Risks, Reputations, and Rewards: Contingency Fee Legal Practice in the United States
Herbert M. Kritzer, RISKS, REPUTATIONS AND REWARDS: CONTINGENCY FEE LEGAL PRACTICE IN THE UNITED STATES, Stanford University Press, July 2004
Posted: 6 Aug 2004
Risks, Reputations and Rewards posits that the best way to understand the work of contingency fee practitioners is to conceptualize it as managing a specialized type of investment portfolio involving unique types of risks. The investment is largely the lawyer's time and the return is the fee that the lawyer ultimately receives. The lawyer must confront and try to manage a variety of risks, reflecting the uncertainty the lawyer has regarding the size of the investment that will be necessary and the uncertainty regarding the amount of return, if any, that will be realized from that investment. The economic theory of portfolio management provide insights into the work of contingency fee practitioners, and moves beyond the traditional economic analyses which have looked at contingency fees from the perspective of individual cases rather than as a portfolio of cases. The resulting shift in perspective shows many of the agency problems emphasized in most analyses of the contingency fee are less significant than previously thought.
The book considers a wide variety of specific questions related to contingency fee practice most of which are understandable within the portfolio perspective: What are the nature of contingency fees that lawyers charge, how do lawyers get and screen potential cases, what does the work of handling contingency fee cases involve, how do contingency fee lawyers interact with their clients and opponents, what is involved in settling contingency fee cases, what types of returns do contingency fee cases produce, and what roles do reputation place in contingency fee practice?
The empirical analysis in the book draws upon a range of data, both quantitative and qualitative in nature. The original data analyzed by the author includes a mail survey of contingency fee practitioners in Wisconsin, a general population survey of Wisconsin residents, a survey of accident victims in Wisconsin targeted for direct mail solicitation, three months of observation of contingency fee practitioners in three different practices, and semi structured interviews with contingency fee practitioners and representatives of the opposing parties in contingency fee litigation. In addition to these data, the analyses draw on two national data sets collected by the RAND Corporation, which provide evidence of the generalizability of the findings.
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