How lawyers use economics


Law 248.6 (2 units), Th 3:35-5:25 in Law School Room 10, Spring 2011
Suzanne Scotchmer and Ken Taymor

Description: Practicing lawyers work with economists as expert consultants in many ways: to calculate damages in patent infringement or breach of contract cases, to calculate damages in tort cases, concepts of takings, valuation of companies, the structuring of securities, theories of discrimination in insurance, theories of discrimination in employment, taxation issues such as the recognition and valuation of taxable income, definitions of a market for different purposes, for example, antitrust, IP damages, and contracts. The purpose of the course is not "economic analysis of the law", but rather to prepare students for a practice that involves interaction with economic experts. You will hear from testifying economics experts and lawyers who use their services.


Prerequisites: None.


Requirements: Faithful attendance, and four written assignments chosen from these.





The readings are either linked or in bspace.

Week 1

Jan 13


(a) Economists in court

(b) Economics in regulatory rule making (cost-benefit analysis)

Mandel. Going for the Gold: Economists as Expert Witnesses. Journal of Economic Perspectives 1999, 113-120.

Interview with Ken Feinberg on 9-11 compensation (lawyer who specializes in mediating compensation cases)

Adler, Posner. New Foundations of Cost-benefit Analysis (Harvard Univ 2006) 1-6 (Intro), 101-123 (ch. 4)

Garber, Sox. Role of Costs in Comparative Effectiveness Research. Health Affairs 129:1805-1811 (2010).

UK National Institute for Health and Clinical Excellence Measuring cost effectiveness: the QALY

Kirkdale et al. The Cost of a QALY, Quarterly J of Medicine 103:715-720.

Week 2

Jan 20

The practice of cost benefit analysis: mostly health care

Late breaking news Obama's new Executive Order on cost/benefit analysis

Brent, Applied Cost-Benefit Analysis (Elgar 1996), 3-19 on conceptual foundations

Knoll and Colon. 2006. The Calculation of Prejudgment Interest. Penn Law Sch Research paper 06-21.

Campbell, Brown, Benefit-cost Analysis (Cambridge Univ 2003), 36-44 on discounting “nuts and bolts”

Viscusi, Aldy, The Value of a Statistical Life, J of Risk and Uncertainty 27:5-76 (2003). You needn’t read this article in detail. Try to understand the technique for valuing risk, and the range of valuations.

Truog. Screening Mammorgraphy and the R word. Health Policy and Reform. Nov 25, 2009.

Shabtai, Revisiting the USPSTF Screening Guidelines, Clinical Correlations (NYU Internal Medicine Blog)

Weeks 3,4

Jan 27

Feb 3

The practice of cost benefit analysis: Environmental torts

Swanson, Kontoleon. What is the role of Environmental valuation in the courtroom? The US experience and the proposed EU directive

Kopp, Smith, Benefit Estimation goes to Court. J of Policy Analysis and Management 8:593-612 (1989).

Hirsch. Exxon Valdez Litigation, Justice Delayed: Seven Years Later and No End in Sight 1996

Guest: Litigating attorney William Hirsch


Exxon Valdez

contingent valuation


Diamond and Hausman, Is some number better than no number? 1994 J of Econ Perspectives 8:45-64.

Hanemann. Valuing the Environment through Contingent Valuation. 1994 J of Econ Perspectives 8:18-44.

Portney. The Contingent Valuation Debate: Why Economists should Care. 1994 J of Econ Perspectives 8:3-17.

Week 5

Feb 10

IP infringement damages

Oracle v. SAP:

two WSJ pieces for background

Oracle v. SAP Complaint

two experts’ testimony, Clarke and Meyer

Guest: Steven C. Holtzman, Plaintiff’s attorney

Week 6

Feb 17

Prejudgment interest

IP infringement damages

Knoll and Colon. 2006. The Calculation of Prejudgment Interest. Penn Law Sch Research paper 06-21.

Zynga v. Playdom two complaints

Week 7,8

Feb 24

March 3

Contract damages

Fictional case from Henry Hecht and Vince O’Brien: Donna Taylor v. Shape-up Stores, Inc. (not in bspace)

Craswell. Against Fuller and Perdue. Univ of Chic Law Rev 67:99-161 (2000)

Ehrlich v. Menezes, 981 Pac2nd 978 (1999)

Jacob and Youngs, Inc. vs. Kent, 129 NE 889 (1921)

Week 9

March 10

Contract damages and corporate governance and control

Katz v. Oak Industries Inc., 508 A.2d 873  (1986)

? Revlon v. MacAndrews & Forbes, 506 A.2d 173 (1986)

Week 10

March 17*


Antitrust: Credit cards

U.S. v. VISA and MasterCard 2003 Appellate Opinion (read) and other reference materials (optional)

Expert report of testifying economics expert

Guest: testifying economics expert Prof. Michael Katz

Week 11

March 31


Antitrust rules on experts

Kennedy, Raoul. 2010. Expert Witness Depositions. In Henry L. Hecht, Effective Depositions. ch 19, 505-558. American Bar Association, Section on Litigation.

Kitzmiller v. Dover School district (intelligent design)

Week 12 April 7*

Antitrust Sherman Act Case

(rule of reason)

Infinite Interiors v. Mitchell Arts and Crafts and

Guest: Beth Parker, Arnold & Porter

Week 13

April 14

Regulatory takings and eminent domain

Wilde. Keeping the Gate: Damages Testimony in Cases Alleging Property Value Diminution due to Contamination Toxics Law Reporter 2009.

Week 14

not April 21

We will use a make-up slot


theories of damages and how to measure them.