Legal Fees Research Articles

The Economics of Antitrust Compliance

The typical Fortune 500 corporation spent nearly $6 million in the decade of the 1970s on antitrust fines, damages, court costs, out-of-court settlements, legal fees, and compliance with the demands of antitrust investigations. This was a 350 percent increase over the 1960s. Attorneys' fees increased the cost to more than $20 million. The number of antitrust cases brought against the Fortune 500 increased approximately 40 percent from the 1960s to the 1970s, when 60 percent of the outcomes were adverse.' Between 1960 and 1980, the intensity of antitrust enforcement activities by government and private parties increased dramatically,2 as did the scope of corporate antitrust compliance programs. These changes are reflected in surveys of the perceptions of attorneys and managers about the antitrust enforcement climate in which they work.3 Yet, violations show little sign of abating.4

Class-action privileges and contingent legal fees: Investor and lawyer incentives to litigate and the effect on audit quality

The Cohen Commission recognized the importance of litigation incentives and recommended that research based upon an economic approach be conducted into the effects that litigation incentives can have on the auditing profession. By extending Simon (1981), an economic analysis of an auditing environment is presented wherein audit firms issue reports, representative investors make decisions based upon audit reports, and lawyers (as well as representative investors) play an active role in determining whether or not to initiate litigation against audit firms. The influence that alternative litigation privileges (i.e., class-action privileges with contingent legal fees and no class-action privileges with fixed legal fees) have on representative investor and lawyer incentives to litigate and on the equilibrium characteristics of this audit market are analyzed.

Legal fees contracts and alternative cost rules: An economic analysis

Legal fees contracts and alternative cost rules: An economic analysis

In-House Hospital Law Offices: How Healthy are They?

Medical centers. with increasing frequency, are employing their own in-house attorneys. The express purpose for this is to avoid the cost of large corporate law firms, as well as to secure greater control over costs connected with medical malpractice litigation, such as loss control, risk management, and self-insurance programs. But are these offices appropriately and competently providing the full spectrum of legal services to the medical centers they serve?This past spring, a conference in Chicago explored the role of in-house counsel in controlling corporate legal costs. The general consensus was that corporate clients, who consume from 65 to 85 percent of the legal services in the country, have allowed themselves to be “cowed by the demands of prestigious outside counsel.” According to press reports, ineffectual in-house counsel were criticized for their inability to curb excessive corporate legal fees and expenditures. The legal fees of outside firms were characterized as “just plain unnecessary.”

Some Evidence on the Early Price Effects of Attorney Advertising in the USA

When the US Supreme Court gave attorneys in the US the right to advertise their fees for routine legal services, the Court assumed that such fees would fall as a result of attorney advertising. According to economic theory, however, it is not clear what impact seller advertising will have on market prices. A major research effort designed to measure the price effects of attorney advertising in the USA began one year after the Bates decision. Some of the major findings of that study are presented in this paper. While none of the study's results so far indicates that the price effects of attorney advertising in the short run are likely to be substantial, the results suggest that the level of routine legal service fees may fall slightly or remain unchanged in constant dollar terms as a result of attorneys' use of advertising to promote their services and prices.

The Legal Theory of Attorney Fee Shifting: A Critical Overview

With its general rule that each side in civil litigation has ultimate responsibility for its own lawyer's fees and that the system will not require the loser to pay anything toward the winner's representation, this country stands in a small minority among the industrialized democracies.1 The English routinely include an assessment for a reasonable attorney's fee in the costs to be borne by a losing party;2 the usual rule on the Continent is similarly to assess the loser for at least part of the winner's attorney fees.3 In recent decades, the American rule of no attorney fee shifting has come under increasing questioning and criticism.4 At the same time, the rule has been riddled with ever more numerous exceptions at both state and federal levels.5 Discussion of fee shifting rules in cases, legislative histories, and commentary has tended to remain ad hoc, understandably focusing on interests and concerns surrounding a particular possible or existing exception to the American rule. There exist, indeed, several different sorts of reasons why a legal system might choose a policy of requiring losing litigants to pay winners' legal fees in some or all cases. This

Suit, Settlement, and Trial: A Theoretical Analysis under Alternative Methods for the Allocation of Legal Costs

Suit, Settlement, and Trial: A Theoretical Analysis under Alternative Methods for the Allocation of Legal Costs

