Why Plaintiffs' Attorneys Use Contingent and Defense Attorneys Fixed Fee Contracts

24 Pages Posted: 2 Aug 2014 Last revised: 14 Apr 2016

See all articles by Winand Emons

Winand Emons

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

Claude Fluet

Université Laval

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Date Written: August 1, 2014

Abstract

Victims want to collect damages from injurers. Cases differ with respect to the judgment. Attorneys observe the expected judgment, clients do not. Victims need an attorney to sue; defense attorneys reduce the probability that the plaintiff prevails. Plaintiffs' attorneys offer contingent fees providing incentives to proceed with strong and drop weak cases. By contrast, defense attorneys work for fixed fees under which they accept all cases. Since the defense commits to fight all cases, few victims sue in the first place. We thus explain the fact that in the US virtually all plaintiffs use contingency while defendants tend to rely exclusively on fixed fees.

Keywords: litigation, contingent fees, fixed fees, expert services

JEL Classification: D82, K41

Suggested Citation

Emons, Winand and Fluet, Claude-Denys, Why Plaintiffs' Attorneys Use Contingent and Defense Attorneys Fixed Fee Contracts (August 1, 2014). Available at SSRN: https://ssrn.com/abstract=2475032 or http://dx.doi.org/10.2139/ssrn.2475032

Winand Emons (Contact Author)

University of Bern - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Claude-Denys Fluet

Université Laval ( email )

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