Frivolous lawsuits refer to cases that are brought by plaintiffs with the only objective to extract settlement offers from defendants. Whereas a wide literature questions the credibility of frivolous litigation, this phenomenon had significant policy implications by inspiring several legal reform acts designed to deter meritless claims. Indeed, the issue of frivolous suits may be important from a welfare perspective since such claims may consume substantial resources (due to litigation costs, judicial congestion, etc.) and have negative distributive consequences (since a payment is made to a party who has no legal entitlement to recovery).