Of the Conditional Fee as a Response to Lawyers, Bankers and Loopholes
16 Pages Posted: 23 Apr 2018 Last revised: 12 Jul 2018
Date Written: 2011
In this essay, we make a concrete proposal to limit the extent to which lawyers facilitate problematic transactions of the sort that contributed to, and may have caused, the financial crisis. We propose that the fees of securities lawyers and perhaps other regulatory lawyers such as banking lawyers be "conditional." If the client became insolvent and was found to have materially violated the relevant regulations in the period leading up to insolvency, outstanding legal fees would not be payable and any fees paid to the lawyers by the client during the period of the violation would be disgorged. A finding of legal malpractice or other fault on the part of the lawyer would not be necessary, nor would proof that the violation caused the insolvency be required.
Keywords: Dodd-Frank, financial crisis, securities, regulatory, regulation, standards-based regulation
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