Article:
Samuel Issacharoff & George Loewenstein, Unintended Consequences of Mandatory Disclosure, 73 TEX. L. REV. 753 (1995).
 

Abstract:
Professors Issacharoff and Loewenstein take a fresh look at the wisdom of mandatory disclosure by focusing on whether or not the rule is effective in performing its primary task—decreasing the cost of litigation. The Article assesses the likely consequences of mandatory disclosure using both an economic approach and an assessment of the potential litigation strategies created by the new rule. The authors begin by establishing a formal economic model of settlement to examine the impact of mandatory disclosure on the timing and frequency of settlement. The authors then modify their model by considering various aspects of psychology that challenge the traditional assumptions of economic theory.

The authors conclude that mandatory disclosure will have the opposite of its intended effect. Because it increases the up-front costs of litigation, cases that would ordinarily settle without discovery have increased systematic costs. These costs are not ameliorated by any savings under mandatory disclosure because the cost of filing routine discovery is not substantial. Furthermore, the increased up-front costs, rather than decreasing the amount of suits, will likely give greater vitality to strike suits because the defendant is the party that bears the costs of early discovery. Finally, the authors note that early discovery will probably not promote settlement because the disclosed information is likely to be the subject of self-serving judgments that may block efficient settlements.