Bargaining through an Expert Attorney
AbstractThe following is a three-player litigation model. Previous litigation models analyze the litigation process as a two-player strategic game of incomplete information, where equilibrium usually involves a positive probability of trial. These litigation models assume the attorney and her client have the same objectives. However, an attorney paid by contingency fee may want to settle a case, even when it is not advantageous to her client, in order to avoid the cost of preparing for trial. In this paper, the plaintiff and attorney, paid by contingency fee, act as a principal and agent who are bargaining with another principal, the defendant. The attorney is able to learn part of the defendant's private information, at a lower cost than the plaintiff could. Supported by previous empirical studies, I find that as the stakes of the case rise, the range of contingency fees mutually advantageous for plaintiff and attorney falls. Copyright 1994 by Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Journal of Law, Economics and Organization.
Volume (Year): 10 (1994)
Issue (Month): 1 (April)
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- Hyde, Charles E., 2006. "Conditional versus contingent fees: Litigation expenditure incentives," International Review of Law and Economics, Elsevier, vol. 26(2), pages 180-194, June.
- Douglas Cumming, 2001. "Settlement Disputes: Evidence from a Legal Practice Perspective," European Journal of Law and Economics, Springer, vol. 11(3), pages 249-280, May.
- Spier, Kathryn E. & Sykes, Alan O., 1998. "Capital structure, priority rules, and the settlement of civil claims," International Review of Law and Economics, Elsevier, vol. 18(2), pages 187-200, June.
- Arzu Kıbrıs, 2012. "Uncertainty and ratification failure," Public Choice, Springer, vol. 150(3), pages 439-467, March.
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