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Optimal attorney advertising

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  • Stone, Michael P.
  • Miceli, Thomas J.

Abstract

Attorney advertising routinely targets tort victims. This paper reviews legal services advertising restrictions in the United States and abroad. A theoretical model is developed which incorporates advertising intensity, litigation costs, and an endogenous number of lawsuits. Since advertising induces victims to bring suit, it increases the level of injurer care. However, litigation costs are also incurred. At the optimum, the marginal benefit of deterrence equals the sum of marginal litigation and advertising costs. Extensions of the model are considered, including the possibility that advertising stirs up frivolous lawsuits and that firms use advertising to rent seek. Fee shifting and alternative fee structures are also discussed. Although blanket prohibitions on attorney advertising are likely suboptimal, some regulations may be justified.

Suggested Citation

  • Stone, Michael P. & Miceli, Thomas J., 2012. "Optimal attorney advertising," International Review of Law and Economics, Elsevier, vol. 32(3), pages 329-338.
    • Handle: RePEc:eee:irlaec:v:32:y:2012:i:3:p:329-338
    DOI: 10.1016/j.irle.2012.07.001
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    Cited by:

    1. Friehe, Tim & Gabuthy, Yannick & Lambert, Eve-Angéline, 2020. "Settlement implications of lawyer advertising," International Review of Law and Economics, Elsevier, vol. 61(C).
    2. Frank H. Stephen, 2013. "Lawyers, Markets and Regulation," Books, Edward Elgar Publishing, number 14803.

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    More about this item

    Keywords

    Tort; Liability; Advertising; Attorneys; Lawyer; Legal services;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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