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There is a consensus among economists, historians, and lawyers that the protection of property rights and the enforcement of contracts are among the proper functions of government. The intricacy of this consensus is that it does not tell us exactly how the state can design a functional legal system and what it takes it to effectively secure property and contract rights. In other words, this consensus tells us nothing about the desirable extent of government intervention (Glaeser and Shleifer 2002; Rodrik 2008). A growing literature in Law and Economics postulates that when courts are expensive, unpredictable and/or corrupt, regulation by government agencies can provide an (efficient) alternative to judicial enforcement. While recognizing the overlap, this literature often views litigation and regulation as substitutes (for an overview, see Kessler and Shleifer 2010). Regulation and litigation, however, can also be …