Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108731
Authors: 
Felsö, Flóra
Onderstal, Sander
Seldeslachts, Jo
Year of Publication: 
2015
Series/Report no.: 
DIW Discussion Papers 1460
Abstract: 
We analyze a client's choice of contract in auctions where Dutch law firms compete for cases. The distinguishing feature is that lawyers may submit bids with any fee arrangement they prefer: an hourly rate, a fixed fee or a \mixed fee," which is a time-capped fixed fee plus an hourly rate for any additional hours should the case take longer than expected. This format of selling legal services is unusual in that it both forces lawyers to compete directly against each other and allows clients to easily compare these different offers. We estimate a choice model for clients and find robust evidence that hourly rate bids are a client's least-preferred choice. Our findings tentatively contradict lawyers' often made argument that hourly rates are in a client's best interest.
Subjects: 
lawyers' fee arrangements
clients' choices
discrete choice models
JEL: 
C25
D43
K10
K40
Document Type: 
Working Paper

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