Rent-seeking and litigation: some underappreciated virtues of reverse contingency fees

Дата публикации: 14-08-2026 00:00:00

This paper analyzes the welfare implications of reverse contingency fees (compared to hourly fees) in terms of both litigation effort and adjudicative accuracy in a framework in which litigation is modeled as a rent-seeking contest. Under reverse contingency fees, the defendant’s lawyer gets a share of the amount her client saved, which is the difference between the plaintiff’s claim and the judgment. We show that the conditions under which reverse contingency fees outperform hourly fees are relatively restrictive, especially since they may also tighten liquidity constraints for the defendant. This may explain why reverse contingency fees are rarely used, and highlights why they are not the mirror image of plaintiff-side contingent fees.

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