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What clients want: Choices between lawyers' offerings

Author

Listed:
  • Flóra Felső
  • Sander Onderstal
  • Jo Seldeslachts

Abstract

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 prefer: an hourly rate, a fixed fee or a "mixed fee", which is a time-capped fixed fee plus an hourly rate for any additional hours should the case take longer than expected. This format of selling legal services is unusual in that it both forces lawyers to compete directly against each other and allows clients to easily compare these dierent oers. We estimate a choice model for clients and find robust evidence that hourly rate bids are a client's least-preferred choice. Our findings tentatively contradict lawyers' often made argument that hourly rates are in a client's best interest.

Suggested Citation

  • Flóra Felső & Sander Onderstal & Jo Seldeslachts, 2015. "What clients want: Choices between lawyers' offerings," Working Papers of Department of Management, Strategy and Innovation, Leuven 486733, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    • Handle: RePEc:ete:msiper:486733
    Note: paper number MSI_1504
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    File URL: https://lirias.kuleuven.be/retrieve/979574af-a096-40a7-959c-2cb2133e16a4
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    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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