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To achieve equality and justice is the main objective of China’s judicial reform. However, due to the scarcity of judicial resources in China, the cost of achieving equality and justice must be considered when designing the judicial system. Thus, how to balance equality, justice and judicial costs has become one of the most complicated questions of the reform. Analysis of the legal fee arrangements provides a unique perspective for this issue. In this paper, we use the method of law and economics to analyze this question. Through setting up a dynamic game model for litigation, we compare the effects of different legal fee arrangements on equality, justice and the social cost. Through data simulation, our theoretical findings are interpreted intuitively. The paper also scrutinizes institutional factors in system designing, which provides useful implications for the judicial reform. In addition, our research findings have amended the inconsistence of results between theoretical reasoning and empirical evidence.

Judicial Reform in China: From the Perspective of Legal Fee Arrangements