Expertise, Contingent Fees, and Excessive Litigation
Center of Economic Policy Research, London, Discussion Paper No. 1487
Posted: 14 Nov 1996
Date Written: August 1996
Plaintiffs have either strong or weak cases. Both cases should be taken to court, yet weak cases need more work by the attorney than strong cases. Only the attorney knows whether a case needs additional work or not; the plaintiff is forced to rely on the attorney's recommendation. We show that under contingent fees there will generally be excessive litigation. In contrast, an hourly fee implements the efficient amount of litigation.
JEL Classification: D82, K41
Suggested Citation: Suggested Citation