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Contingent fees and endogenous timing in litigation contests
European Journal of Law and Economics ( IF 1.266 ) Pub Date : 2022-06-14 , DOI: 10.1007/s10657-022-09743-8
Sung-Hoon Park

This study examined the contingent fee arrangements and adversarial systems applied in the United States. In the American context, a plaintiff (or a defendant) pays a contingent fee (an hourly fee) to their lawyer. In this adversarial system, lawyers can either be the first or the second mover. Solving the American practice with endogenous timing of litigation efforts, we obtained the following results: (i) if the defendant’s total hourly fee rate is not sufficiently high, the plaintiff’s lawyer is the first mover, with the plaintiff then being the underdog and (ii) if the rate is sufficiently high, the lawyer is the second mover, with the plaintiff then being the favorite. We demonstrated that these results are not ideal for the plaintiff. The equilibrium order of effort increases the equilibrium contingent fee and total legal effort in the trial, making reaching a settlement difficult. However, this improves the justice achieved through litigation if the total hourly fee rate is not significantly high. We suggest that the American practice of contingent fees with endogenous timing of effort is not economically efficient but is suitable for achieving justice.



中文翻译:

诉讼竞争中的或有费用和内生时间

本研究考察了在美国应用的或有费用安排和对抗性制度。在美国的情况下,原告(或被告)向其律师支付或有费用(按小时计费)。在这种对抗性系统中,律师可以是先行者,也可以是后行者。用诉讼努力的内生时间来解决美国的做法,我们得到了以下结果:(i)如果被告的总小时费率不够高,则原告的律师是先行者,而原告是失败者,并且(ii )) 如果比率足够高,则律师是第二推动者,而原告则是最喜欢的。我们证明这些结果对原告来说并不理想。努力的均衡顺序增加了审判中的均衡或有费用和总的法律努力,使达成和解变得困难。但是,如果总时费率不是很高的话,这会提高通过诉讼实现的正义。我们认为,美国的或有费用与内生时间安排的做法在经济上并不有效,但适合实现正义。

更新日期:2022-06-15
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