chilling effect
Legal and social term for the discouragement of legitimate behavior by the threat of legal sanction or social pressure. Often used in discussions of free speech, journalism, and constitutional law.
This law is criticized for having a chilling effect on freedom of expression.
The risk of lawsuits is creating a chilling effect on journalism.
萎縮 means 'atrophy' or 'shrinkage' in a physical or metaphorical sense, while 萎縮効果 specifically refers to the legal/social 'chilling effect'.
Compound of 萎縮 (いしゅく, 'atrophy, shrinkage') and 効果 (こうか, 'effect'). The term is a calque of the English legal phrase 'chilling effect'.