Legal effort and optimal legal expenses insurance

Yue Qiao

Economic Modelling, 2013, vol. 32, issue C, 179-189

Abstract: In this paper we derive optimal legal expenses insurance for litigants and payment method for lawyers when neither the litigant's quantity choice nor the lawyer's legal effort is contractible. Three points are highlighted as our conclusions. First, to design an optimal insurance-payment system, demand-side cost-sharing is necessary. Second, supply-side cost-sharing is necessary only if the quantity and effort are substitutes and the payment contract involves hourly fees. Third, the optimal insurance-payment system could be achieved under conditional fees and sliding fees. Reputation incentives and side-contracts are also discussed in this paper.

Keywords: Insurance; Moral hazard; Legal effort; Conditional fee; Optimal contracts (search for similar items in EconPapers)
JEL-codes: G22 K40 K41 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:32:y:2013:i:c:p:179-189

DOI: 10.1016/j.econmod.2013.02.003

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