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Paying by the Hour: The Least Appealing Option for Clients of Lawyers

Author

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  • Jo Seldeslachts

Abstract

In this study, we analyze a client’s choice of contract in auctions where Dutch law firms compete for cases. The distinguishing feature is that lawyers may submit bids with any fee arrangement they wish. We find robust evidence that bids offering hourly rates are less attractive to clients. Our findings tentatively contradict lawyers’ often-made argument that hourly rates are in a client’s best interest.

Suggested Citation

  • Jo Seldeslachts, 2016. "Paying by the Hour: The Least Appealing Option for Clients of Lawyers," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 6(26/27), pages 295-299.
  • Handle: RePEc:diw:diwdeb:2016-26-1
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.538241.de/diw_econ_bull_2016-26-1.pdf
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    More about this item

    Keywords

    Lawyers’ fee arrangements; clients’ choices; discrete choice models;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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