Contingent Fees Research Articles

On the strategic choice of overconfident lawyers

This paper analyzes how the plaintiff selects her lawyer based on lawyers’ confidence in their trial-effort productivity. The plaintiff’s lawyer works on a contingent fee and makes litigation decisions on the plaintiff’s behalf. When the lawyer’s preferences are decisive at both the settlement and the trial stage, the plaintiff must anticipate that a more confident lawyer evaluates settlement compared to trial differently and implies different equilibrium trial effort levels. When the lawyer implements the plaintiff’s ideal settlement demand, only the influence of the confidence level on trial effort levels is relevant. In both cases, the plaintiff prefers an overconfident lawyer but would be harmed by excessive overconfidence. In many circumstances, the optimal confidence level maximizes the plaintiff’s trial payoff. However, when the lawyer’s preferences are decisive at both the settlement and trial stage, the plaintiff may choose an even more confident lawyer to raise the settlement level her lawyer demands from the defendant.

Гонорар успеха: нормативное регулирование, особенности оформления соглашений, риски, судебная практика

The article is devoted to the institution of contingency fee to lawyers for the provision of legal services, its ambiguous assessment, both in legal doctrine and in the current judicial practice, which creates certain obstacles to the introduction of contingency fee in the mechanism for improving the quality of professional legal assistance. Based on the analysis of the acts of the current legislation and the legal positions of the highest court, the author comes to the conclusion that, despite the ambiguity of the attitude towards the contingency fee as a type of incentive payment for a lawyer, its final legalization and a uniform understanding at the level of law enforcement practice are only a matter of time and firstly depend on consistent and worked out procedures on the part of the legislator.

Changes in the fee system for acute care hospitals will contribute to reducing their costs

Changes in the fee system for acute care hospitals will contribute to reducing their costs Hiroki Konno, Professor of College Economics at Nihon University argues that acute care hospitals in Japan need to restructure their management strategies – to which, these hospitals have been stratified according to hospitalisation fees based on nurse staffing levels. As the medical functions provided by hospitals are no longer viewed as a hierarchy, but as a segregation of functions in the region, a policy of segregation as a fee system for inpatient acute care can desegregate medical functions and can be expected to promote efficiency in the provision of medical care and contribute to reducing costs. This study by Nihon University reviewed the fee system for hospitals and described its impact on thyroid cancer treatment by analysing three policy directions: 1. The "basic" nurse staffing level of acute care hospitals should be 10:1. 2. Although the fee levels for wards of regional packaged care and wards of chronic care are relatively high at present, once the number of wards has been filled, their fees will be reduced and will mainly be based on a graduated contingency fee. 3. Patients admitted to wards of chronic care will be limited to those requiring higher medical treatments, while those requiring lower medical treatments will be transferred to a Nursing Care Medical Clinic.

Avoiding Common Conflicts of Interest in the Lawyer-Client Relationship

There are several areas in the law where conflicts of interest commonly occur in the context of the lawyer-client relationship. This article, which is Part II of a three-part series on issues relating to the lawyer-client relationship, will explain two of the main conflicts that may occur: simultaneous representation of clients with differing or conflicting interests and personal conflicts of interest between a lawyer and a client. In addition, the paper will discuss the special considerations inherent in contingent fee arrangements.

Contingent fees and endogenous timing in litigation contests

Contingent fees and endogenous timing in litigation contests

Predicting the trends and cost impact of COVID-19 OSHA citations on US construction contractors using machine learning and simulation

