The Economics of Us-Style Contingent Fees and Uk-Style Conditional Fees

20 Pages Posted: 10 Aug 2004

See all articles by Winand Emons

Winand Emons

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

Nuno Garoupa

George Mason University - Antonin Scalia Law School, Faculty

Multiple version iconThere are 2 versions of this paper

Date Written: July 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 principal-agent framework where the lawyer chooses unobservable effort after they have observed the amount at stake. Contingent fees provide better incentives than conditional fees independently of whether upfront payments are restricted to be non-negative or not. Under contingent fees, the attorney uses their information about what is at stake more efficiently.

Keywords: Contingent fees, conditional fees, moral hazard, incentives

JEL Classification: D82

Suggested Citation

Emons, Winand and Garoupa, Nuno, The Economics of Us-Style Contingent Fees and Uk-Style Conditional Fees (July 2004). CEPR Discussion Paper No. 4473. Available at SSRN: https://ssrn.com/abstract=574542

Winand Emons (Contact Author)

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Postfach 8573
CH-3001 Bern
Switzerland
+41 31 631 3922 (Phone)
+41 31 631 3783 (Fax)

HOME PAGE: http://staff.vwi.unibe.ch/emons

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Nuno Garoupa

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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