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Paying by the Hour: The Least Appealing Option for Clients of Lawyers

DIW Weekly Report 26/27 / 2016, S. 295-299

Jo Seldeslachts

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In this study, 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 wish. We find robust evidence that bids offering hourly rates are less attractive to clients. Our findings tentatively contradict lawyers’ often-made argument that hourly rates are in a client’s best interest.

Jo Seldeslachts

Research Associate in the Firms and Markets Department

JEL-Classification: C25;D43;K10;K40
Keywords: Lawyers’ fee arrangements, clients’ choices, discrete choice models
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