using a two-way fixed effects event study analysis, we estimate the effect of rendering sobriety checkpoints illegal on state-level counts of fatal car crashes, and arrests for driving under the influence of drugs or alcohol (DUI), and drug possession. We find evidence that when states make sobriety checkpoints illegal, the number of annual fatal crashes increases by 17 percent. We also find evidence that rendering sobriety checkpoints illegal leads to a 25 percent increase in the number of annual DUI arrests in a state, suggesting that the deterrent effect of checkpoints is much stronger than their enforcement impacts. We also find suggestive evidence that eliminating sobriety checkpoints increases racial disparities in DUI and cannabis possession arrests, with larger impacts on arrests among Black residents.”

Theory's Role in ELS

A not infrequent, though diminishing, canard is that "too many" empirical legal studies papers are "atheoretical." While the claim itself is an empirical one (and one that I side-step), a larger, broader point endures. Specifically, the best of ELS is certainly informed by well-developed theory. In a recent paper, The Role of Theory in Empirical Legal Studies, Tonja Jacobi (Emory) makes this case in a brief and widely accessible paper. While perhaps targeted to "early career" ELS scholars and non-technical consumers of empirical research, the paper helpfully reminds all of theory's essential role in empirical legal studies. The paper's abstract follows.

"The growing field of empirical legal studies is not an alternative to theory: within every empirical inquiry is an implicit formal theoretical model. Further, good empirical tests should be inspired by substantive theories of the phenomena being analyzed. This essay explains how theory is built into all empirical testing and illustrates why empirical tests are best informed by well-developed theories. It uses examples of empirical studies of both US Supreme Court and Australian High Court oral argument to illustrate how these issues apply to the central issues at the intersection of empirical legal studies and constitutional law: the role of judicial ideology and strategy, and predicting judicial behavior. The essay explores common errors in both conducting and consuming empirical work, and presents some solutions, including both methodological fixes and how to draw on substantive expertise. It aims to help the non-technical reader understand when counterintuitive results should be queried and when, in contrast, resistance is more reflective of priors of the reader rather than potential weaknesses of the work. And it acts as a reminder to technical readers and empirical practitioners that theory is built into every empirical test, and so must be taken seriously."

CELS 2023--Univ. of Chicago Law School

Coming on the heels of an exceptionally well-executed and successful CELS at Virginia, CELS 2023 co-organizers--Adam Chilton, Dhammika Dharmapala, and William Hubbard--announced that CELS 2023 is scheduled for 13-14 October 2023, at the University of Chicago Law School. More information will follow.

Case Outcomes & Judge Financial Conflicts

To assist with insuring that "justice is blind," a presiding judge is expected to recuse from any case where he/she is financially conflicted with any of the litigating parties. Evidence that this expectation is not being consistently met was widely reported in 2020-2021. Indeed, the public controversy elicited a response from Chief Justice John Roberts. In his 2021 annual report on the federal judiciary, and in direct response to the controversy surrounding numerous federal judges, Chief Justice Roberts downplayed the controversy’s significance, characterizing the incidents as "isolated violations" and "unintentional oversights."

Notwithstanding Justice Roberts' characterizations, given the widespread implications posed by judges' failures to recuse when proper it is important to understand whether these recent episodes are one-time incidents or point to a larger, systemic problem. To address this question, in a recent paper, Judge Financial Holdings and Case Outcomes: Evidence from Judge Financial Disclosures, Tuhin Harit (Univ. Dallas--Mgmt.) et al. examine whether there is a relation between judges' disclosed financial holdings and the outcomes of the trials over which they presided.

Drawing from a sample that includes cases from 2000–2021, the paper finds that “stock ownership by judges significantly improves the chances of a litigant's winning a case.” In cases where the presiding judge is financially conflicted with either the defendant or plaintiff, “their chance of a favorable decision improves by 3.3% and 4.3%, respectively, after controlling for judge, industry, district, case file year, and firm characteristics.” An excerpted abstract follows.

"... Using novel data on financial disclosures of judges and the civil case information of public firms across district courts in the United States between 2000 and 2021, we document multiple instances in which judges fail to recuse themselves in cases where they hold common stock. We find robust evidence that judges rule more favorably and take longer when deciding over conflicted cases as compared to unconflicted ones. We also find that investors are positively surprised by these outcomes, as reflected by stock returns to trial outcomes. Collectively, our results provide the first large-scale evidence of the relation between judges' financial holdings and case outcomes.”

Dodd-Frank, Accounting Fraud, and Whistleblowing

Owing to several notable financial frauds involving whistleblowers, regulators took steps to strengthen whistleblowing provisions. One prominent example is the Dodd-Frank whistleblower program which provides financial rewards to whistleblowers who report financial fraud to the SEC. While regulators may believe that the Dodd-Frank whistleblower law helps deter accounting fraud, whistleblower tips can be frivolous and processessing such tips is not cost-less. Similar to all too many public policies, little empirically is known about the the Dodd-Frank whistleblower provision's efficacy.

In a recent paper, Did the Dodd-Frank Whistleblower Provision Deter Accounting Fraud?, Philip Berger (Chicago--Booth Business) & Heemin Lee (Baruch College) examine whether the Dodd-Frank whistleblower law has a causal effect on the deterrence of fraud and quantify the size of the deterrence effect. Exploiting a control group of firms previously exposed to state-level false claims statutes, the paper sets out to assess the "underlying (or ex ante) likelihood of accounting fraud decreases for firms subject to Dodd-Frank and not previously exposed to the risk of whistleblowing" via analogous state laws. At least as it relates to Dodd-Frank's whistleblowing component, the paper a finds a decrease in the probability of fraud attributable to whistleblower provisions. The abstract follows.

“We examine the deterrence effect of the Dodd-Frank whistleblower provision on accounting fraud. To facilitate causal inference, we use state False Claims Acts (FCAs), under which whistleblowing about accounting fraud at a firm invested in by a state's pension fund can result in monetary rewards from that state’s government. We divide our sample into firms exposed and not exposed to whistleblowing risk from a state FCA during the 2008 – 2010 period that preceded the 2011 SEC implementation of the Dodd-Frank whistleblowing provision. We hypothesize that firms already exposed to a state FCA whistleblower law are less affected by the Dodd-Frank whistleblower provision. Using the companies exposed to a state FCA as control firms in our Dodd-Frank tests, the remaining firms constitute the treatment sample. We find that exposure to Dodd-Frank reduces the likelihood of accounting fraud of treatment firms by 12% to 22% relative to control firms, but do not find that it affects audit fees.”

Med Mal Insurance Premia & Economic Theory

The medical malpractice insurance market is inherently complex and made even more so by the growing number of state efforts to regulate it. Complexities aside, however, standard economic theory should, in the main, explain, to some degree, med mal premia trends. Findings from a recent paper, How Do Insurers Price Medical Malpractice Insurance?, by Bernie Black et al. (Northwestern), however, "are not easily explained by standard economic theory."

Prof. Black et al.'s paper analyzes almost three decades worth of med mal premia data (gathered by the Medical Liability Monitor). Core findings include:

• Med mal premia are only loosely connected to insurer costs, even over long periods;
• Premia are much higher in states with damage caps, even after controlling for costs; and
• The Premium/Cost Ratio varies widely both across states at a given time and within states across time.

Taken together, the paper's findings imply that med mal insurance companies do not fully adjust premia to changes in direct costs even over long time periods as standard economic theory might predict.