Playing it Safe with Low Conditional Fees Versus Being Insured by High Contingent Fees

Posted: 29 Feb 2008

See all articles by Winand Emons

Winand Emons

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR)

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Date Written: 2006

Abstract

Under contingent fees the attorney gets a share of the judgment; under conditional fees he gets an upscale premium if the case is won, a premium unrelated, however, to the adjudicated amount. This article compares conditional and contingent fees in a framework where lawyers choose between a safe and a risky litigation strategy. Under conditional fees lawyers prefer the safe strategy; under contingent fess, the risky one. Risk-averse plaintiffs prefer conditional fees over contingent fees when lawyering costs are low and vice-versa for high lawyering costs.

Suggested Citation

Emons, Winand, Playing it Safe with Low Conditional Fees Versus Being Insured by High Contingent Fees ( 2006). American Law and Economics Review, Vol. 8, Issue 1, pp. 20-32, 2006, Available at SSRN: https://ssrn.com/abstract=1095565 or http://dx.doi.org/10.1093/aler/ahj002

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