Lawyers Steer Clients Toward Lucrative Filings: Evidence from Consumer Bankruptcies

40 Pages Posted: 12 Nov 2010 Last revised: 31 Jul 2013

See all articles by Frank McIntyre

Frank McIntyre

Amazon.com

Daniel M Sullivan

JPMorgan Chase Institute

Laura Summers

Brigham Young University - Department of Economics

Date Written: July 10, 2013

Abstract

Consumers often rely on lawyers to make complicated legal decisions, though in many cases, the lawyer’s financial interests are at odds with those of the client. We consider this general problem in the context of consumers filing for bankruptcy. Lawyers advise debtors on whether to file the cheaper Chapter 7 filing or the more expensive, and more likely to be dismissed, Chapter 13 filing. We show that bankruptcy courts that allow lawyers to charge more for Chapter 13 bankruptcy filings see a larger fraction of Chapter 13 filings. This is true controlling for a host of demographic controls at the zip code level, as well as with state fixed effects.

Keywords: Bankruptcy, Principal-Agent Problems

Suggested Citation

McIntyre, Frank and Sullivan, Daniel M and Summers, Laura, Lawyers Steer Clients Toward Lucrative Filings: Evidence from Consumer Bankruptcies (July 10, 2013). Available at SSRN: https://ssrn.com/abstract=1708111 or http://dx.doi.org/10.2139/ssrn.1708111

Frank McIntyre (Contact Author)

Amazon.com ( email )

Seattle, WA 98144
United States

Daniel M Sullivan

JPMorgan Chase Institute ( email )

601 Pennsylvania Avenue NW
Washington, DC 20004
United States

Laura Summers

Brigham Young University - Department of Economics ( email )

130 Faculty Office Bldg.
Provo, UT 84602-2363
United States

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