Cashing by the Hour: Why Large Law Firms Prefer Hourly Fees Over Contingent Fees

Posted: 16 Sep 2008

See all articles by Nuno Garoupa

Nuno Garoupa

George Mason University - Antonin Scalia Law School, Faculty

Fernando Gomez-Pomar

Universitat Pompeu Fabra

Multiple version iconThere are 2 versions of this paper

Date Written: October 2008

Abstract

Large law firms seem to prefer hourly fees over contingent fees. This article provides a moral hazard explanation for this pattern of behavior. Contingent legal fees tend to align the interests of the attorney with those of the client but not necessarily with those of the partnership. We show that the choice of hourly fees is a solution to a common agency problem. The article also discusses other possible explanations. (JEL J4, K1, K2, K4)

Suggested Citation

Garoupa, Nuno and Gomez-Pomar, Fernando, Cashing by the Hour: Why Large Law Firms Prefer Hourly Fees Over Contingent Fees (October 2008). The Journal of Law, Economics, & Organization, Vol. 24, Issue 2, pp. 458-475, 2008. Available at SSRN: https://ssrn.com/abstract=1268658 or http://dx.doi.org/10.1093/jleo/ewm063

Nuno Garoupa (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Fernando Gomez-Pomar

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
Spain
(34-93) 542 16 47 (Phone)
(34-93) 542 17 31 (Fax)

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