Conditional Versus Contingent Fees

University of Bern Discussion Paper No. 04.08

17 Pages Posted: 25 May 2004

See all articles by Winand Emons

Winand Emons

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

Multiple version iconThere are 3 versions of this paper

Date Written: May 24, 2004

Abstract

Under contingent fees the attorney gets a share of the judgement; under conditional fees the lawyer gets an upscale premium if the case is won which is, however, unrelated to the adjudicated amount. We compare conditional and contingent fees in a framework where lawyers are uninformed about the clients' cases. If there is asymmetric information about the merits of cases, in equilibrium attorneys will offer only conditional fees. If there is asymmetric information about the risk of cases, only contingent fee contracts are offered in equilibrium.

Keywords: Contingent fees, conditional fees, adverse selection, moral hazard, screening, pooling

JEL Classification: D82, K1

Suggested Citation

Emons, Winand, Conditional Versus Contingent Fees (May 24, 2004). University of Bern Discussion Paper No. 04.08, Available at SSRN: https://ssrn.com/abstract=550301 or http://dx.doi.org/10.2139/ssrn.550301

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Centre for Economic Policy Research (CEPR)

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