PurposeOccupational Safety and Health Administration (OSHA) of the U.S. government ensures that all health and safety regulations, protecting the workers, are enforced. OSHA officers conduct inspections and assess fines for non-compliance and regulatory violations. Literature discussion on the economic impact of OSHA inspections with COVID-19 related citations for the construction sector is lacking. This study aims to investigate the relationships between the number of COVID-19 cases, construction employment and OSHA citations and it further evaluates the total and monthly predicted cost impact of OSHA citations associated with COVID-19 violations.Design/methodology/approachAn application of multiple regression analysis, a supervised machine learning linear regression model, based on K-fold cross validation sampling and a probabilistic risk-based cost estimate Monte Carlo simulation were utilized to evaluate the data. The data were collected from numerous websites including OSHA, Centers for Disease Control and the World Health Organization.FindingsThe results show that as the monthly construction employment increased, there was a decrease in OSHA citations. Conversely, the cost impact of OSHA citations had a positive relationship with the number of COVID-19 cases. In addition, the monthly cost impact of OSHA COVID-19 related citations along with the total cost impact of citations were predicted and analyzed.Originality/valueThe application of the two models on cost analysis provides a thorough comparison of predicted and overall cost impact, which can assist the contractors to better understand the possible cost ramifications. Based on the findings, it is suggested that the contractors include contingency fees within their contracts, hire safety managers to implement specific safety protocols related to COVID-19 and request a safety action plan when qualifying their subcontractors to avoid potential fines and citations.

Derivative Action- An Impartial Right given to Minority Shareholders under Pakistan’s Legislation

Derivative Action- An Impartial Right given to Minority Shareholders under Pakistan’s Legislation

Public Client Contingency Fee Contracts as Obligation

Contingency fee contracts predicate an attorney’s compensation on the outcome of a case. Such contracts are widely accepted when used in civil litigation by private plaintiffs who might not otherwise be able to afford legal representation. However, such arrangements are controversial when government plaintiffs like attorneys general and local governments retain private lawyers to litigate on behalf of the public in return for a percentage of any recovery from the lawsuit. Some commentators praise such public client contingency fee contracts, which have become commonplace, as an efficient way to achieve justice. Critics, however, view them as corrupt, undemocratic, and unethical. This Comment contributes to this debate by arguing that public client contingency fee contracts are not only permissible, as some have argued, but that certain legal doctrines obligate government entities to form these contracts. First, this Comment contends that the principle that government litigators have a special duty to “seek justice” obligates government actors to enter into public client contingency fee contracts. The obligation to form such contracts is triggered when civil justice requires enforcement, but constraints prevent government attorneys from pursuing litigation. This contention undermines critics’ claim that the “seek justice” principle means public client contingency fee contracts are impermissible. Second, this Comment argues that the public trust doctrine also obliges government entities to form public client contingency fee contracts in some instances. These arguments undermine attacks on public client contingency fee contracts and demonstrate the existence of a heretofore ignored obligation in public civil litigation.

Acquirers’ Use of Fairness Opinions and Subsequent Goodwill Impairments

In this study, we examine the association between acquirers’ use of fairness opinions and subsequent goodwill impairment charges. Understanding both fairness opinions and goodwill impairments are of interest to investors, analysts, auditors, and regulators. Using a large sample of manually collected data, we find that when an acquirer purchases a fairness opinion, goodwill is more likely to be impaired and to be impaired with a greater amount, suggesting that acquirers purchase fairness opinions to justify overpayment and provide legal protection. Additionally, for acquirers with fairness opinions, we find some evidence that acquirers that purchase multiple fairness opinions and opinions from top financial advisors and advisors with smaller contingent fees are less likely to impair their goodwill and impair with a smaller amount. Our results are robust after controlling for endogeneity and using hazard model. Overall, we identify the existence of fairness opinions and opinion-related characteristics as an oversight mechanism that is associated with subsequent goodwill impairments.

