Contingent fees and legal expenses insurance: Comparison for varying defendant fault

Abstract

This paper studies the impact of varying defendant fault on the comparison of litigation outcomes under the contingent fee regime and the legal expenses insurance regime. The criteria for regime comparison are: (i) expected plaintiff payoffs, (ii) plaintiff and defendant expenditures, (iii) total contest effort, (iv) incentives for delegation, and (v) justice. We find that the performance of both regimes is highly dependent on defendant fault and this serves to sharpen the analysis to current literature.