Question: Example 4 at the beginning of this chapter concerns whether a judge should order a divorcing couple to attempt mediation before beginning a trial. Assume that false optimism causes trials and predict whether compulsory mediation would cause more disputes to be settled without trial.
Example 4: A Los Angeles manufacturer faces large liabilities for dumping hazardous waste in 1965. The manufacturer files a claim with the London insurer that supplied its policy in 1965. The insurer denies that the insurance policy covers the loss. The manufacturer has the option of suing the insurer in Los Angeles or London. In Los Angeles, each side pays its own legal costs, whereas in London the loser pays the legal costs of the winner. The manufacturer asks its counsel how the allocation of legal costs should influence its choice of the place to file suit.