Conditional Versus Contingent Fees

17 Pages Posted: 23 Sep 2004

See all articles by Winand Emons

Winand Emons

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

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Date Written: August 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, K10

Suggested Citation

Emons, Winand, Conditional Versus Contingent Fees (August 2004). Available at SSRN: https://ssrn.com/abstract=594823

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Centre for Economic Policy Research (CEPR)

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