STRATEGIC DECISIONS ON LAWYERS' COMPENSATION IN CIVIL DISPUTES

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By this: publisher
In this Subject: Economics
By this author: BAIK, KYUNG HWAN ;&nbsp; KIM, IN-GYU

Authors: BAIK, KYUNG HWAN; KIM, IN-GYU

Source: Economic Inquiry, Volume 45, Number 4, October 2007 , pp. 854-863(10)

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Abstract:

We study a model of civil dispute with delegation in which a plaintiff's lawyer works on a contingent-fee basis but a defendant's lawyer on an hourly fee basis. We first derive the condition under which delegation to the lawyers brings both litigants more payoffs compared with the case of no delegation. We then show that under this profitable delegation condition, the contingent-fee fraction for the plaintiff's lawyer is about one-third. Next, allowing the plaintiff to choose between the two fees, we show that under the profitable delegation condition, the plaintiff chooses the contingent fee, given that the defendant adopts the hourly fee. (JEL K41, K13, D74, D72)

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1465-7295.2007.00054.x

Publication date: 2007-10-01