Optimal Attorney Advertising

Michael Stone

No 2010-14, Working papers from University of Connecticut, Department of Economics

Abstract: Attorney advertising routinely targets tort victims. In this paper, a theoretical model is developed which incorporates advertising intensity, litigation costs, and an endogenous number of lawsuits. Since advertising induces victims to bring suit, it increases the level of injurer care. However, litigation costs are also incurred. At the optimum, the marginal benefit of deterrence equals the sum of the marginal costs of litigation and advertising. It is shown that even though blanket prohibitions on attorney advertising are likely suboptimal, ethical regulations which increase the marginal cost of advertising may be justified. Nevertheless, despite the widespread use of legal services advertising, it is unclear whether law firms are currently advertising excessively or inefficiently low. Whether firms are advertising excessively from a social standpoint is a purely empirical question.

Keywords: Tort; Liability; Advertising; Attorneys; Lawyer; Legal Services (search for similar items in EconPapers)
JEL-codes: K13 L84 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2010-07
New Economics Papers: this item is included in nep-com and nep-law
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Citations: View citations in EconPapers (1)

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Journal Article: Optimal attorney advertising (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2010-14

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