Investigating the direct costs of business rescue

Orientation: The direct costs associated with business rescue proceedings are essential to the decision-making of directors, business rescue practitioners and other affected parties. Business rescue has come under criticism for being a costly procedure, but what constitutes these costs and how they are defined remain largely unknown.Research purpose: The aim of this study was to identify and measure the direct costs of business rescue proceedings in South Africa. This research also explored the relationship between direct costs and the following variables: firm size and duration of business rescue proceedings.Motivation for the study: Despite the significance of understanding reorganisation costs, astonishingly little is know about the size and determinants of the direct costs of business rescue in the South African context. Business rescue practitioners fees and other related expenses have been blamed for worsening business rescue proceedings’ reputation. However, researchers have not yet determined the nature or quantum of such costs.Research design, approach and method: This study employed an exploratory sequential mixed-method research design. The first phase comprised semi-structured interviews supplemented by a closed card sort with 14 business rescue practitioners. The first phase resulted in direct cost categories and components used to develop a survey instrument. The survey was administered in the second phase and measured the direct costs for 19 South African firms previously under business rescue.Main findings: The first phase results show that the direct costs of business rescue consist of four categories: the basic remuneration of the business rescue practitioner, contingency fees, professional fee disbursements and general disbursements. Because of the small sample size, the results of the second phase were inconclusive.Practical/managerial implications: This research contributes to the management body of knowledge by providing business rescue practitioners, the management of distressed companies, and affected parties, especially creditors with a starting point into understanding the direct costs of business rescue proceedings.Contribution/value-add: This is the first study of its kind, to quantitatively measure the direct costs of business rescue in the South African context. Therefore, the results of the study may offer affected parties some insight and clarity regarding the nature of the direct costs of business rescue.

Can Contingency Fee Reforms Improve Maternal & Infant Health? Evidence from Nevada

Abstract Contingency fee laws are intended to reduce the amount of defensive medicine practiced by physicians, but their impact on such behavior is theoretically ambiguous. While nearly half of all states have adopted some type of contingency fee laws, very little empirical evidence exists with respect to related impacts, and no rigorous studies examine their potential impacts on health. We examine the impact of a particular contingency fee reform that occurred in Nevada in 2004 using synthetic control methods. Consistent with our expectations, we find a systematic increase in the C-section rate of less-educated mothers in Nevada after implementation of the reform. However, we find no systematic effect on infant mortality, suggesting that contingency reforms contribute to an increase in defensive medicine without a corresponding improvement in health.

Conditional Fees and the Contingency Fees distinction: A comparative study of the UK and US risk assessment for insurers in litigation

The Conditional Fee Agreements in the UK and the Contingency Fee in the US for legal retainers can be distinguished by their risk lawyers take even if they both allow law firms to be stakeholders in the litigation process. The introduction of the conditional fee agreements (CFI) in England enabled a framework of civil litigation that could be relied upon where the cause of action could not be financed by the client. There was an element of risk involved which the insurance company had to calculate and the Jackson Reforms were responsible for effective management of litigation through the introduction of costs budgeting. While the after effects insurance was abolished the various forms of CFI could facilitate the insured litigant. This has been harmonised by a consumer based legal provision in the UK that is the priority of the Legal Services Act 2007. The comparison needs to drawn with the contingency fee agreement offered by US firms that have encouraged litigation and allow the losing party to forfeit costs when losing their case. The argument of this paper is to retain both these form of agreements in their respective jurisdictions but to retain the flexibility of allowing out of court settlements.

A Law and Economics Perspective on the EU Directive on Representative Actions

This article provides an analysis of the Directive on representative actions for the protection of the collective interests of consumers of 25 November 2020. The Directive enables qualified entities to bring representative actions on behalf of the consumer. The article uses a Law and Economics approach to stress the advantages of collective actions as a tool to remedy rational apathy and free-rider behaviour. The article therefore in principle welcomes the fact that this Directive will lead to all Member States having some form of collective redress. However, it is rather difficult to fit this Directive into the economic criteria for centralization as there is no obvious danger of cross-border externalities or a race-to-the-bottom. The article is critical of the fact that the Directive only provides for a representative action and does not mention the alternative of a group action (sometimes referred to as a class action). This is especially problematic if there are very few qualified entities that could bring the representative action. Furthermore, the fact that Member States may choose an opt-in procedure instead of an opt-out procedure is critically evaluated. The most problematic aspect of the Directive is the funding of the representative action. Punitive damages and contingency fees are rejected, and the possibility of third-party funding is restricted. It is therefore to be feared that this Directive, notwithstanding the good intentions, may not lead to much application in practice, since the question of how the representative action is to be financed is not resolved in any satisfactory manner.

