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Why Plaintiffs' Attorneys Use Contingent and Defense Attorneys Fixed Fee Contracts

  • Winand Emons
  • Claude Fluet

Victims want to collect damages from injurers. Cases differ with respect to the judgment. Attorneys observe the expected judgment, clients do not. Victims need an attorney to sue; defense attorneys reduce the probability that the plaintiff prevails. Plaintiffs’ attorneys offer contingent fees providing incentives to proceed with strong and drop weak cases. By contrast, defense attorneys work for fixed fees under which they accept all cases. Since the defense commits to fight all cases, few victims sue in the first place. We thus explain the fact that in the US virtually all plaintiffs use contingency while defendants tend to rely exclusively on fixed fees.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 1338.

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Date of creation: 2013
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Handle: RePEc:lvl:lacicr:1338
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  1. Alon Klement, 2004. "Incentive Structures for Class Action Lawyers," Journal of Law, Economics and Organization, Oxford University Press, vol. 20(1), pages 102-124, April.
  2. Eyal Zamir & Ilana Ritov, 2010. "Revisiting the Debate over Attorneys' Contingent Fees: A Behavioral Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 245-288, 01.
  3. Dana, James D, Jr & Spier, Kathryn E, 1993. "Expertise and Contingent Fees: The Role of Asymmetric Information in Attorney Compensation," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(2), pages 349-67, October.
  4. Patricia Munch Danzon, 1983. "Contingent Fees for Personal Injury Litigation," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 213-224, Spring.
  5. Daniel F. Rubinfeld & Suzanne Scotchmer, 1993. "Contingent Fees for Attorneys: An Economic Analysis," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 343-356, Autumn.
  6. Emons, Winand, 2004. "Conditional versus Contingent Fees," CEPR Discussion Papers 4532, C.E.P.R. Discussion Papers.
  7. Lynk, William J, 1990. "The Courts and the Market: An Economic Analysis of Contingent Fees in Class-Action Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 19(1), pages 247-60, January.
  8. A. Mitchell Polinsky & Daniel L. Rubinfeld, 2003. "Aligning the Interests of Lawyers and Clients," American Law and Economics Review, Oxford University Press, vol. 5(1), pages 165-188.
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