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Who benefits from the uniformity of lawyer's contingent fee rates?
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Zamir, Eal, Medina, Barak and Segal, U. (Uzi) (2014) Who benefits from the uniformity of lawyer's contingent fee rates? Review of Law & Economics, 9 (3). pp. 357-387. doi:10.1515/rle-2013-0009 ISSN 1555-5879.
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Official URL: http://doi.org/10.1515/rle-2013-0009
Abstract
Lawyers’ Contingent Fee (CF) rates are rather uniform, often one-third of the recovery. Arguably, this uniformity is a type of anti-competitive price-fixing, which results in clients paying supra-competitive fees. This paper challenges this argument. It shows that uniform CF rates provide clients with an important advantage, as suchthey rates enable them to make a de facto “take-it-or-leave-it” offer. Consequently, lawyers cannot exploit their private information, and clients retain the transaction’s entire surplus and may hire the best lawyer among those who find it profitable to handle the case.
The paper also addresses the effect of uniformity of CF rates when lawyers refer cases to other lawyers. It shows that uniformity facilitates matching of clients and lawyers through the referral system. It also demonstrates that the fact that both direct clients and those obtained through paid-for referrals pay the same CF rate does not attest to cross-subsidization. The clients whose cases are transferred for a referral fee (paid by the handling lawyer) “pay” for the referral service by obtaining a less highly ranked lawyer.
| Item Type: | Journal Article | ||||||
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Lawyers -- Fees, Contingent fees, Practice of law -- Economic aspects | ||||||
| Journal or Publication Title: | Review of Law & Economics | ||||||
| Publisher: | De Gruyter | ||||||
| ISSN: | 1555-5879 | ||||||
| Official Date: | 8 January 2014 | ||||||
| Dates: |
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| Volume: | 9 | ||||||
| Number: | 3 | ||||||
| Page Range: | pp. 357-387 | ||||||
| DOI: | 10.1515/rle-2013-0009 | ||||||
| Status: | Peer Reviewed | ||||||
| Publication Status: | Published | ||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||
| Date of first compliant deposit: | 6 September 2017 | ||||||
| Date of first compliant Open Access: | 7 September 2017 | ||||||
| Funder: | Milton and Miriam Handler Foundation, Universiṭah ha-ʻIvrit bi-Yerushalayim. Aharon Barak Center for Interdisciplinary Legal Research [Hebrew University of Jerusalem] |
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