Fees, Reputation, and Information Production in the Credit Rating Industry

We compare a credit rating agency’s incentives to acquire costly information when it is only paid for giving favorable ratings to the corresponding incentives when the agency is paid up-front, i.e., irrespective of the ratings assigned. We show that, in the presence of moral hazard, contingent fees provide stronger dynamic incentives to acquire information than up-front fees and may induce higher social welfare. When the fee structure is chosen by the agency, contingent fees arise as an equilibrium outcome, in line with the way the market for credit rating actually works. (JEL D21, D82, D83, G24)

Legal Fees, Cost-Shifting Rules and Litigation: Experimental Evidence

In this paper, we conduct an experiment in order to explore how the legal fee arrangement (i.e. flat or contingent fees) and the trial costs allocation rule (i.e. American or English rule) may shape the efficiency of the litigation process, via their effect on the lawyer’s effort, the deterrence of frivolous lawsuits and the plaintiff’s incentives to go to court. In our experimental context, it is shown that the combination of contingent fees and English rule is the best setting in terms of effort incentives, but enhances frivolous lawsuits. This result may indicate potentially that the recent tendency observed in European countries to combine contingency and English rule would be desirable only if it is associated to mechanisms discouraging plaintiffs to sue meritless cases.

Гонорар успіху представника в контексті витрат на правничу допомогу: юридично-психологічний аспект і практика застосування в господарському судочинстві

The purpose of the article is to study the legal essence of contingency fee of judicial representative in the context of legal expenses, to outline the judicial and psychological aspects of application of contingency fee, as well as main problems and tendencies of law enforcement practice in this sphere of legal relations. Methodology. The methods used in the survey were chosen according to the defined purpose, specific of object and subject of the research. The survey is based on the use of general and specific scientific methods. By means of cognition method the problems of legal background of contingency fee were studied. The method of comparative analysis was used while analyzing of legislation and scientific categories of the research. For theoretical investigation of various sides of the problem the methods of analysis and synthesis were used (in particular, for determent of the possibility of adaptation of foreign legislation to the processes that take place in modern Ukraine). Scientific novelty lies in the formulation of the scientific concept of application of contingency fee in the national legal field. The proposition was made to determine the amount of attorney’s remuneration in the fixed sum or by applying of calculation formula, in particular in the percentage equivalent to the amount of claim, or otherwise provided that it can be clearly defined, the payment of which depend on the outcome of legal aid provision. It was proved that the limits of application of contingency fee must be established not by prohibitions and restrictions as to certain categories of cases, but by formation of moral and ethical characteristics of attorney, by the prohibition of abuse of the rights for contingency fee in the context of moral, material, disciplinary responsibility of attorney at law. Conclusions. On the basis of conducted research, it is established that the contingency fee, as a part of a fee of legal representative (attorney at law), belongs to the legal expenses for legal aid. The procedure of reimbursement of these expenses comprises: existence of provisions about contingency fee in the legal aid agreement with clear prescription of the rules of definition if its size and conditions of payment; confirmation of the fact of incurring of expenses for payment of contingency fee; compliance with the criteria of proportionality and reasonableness while distribution of court costs. Keywords: contingency fee; attorney’s fee; legal aid expenses; court expenses; economic judicial procedure.

Payment for legal services in the USA civil procedure: Contingent fee, American rule and their impact on the judicial caseload

