Research Handbooks in Law and Economics series
Edited by Jennifer H. Arlen
Chapter 15: Contingent-fee contracts in litigation: A survey and assessment
One of the core features of the U.S. civil justice system is that plaintiffs in tort, and a variety of other suits, pay their attorneys using a contingent fee in which the attorney is paid a fraction of recovery in the event the plaintiff is successful in his or her claim. By contrast, lawyers providing other legal services are paid using a variety of arrangements ranging from an hourly fee to a flat fee for a specific legal service. In light of tort plaintiffs’ nearly exclusive use of contingent-fee contracts, most scholarship has focused on understanding why these fees are used primarily by plaintiffs in personal injury and other tort cases, what the implications of their use are for the level of litigiousness and deterrence, and the potential impact on case outcomes. This uniformity of interest has not led to a consensus of opinion, however. In perhaps no other area of law do the theories of economists diverge more radically from the explanations of other legal theorists. Economists and legal theorists agree on the point that clients should not (or could not) pay their lawyers with an hourly rate or flat fee but disagree on why.
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