US-style contingent fees and UK-style conditional fees: agency problems and the supply of legal services

Winand Emons, Nuno Garoupa

Research output: Contribution to journalArticle

36 Citations (Scopus)

Abstract

Under contingent fees, the attorney gets a share of the judgment; 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 she has 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 her information about what is at stake more efficiently.

Original languageEnglish
Pages (from-to)379-385
Number of pages7
JournalManagerial and Decision Economics
Volume27
Issue number5
DOIs
Publication statusPublished - 1 Jul 2006

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