An Economic Analysis of Cost and Fee Rules for Class Actions

Previous articleNext article No AccessAn Economic Analysis of Cost and Fee Rules for Class ActionsDonald N. Dewees, J. Robert S. Prichard, and Michael J. TrebilcockDonald N. Dewees Search for more articles by this author , J. Robert S. Prichard Search for more articles by this author , and Michael J. Trebilcock Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by The Journal of Legal Studies Volume 10, Number 1Jan., 1981 Sponsored by The University of Chicago Law School Article DOIhttps://doi.org/10.1086/467675 Views: 11Total views on this site Citations: 8Citations are reported from Crossref Copyright 1981 The University of ChicagoPDF download Crossref reports the following articles citing this article:George Robert Barker An Economic Model of Collective Redress, Relevant to Joinder Proceedings, Group Litigation and Class Actions, SSRN Electronic Journal 7 (Jan 2012).https://doi.org/10.2139/ssrn.1990141Avery W. Katz, Chris William Sanchirico Fee Shifting in Litigation: Survey and Assessment, SSRN Electronic Journal 84 (Jan 2010).https://doi.org/10.2139/ssrn.1714089Kent Roach, J. R. S. Prichard Comparative Common Law: The Consequences of Differing Incentives to Litigate, (Jan 2017): 336–339.https://doi.org/10.1007/978-1-349-74173-1_68Avery Wiener Katz Indemnity of Legal Fees, SSRN Electronic Journal 23 (Jan 1998).https://doi.org/10.2139/ssrn.57958J. Robert S. Prichard A Systemic Approach to Comparative Law: The Effect of Cost, Fee, and Financing Rules on the Development of the Substantive Law, The Journal of Legal Studies 17, no.22 (Oct 2015): 451–475.https://doi.org/10.1086/468137Douglas V. DeJong Class-action privileges and contingent legal fees: Investor and lawyer incentives to litigate and the effect on audit quality, Journal of Accounting and Public Policy 4, no.33 (Sep 1985): 175–200.https://doi.org/10.1016/0278-4254(85)90019-5P.J. Halpern, S.M. Turnbull Legal fees contracts and alternative cost rules: An economic analysis, International Review of Law and Economics 3, no.11 (Jun 1983): 3–26.https://doi.org/10.1016/0144-8188(93)90043-5Ejan Mackaay Economic Analysis of Major Common Law Doctrines, (Jan 1982): 31–79.https://doi.org/10.1007/978-94-017-5332-6_3

Consumer response to advertisements for legal services: An empirial analysis

In the near future, advertisement of professional services will become a reality. This is especially true of the legal profession. On June, 27, 1977, in a historic though confusing decision, the Supreme Court lifted a ban on the advertising of legal fees and routine services. While several theoretical arguments may be advanced favoring professional advertising, there is a scarity of empirical studies supporting these claims. This study represents one modest attempt to rectify this lack of empirical research regarding the impact of advertising upon the demand for legal services.

No-Fault Insurance: What, Why and Where?

Under the common-law "tort" or fault-finding system, after an accident between Smith and Jones, if Smith is an "innocent" party claiming loss against a "wrongdoer," he is paid not only for his economic loss, but for the monetary value of his pain and suffering. But it is often very difficult to establish not only who was at fault in an accident but the pecuniary value of pain. Under the no-fault solution, after an accident between Smith and Jones, each is paid for eco nomic losses by his own insurance company, regardless of any one's fault. As a corollary, each is required to surrender his claim based on fault against the other. No-fault insurance then, was designed to make the following improvements in auto accident compensation: (1) to assure that everyone injured in auto accidents is eligible for auto insurance payments, regard less of whether he was able to prove fault-based claims; (2) to spend less on smaller, relatively trivial claims, and more on serious injury; (3) to pay claims promptly; (4) to pay more efficiently by using less of the premium dollar on insurance overhead and legal fees; (5) to reduce, or at least to stabilize, the pertinent costs of auto insurance. In essence, no-fault auto insurance has succeeded in all these goals. Consideration is given to extending no-fault to all kinds of accidents.

