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Who Benefits from the Uniformity of Contingent Fee Rates?

Author

Listed:
  • Zamir Eyal
  • Medina Barak

    (Faculty of Law, Hebrew University of Jerusalem, Jerusalem 91905, Israel)

  • Segal Uzi

    (Department of Economics, Boston College, Chestnut Hill, MA, USA and WBS)

Abstract

Lawyers’ contingent fee (CF) rates are rather uniform, often one-third of the recovery. Arguably, this uniformity is a type of anti-competitive price-fixing, which results in clients paying supra-competitive fees. This paper challenges this argument. It shows that uniform CF rates provide clients with an important advantage, as such rates enable them to make a de facto “take-it-or-leave-it” offer. Consequently, lawyers cannot exploit their private information, and clients retain the transaction’s entire surplus and may hire the best lawyer among those who find it profitable to handle the case.

Suggested Citation

  • Zamir Eyal & Medina Barak & Segal Uzi, 2014. "Who Benefits from the Uniformity of Contingent Fee Rates?," Review of Law & Economics, De Gruyter, vol. 9(3), pages 357-387, January.
    • Handle: RePEc:bpj:rlecon:v:9:y:2014:i:3:p:357-387:n:4
    DOI: 10.1515/rle-2013-0009
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    References listed on IDEAS

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