[en] Parties engaged in a litigation generally enter the discovery process with different informations
regarding their case and/or an unequal endowment in terms of skill and ability to
produce evidence and predict the outcome of a trial. Hence, they have to bear different legal
costs to assess the (equilibrium) plaintiff’s win rate. The paper analyses pretrial negotiations
and revisits the selection hypothesis in the case where these legal expenditures are private
information. This assumption is consistent with empirical evidence (Osborne, 1999). Two
alternative situations are investigated, depending on whether there exists a unilateral or a
bilateral informational asymmetry. Our general result is that efficient pretrial negotiations select
cases with the smallest legal expenditures as those going to trial, while cases with largest
costs prefer to settle. Under the one-sided asymmetric information assumption, we find that
the American rule yields more trials and higher aggregate legal expenditures than the French
and British rules. The two-sided case leads to a higher rate of trials, but in contrast provides
less clear-cut predictions regarding the influence of fee-shifting. [/en]