On Thursday, March 1, 2018 Professor Kish Parella presented her work in progress, Public Relations Litigation, at the BYU Winter Deals Conference that “brings leading scholars and practitioners to Park City, UT to discuss the modern global economy’s most pressing legal issues.” Professor Parella presented on a panel exploring issues in corporate governance. An abstract of her paper is below:
“It is no secret that litigation can harm a defendant’s reputation. Less well understood is that plaintiffs—and especially sophisticated business plaintiffs—use litigation to enhance their reputations. Technology companies use patent litigation to enhance their reputations among employees; consumer products companies use litigation to affect consumers’ opinions about competitors; and lawsuits against public companies influence shareholders and affect stock prices. Corporate plaintiffs may even use litigation to repair their reputations following a public scandal. All these disparate examples illustrate one simple truth: litigation offers a stage.
“ This Article examines how and why litigants use courts of law to influence the court of public opinion. In doing so, this Article makes three contributions to the literature. Descriptively, it improves our ability to understand litigants’ incentives. For decades, legal scholars have asked: why do plaintiffs file lawsuits they know they cannot win? This question has divided scholars: Law and economics scholars argue it is because of wealth extraction through settlements, while law and social movements scholars attribute it to social mobilization and heightened public awareness. This Article synthesizes the insight from these academic camps to provide a more complete and nuanced understanding of litigants’ incentives: that is, litigation can serve economic and informational objectives for both private and public gain. Normatively, this Article highlights the importance of an oft-neglected function of adjudication: information transmission. Accounting for litigation’s effects in court of public opinion enables us to better distinguish between socially desirable and undesirable “public relations litigation.” Practically, this insight allows us to design better rules for encouraging the former while discouraging the latter.”
