Private Law Theory

ABSTRACT
We examine whether plaintiff’s attorney marketing releases are useful in predicting the incidence and severity of corporate litigation. We find that both traditional and social media announcements of attorneys’ corporate investigations strongly predict future litigation, controlling for known determinants of litigation risk including the adverse corporate events and negative stock returns that trigger the investigations. Our results suggest that the predictive value of social media marketing is incremental to that of traditional media, and we also provide evidence consistent with social media marketing serving a causal role in facilitating litigation. Furthermore, we find that plaintiff’s attorneys’ efforts to recruit additional plaintiffs after a lawsuit has been filed signal that the lawsuit is more likely to succeed and result in more severe damages. Our results are consistent with plaintiff’s attorneys’ pre-filing marketing efforts providing a timely public signal of future litigation, and their post-filing marketing decisions reflecting their ongoing assessment of corporate liability.

Kaplan, Steven E and Masli, Adi and Peterson, Matt and Weisbrod, Eric H, Corporate Ambulance Chasing? Plaintiff’s Attorney Marketing as a Signal of Corporate Litigation Risk (March 13, 2024).