The article deals with the influential mechanism of the contingent fee and the American rule on the number of filings to the US judicial system, and, consequently, on the judicial caseload as a whole. The author concludes that at the moment there is no uniform idea about the role of contingent fee arrangements and the American rule in the growth of the number of filings to courts. There are two opposing views on this issue: those who stand on the side of the plaintiffs’ attorneys (and therefore for the contingent fee and for the American rule), on the one hand, and those who act on behalf of the defendants (which means against these institutions). With certainty, it can only be argued that the contingent fee and the American rule complement each other. The contingent fee justifies its existence by expanding the accessibility of justice. Under the fee, those who are unable to pay for the services of a lawyer get the opportunity to go to court. And this availability is largely based on the plaintiff ’s belief that even in the event of a loss, he will not have to pay the defendant’s costs. Together, these rules, according to their supporters, make it possible to ensure the implementation of one of the unshakable values — the right of every American to get their “day in court”. At the same time, many facts indicate that the “bundle” of the contingent fee and the American rule has led to an increase in the number of clearly unreasonable, frivolous, nuisance lawsuits that are filed not with the aim of obtaining a positive court decision, but only to persuade the defendant to accept a settlement agreement on the payment of compensation to the plaintiff.

In-house deals: Agency and information asymmetry perspectives

Mergers and Acquisitions (M&A) advisors add value by overcoming the information asymmetries between acquirers and targets, but may also push bad deals through due to incentive misalignment stemming from contingent fees. In-house deals are those acquisitions with in-house advisors. We examine the wealth effect of M&A deals advised by in-house advisors versus outside advisors. About 15% of acquisitions are done via in-house advisors. In-house deals result in higher CARs to targets, insignificant wealth effects to acquirers, but lower cumulative abnormal combined returns. This finding is consistent with the view that the information asymmetry problem is more severe than the agency conflict in non-financial acquisitions. Thus, targets are more likely to extract wealth away from the acquirers, or the overall deal quality is lower. Also, consistent with the view that investment banks have an incentive to see deals completed, the completion rate is higher for deals with an outside advisor

THE IMPACT OF THE 2017 TAX ACT ON CERTAIN PERSONAL INJURY PLAINTIFFS

The 2017 Tax Act was the most sweeping federal tax legislation in over a generation. While many of its reforms, from dramatically lowering the corporate tax rate to altering the international tax rules, have already received significant attention, comparatively little attention has been paid to the 2017 Tax Act’s effects on personal injury plaintiffs. This Article explores those impacts.
 The 2017 Tax Act added a new provision that indirectly affects plaintiffs who allege sexual harassment or abuse. The new provision disallows the defendants’ deductions if the parties enter into a nondisclosure agreement. While targeted at defendants, the provision likely unwittingly harms plaintiffs by reducing settlement offers. The provision also suffers from a host of ambiguities that the Treasury Department and Internal Revenue Service will need to resolve.
 The 2017 Tax Act also eliminated so-called miscellaneous itemized deductions. In certain types of personal injury claims, such as defamation or emotional distress, this development causes the plaintiff to be taxed on the full settlement amount even if, as is often the case, one-third or more of the settlement is paid as a contingent fee to the plaintiff’s attorney. Legislative or administrative action is required to remedy this patent unfairness.

ГОНОРАР УСПЕХА КАК СПОСОБ ЗАЩИТЫ ЧАСТНЫХ И ПУБЛИЧНЫХ ИНТЕРЕСОВ В ДЕЛАХ ОБ ОСПАРИВАНИИ НОРМАТИВНЫХ ПРАВОВЫХ АКТОВ И АКТОВ, СОДЕРЖАЩИХ РАЗЪЯСНЕНИЯ ЗАКОНОДАТЕЛЬСТВА И ОБЛАДАЮЩИХ НОРМАТИВНЫМИ СВОЙСТВАМИ

The present article is concerned with the analysis of the main problem in cases of contesting normative legal acts – the asymmetry between the opportunities of parties. As a consequence of that asymmetry, a rational citizen has no motivation to go to court and normative legal acts which contradict superior normative legal acts continue to exist in the system of actual law. The author adapts the American model of a “private attorney general” to Russian law. The aim of this model is to provide incentives for individuals to actively contest normative legal acts by means of covering judicial expenses with contingent fees. Incentives created by this law model are reviewed with the help of legislation analysis, economic analysis of law and game theory methodology. The author also considers the existing approaches to defining the legal nature of the term “contingent fees” in modern legislation. Based on that, possible ways of improving the legal system by the means of creating a legislative base for contingent fees are suggested.