A Study On Analysis And Control Of Litigation Cost

Litigation cost refers to the sum of both the direct and the relevant cost that is produced along the process of making procedure law and conducting litigation mechanism. Therein, direct cost is the necessary input that is inherently positively related with the realization of litigation goal; relevant cost is the expense that does not have an intrinsic necessary link with the achievement of litigation aim, yet inevitable during litigation process. And the objective of litigation mechanism is to minimize the sum of these two kinds of cost.Litigation cost cannot be studied without litigation benefit. Litigation benefit is to, based on the proportion of lawsuit cost and the income, obtain the largest benefit by the least lawsuit investment. There are two fundamental points in litigation benefit: one is minimizing litigation cost; the other is maximizing litigation goal. By all means, to maximize lawsuit goal should not be at the expense of sacrificing uncontrolled litigation cost. It is inadvisable to pursue lawsuit goal by unlimited and expensive lawsuit cost.This thesis adopts the research method of combined standard and empirical analysis, combined qualitative and quantitative analysis, and combined systematic analysis and typical dissection, with the emphasis on standard, qualitative and systematic analysis. The thesis in particular applies Game Theory to analyze lawsuit decision, lawsuit reconciliation and lawsuit cost control path of both parties.In terms of the Game Theory analysis of the litigant's lawsuit decision, this thesis discusses the impact of litigation cost and benefit on the litigant's decision, analyzes the basic model of lawsuit decision, and conducts empirical analysis of lawsuit decision. The thesis suggests that the litigant must be cautious about lawsuit, because where there is litigation there must be litigation cost. If the litigant resort to the law with an otherwise unresolved dispute, the litigant needs to, before a lawsuit and with the help of a legal agent, analyze clearly the advantages and disadvantages of all aspects based on a comprehensive analysis of the case facts, obtained evidence and applicable law, figure out winning probability, evaluate final benefit and make the decision of whether filing a lawsuit or settling on concessive conditions or renouncing rights. The litigant's lawsuit decision plays a crucial role in pursuing the litigation goal and reducing litigation cost.The thesis explains the relationship between the litigant and entrusted agent, analyzes the necessity for lawyers to get involved in a lawsuit as legal agents, and discusses the necessity and feasibility of establishing a system where the losing party pays for the attorney fee of the winning party, adopting contingent fee method and building a lawsuit expense insurance system under the present conditions. As to how the litigant hires a good attorney and how to game and cooperate with the attorney, the thesis explains various conditions including the game between definite principal and agent, between uncertain yet under supervision principal and agent, between uncertain and without supervision principal and agent, and between principal and agent in litigation risk agency.As to litigation expense, the thesis dissects Nash Equilibrium of litigation cost burden and its sharing based on the introduction of litigation cost pay range and standards, and also the conditions of litigation cost reduction, delay and elimination.In terms of the Game Theory analysis of the litigant's lawsuit reconciliation, the thesis proposes the information base of reconciliation, builds the fundamental model of lawsuit reconciliation, discusses the choosing tendency of information and the litigant, and analyzes the reconciliation conditions of several rounds of negotiations. A conclusion is thus reached that the skills the litigant and attorney use in lawsuit game also have great impact on reducing and controlling litigation cost on the condition that lawsuit expense, attorney fee and lawsuit procedure rules are fixed. For the reason that lawsuit is rather expensive, it will undoubtedly benefit both parties if they compromise on their requests to reach settlement and finish the lawsuit early. Therefore, to grasp reconciliation information base, propose timely reconciliation terms and manage to reach a settlement can save more litigation cost than further lawsuit.In terms of litigation cost control, the thesis studies in detail the terms of litigant's prosecution and reconciliation, analyzes specifically the situation where the inappropriate lawsuit behavior of the litigant leads to litigation cost increase and how to master lawsuit game skills, and conducts empirical analysis of real cases on the process of benefit game of both parties. Meanwhile, the thesis also analyzes the problems of China's Civil Procedure Law on the controlling of civil lawsuit cost. As to the structure of the Civil Procedure Law, the thesis offers a legislative proposal of building low-cost legal system, including establishing small claims procedure, perfecting ordinary simple procedure, simplifying special procedure, and so on. Moreover, the thesis emphatically analyzes in theory and in practice the disadvantages of Remand for Retrial System, and suggests this system canceled. Study shows that the litigation cost for achieving the same lawsuit goal or result varies in quantity, and sometimes it varies a lot. To explain this, there are certainly many factors, among which the inappropriate lawsuit behavior of the litigant that leads to litigation cost increase and failure to achieve lawsuit goal takes up a big part. For this reason, studying the lawsuit behavior of the litigant is of great significance for controlling litigation cost. In addition, the structural defect in the Civil Procedure Law is also an important cause for exorbitant litigation cost and underperforming lawsuit procedure.Based on the study, the thesis build a fairly complete frame of litigation cost analysis and control from the aspects of system structure, realization model and analysis of the litigant's litigation behavior process with standard and empirical analysis method.