Legal fee restrictions, moral hazard, and attorney profits
By: Rudy Santore, Alan D. Viard.
Contributors: Viard, Alan D.
Series: Research Department working paper ;; 9912; Working paper (Federal Reserve Bank of Dallas. Research Dept. : Online) ;; 9912.
Publisher: Federal Reserve Bank of Dallas
Published: 1999
Place of publication: [Dallas, Tx.]
Language: eng
Format: Electronic resource
Subjects: Lawyers -- Fees -- Moral and ethical aspects.
Description: "When attorney effort is unobservable and certain other simplifying assumptions (such as risk neutrality) hold, it is efficient for an attorney to purchase the rights to a client's legal claim. However, the American Bar Association Model Rules of Professional Conduct prohibit this arrangement. We show that this ethical restriction, which is formally equivalent to requiring a minimum fixed fee of zero, can create economic rents for attorneys, even though they continue to compete along the contingent-fee dimension. The contingent fee is not bid down to the zero-profit level, because such a fee does not induce sufficient attorney effort. We thereby provide a political economy explanation for these restrictions"--Federal Reserve Bank of Dallas web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/27/2005.
Published, Journal of Law and Economics, 44(2), Part I, October 2001.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.