Discussion paper

DP4841 Playing it Safe with Low Conditional Fees versus Being Insured by High Contingent Fees

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.

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Citation

Emons, W (2005), ‘DP4841 Playing it Safe with Low Conditional Fees versus Being Insured by High Contingent Fees‘, CEPR Discussion Paper No. 4841. CEPR Press, Paris & London. https://cepr.org/publications/dp4841