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1 [i] (2005)

handle is hein.amenin/aeiacsr0001 and id is 1 raw text is: AEI LIABILITY STUDIES Two Cheers for Contingent Fees Alexander Tabarrok and Eric Helland If America is a iawvsuit hell, then contingent-fee lawyers are often considered its devils. Contingent fees have been called unwarranted and the lawyers who accept thern have been denounced as unethical and uncivilized. Furthermvore, in the miist of increased ilings an escatating awards it is diffiult not to notice that some plaintiffs' lawyers have become very rich. As a result, tort ieformers have called for limits on contingent fees and many states have obliged. But limits have been enacted without any evidence that cort tigent fees were eit her resoonsible for the liability cr'sis or that limiting them would produce benefits. This study one of -he first empirical examinations of contingent-fee limits, finds that contingent fees benefit plaint Ifs and do not cause higher awards. Firthermore3 contingent-fee limits are unlkey to reduce lawyers' income very much, since the will simpl snitch to hourly fees. Since hourly fee law'yers are willing to take more cases to court than contingent-fee iawvers, continnent-tee limits can in-crease the nUMber of low-value junk sLits. Tort reform is an important goal, but limting the contractual rights of plaintiffs and their lawyers is an unattractive and likely ineffective method of achieving that goal. The AE's Liability Studies examine aspects of the U.S. civil liability system cen- tral to the poi ti ca d ebates over 1iability reform. The goal of the senes is to con- tribute new emr1ical evidence anpromlsng reforn ideas that are commeristl- rate to the se iousness of Americas liability urobIems. Alexander Tabarrok is an associate professor of economics at George Mason niversity and director of research for the Independent InstittITe. Eric Helland is an associate professor of economics at Claremont McKenna (o llege, a senior economist at the RAN D) Corporations [nstituite for Civil Justice, and a member of the plenary faculty at the Claremont Graduate School. ISBN 084477193-7 51 500 9 780844 77-19

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