Abstract
This thesis uses theoretical models to study the effects of recent developments in the funding of civil litigation in England and Wales. This involves a form of contingency payment (conditional fees), a legal expenses insurance that can be purchased either before or after an accident has taken place and the combination of them. The issue revolves around the implications of litigants' choices and lawyers' effort decision. More recently, policy discussion has raised the possibility of legal service being delivered in new organisational structures. We first use a model to analyse the combined effects of the insurance and the fee arrangements on settlement probabilities, settlement amount, care levels and litigants' welfare. After that, we extend our model to consider the role of risk aversion in litigation and the timing of settlement. Then, we examine the effects of law firm's organisational structure and ownership changes on its legal effort provision in a property rights framework. Our results show that plaintiffs generally benefit from an organisational structure which allows law firms to provide legal insurance services. Efficiencies and welfare effects of other potential business structures are also examined. Other issues such as the three-way relationship between a client, his lawyer and an insurer and comparisons between health care insurance and legal expenses insurance are also discussed in this thesis. This thesis differs from other contributions in this area for two reasons. First, it recognises the complementarity between fee reform and structural developments. Second, it considers the effects of these arrangements on lawyer effort.