Legal Fees Incurred in Litigation Involving Title to Assets. Allocation between Deductible Ordinary Expenses and Nondeductible Capital Expenditures

Legal Fees Incurred in Litigation Involving Title to Assets. Allocation between Deductible Ordinary Expenses and Nondeductible Capital Expenditures

Deductibility of Legal Expenses Incurred in Corporate Stock Redemptions, Partial Liquidations, and Separations

A substantial consideration for any corporation preparing to undergo a change in its organizational structure is the treatment for federal income tax purposes of the legal fees' incurred in developing and implementing the plan of alteration. Typically, the company will attempt to characterize these fees as ordinary and necessary business in order to deduct the amount from its gross income in the year the fees are paid, under section 162 of the Internal Revenue Code.2 The federal government, on the other hand, will generally argue that such structural adjustments benefit the corporation for a period beyond the taxable year, and that the expenses attendant thereto are more properly treated as capital investment.3 Given the importance of this determination to corporate planning, it is surprising that the law remains unsettled with respect to such relatively common trans-

Contingent Fees and Malpractice

To the Editor.— I read, with much interest, Mr. McCabe's defense of contingent fees in the practice of law, and noted his comments on the inadequacies of the system. However, in attempting to emphasize his point, Mr. McCabe chooses an example which is inappropriate by implying that the cardiac surgeon who lost the patient on the table should not have sent a bill for medical services. Fees for medical services, as Mr. McCabe must certainly know, are customarily for a set dollar amount and are not tied to loss of services, future earning power, pain and suffering, and other such ethereal considerations. I feel reasonably certain that Mr. McCabe is not unaware of legal fees amounting to as much as $500,000.00 for the plaintiff's attorney for the successful prosecution of a case of personal injury or malpractice. I cannot help wondering how Mr. McCabe would react had his client received

Contingent Fees and Malpractice

To the Editor.— I read, with much interest, Van Zante's LETTER with regard to contingent legal fees. The contingent fee system is certainly less than perfect. I feel sure that all attorneys would prefer to be paid on the basis of time spent and not on result accomplished. However, the contingent fee opens the courts to all who have been wronged, regardless of their ability to pay, and is far superior to the system which was suggested by Van Zante in his LETTER. The system he suggests closely follows the procedure in England where contingent fees are illegal. The contingent fee system does deter baseless claims. I can think of no better way to prevent the institution of a meritless claim than to tell the lawyer that he will not be paid for his time and effort and may well be obligated to pay for the preparation of the case

Collective Action Among Private Tenants

The paper describes the action of a group of low-income tenants, inexperienced in dealing with bureaucracies or in understanding the complexities of landlord tenant law, who attempted to improve their living conditions by using the Government's Rent Tribunal. While the legal remedies provided under the Rent Acts were effective, the tenants were reluctant to use them until they had organized as a group. This was because of the particular relationship they had with the landlady who made it difficult for them to discuss with her their rights as tenants. Their only way of changing this was through collective action. We discuss the use of conflict strategies in a short-term issue; that is, in fighting a landlady for better living conditions (both lower rents and adequate repairs). It illustrates the difficulty of mobilizing a group of people whose ususal everyday experiences are that it is difficult, if not futile, to take action to improve their situation. This is so in spite of machinery set up by the Government to arbitrate over rents for private property. The difficulty lies in the precarious financial position in which deprived groups often find themselves, making it easy for them to fall into rent arrears and therefore be liable to eviction from their accom modation. It is difficult also because property owners are more likely to have easy access to the legal machinery. These tenants are usually in no position to hold a landlord to his side of the contract because they lack the resources to pay the legal fees entailed.

Warsaw Convention: The 1971 Protocol of Guatemala City

The Warsaw Convention (1929) was amended for the first time by the Protocol signed at The Hague on September 28, 1955.1 The latter increased the limit of liability of international air carriers by 100 percent to $16,600 (250,000 francs Poincare), modified the articles relating to the notice to be inserted in the ticket and the baggage check, and redefined the acts of willful misconduct which prevent the carrier from invoking the limitation of liability. The U.S. signed The Hague Protocol, which came into force on August 2, 1963, but never ratified it because it considered the new liability limit too low.2 Instead, the U.S. on November 15, 1966 gave notice of denunciation3 of the Warsaw Convention, effective from May 15, 1966. This, in turn, led to the so-called Montreal Agreement and later to the famous Order of the U.S. Civil Aeronautics Board implementing an interim whereby passengers on participating carriers going to, from, or stopping in, the U.S. are subject to a limit of liability of $58,000 (or $75,000 inclusive of legal fees) regardless of fault on the part of the air carrier. This arrangement was generally assumed to be an emergency measure, pending formal amendment of the Warsaw Convention. The U.S. agreed to withdraw their denunciation of the convention, but pressed for an even higher liability limit in case of death or personal injury, first of $100,000 and finally in the order of $200,000 to $300,000. After a series of unsuccessful meetings held under the auspices of the International Civil Aviation Organization,5 the Legal Committee of ICAO at its session in 1970 produced draft amendments which became the basis for the Diplomatic Conference held at Guatemala City March 3-17, 1971.

