Playing it Safe with Low Conditional Fees versus Being Insured by High Contingent Fees

Winand Emons

No 4841, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Under contingent fees the attorney gets a share of the judgement; under conditional fees they get 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 choose between a safe and a risky litigation strategy. Under conditional fees lawyers prefer the safe strategy, under contingent fess the risky one. Risk-averse plaintiffs prefer conditional fees over contingent fees when lawyering costs are low and vice versa for high lawyering costs.

Keywords: Contingent fees; Conditional fees; Risk aversion; Insurance; Incentives (search for similar items in EconPapers)
JEL-codes: D82 K10 (search for similar items in EconPapers)
Date: 2005-01
New Economics Papers: this item is included in nep-law
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Related works:
Journal Article: Playing It Safe with Low Conditional Fees versus Being Insured by High Contingent Fees (2006)
Working Paper: Playing It Safe with Low Conditional Fees versus Being Insured by High Contingent Fees (2004)
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