The events of March and the "Vooruit"

The aloofness or non-involvement of the independent press and to a great degree, of the Liberal press as well, contrasted sharply with the emotional reactions of the Catholic papers. The Socialist press, however, is beyond any doubt, the most ,engaged in social affairs and hence one finds V ooruit the most fascinating of all the papers in Ghent in this year of turmoil. The Socialist mouthpiece, from its very beginnings, has been dealing with the entire gamut of social issues and the March events only intensify the paper's eagerness to communicate and to inculcate its readers with Socialist philosophy. Besides the summary-type news reports on the events themselves, the major part of the small four page paper is devoted to social problems in the form of editorials, letters, articles or short stories. The tone of these writings can be angry or enthusiastic, plaintive of rude, but, in general, one must admit it reached the level of understanding of the readers and hence, was successful. During the early weeks of March the question of universal suffrage is frequently debated and related to the planned demonstration of June 13 in Brussels 1 • The Voomit discusses, at length, the involvement of the anarchists in the outbreak of the turmoil in Liege. It is only by the time that the confusion and rioting has spread to the Borinage that the paper begins to take the side of the strikers, mostly because of the harsh repressive measures by the army. This belated sympathy for the strikers does not mean that the V ooruit was unsympathetic to their cause. It was definitely a matter of expediency because the paper did not want to be associated with the ,criminals and vandals of the early days. After the first week, V oorttit has taken a firm position and begins to withdraw from the initial defensive stand to a more agressive attitude. This agressiveness is combined with its first suggestions to remedy the terrible social situations in the country. The initial proposal is a practical one: to send food to the disaster areas. When people are fed, they will no longer burn and loot, the paper argues. Furthermore, there is an immediate need for negotiations between strikers and management and last, but not least, no more troops should be dispatched 2 • Several subscriptions are started by the paper to get funds to help those workers who have been dismissed by their employers or to pay the legal fees for those who are brought before the courts 3 • Since the Socialist paper is convinced that the ,great and only instigator of the strikes is

Reports of the Board of Trustees on the Malpractice Problem

Three reports 1 of the Board of Trustees of the AMA on the malpractice problem are of interest to its membership. The first noted that since World War II professional liability has become a matter of growing concern to the medical profession, with an increased tendency of people to sue doctors and with more frequent and higher jury awards. One reason for the increase in malpractice claims has been, ironically, the increased skills of modern physicians, leading the public, encouraged by glowing articles in the lay press of new wonder drugs and miracle operations, to expect successful treatment in all cases, When expectation is not fulfilled the patient is prone to seek redress for malpractice. Another major reason is the contingent fee system where the lawyer receives one-third to one-half of the amount recovered, while the patient pays no legal fees if the case is lost. If the verdict is

Medical vs Legal Fee Splitting

To the Editor:— James H. Hutton, MD, compares medical fee splitting (proscribed) to fee splitting in the legal profession which is approved by the bar association. He suggests that medical fees be paid in lump sum and the doctors split them any way they see fit. A fallacy in the comparison is that fee splitting among lawyers is self-regulating, since most fees are contingent on the size of the settlement. Therefore it is to the advantage of the client to secure lawyer A in the hope that he will get a large award. It is also to the advantage of lawyer A to secure the services of lawyer B who may be able to get an even larger award. Lawyer A can't possibly choose a less talented lawyer or his fees would suffer. The system provides for referrals of increasing- competence, and an increasing degree of protection for the client.

Taxation: Deductibility of Legal Fees in Criminal Cases as "Ordinary and Necessary" Expenses

Taxation: Deductibility of Legal Fees in Criminal Cases as "Ordinary and Necessary" Expenses