Disregarding the Attorney's Advice: An Agency Perspective
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Aaron Finkle
Using an agency model, we study the contract between a plaintiff and an attorney. The plaintiff hires the attorney to investigate the case and provide advice as to the profitability of trial versus accepting a defendant’s settlement offer. The attorney’s investigation is costly and remains unverified if the plaintiff accepts settlement. Thus, the attorney has an incentive to suggest settlement without investigating the case. Our analysis reveals that the plaintiff sometimes proceeds with trial against the attorney’s advice to accept the settlement offer despite knowing the attorney’s advice to be accurate. Furthermore, when the plaintiff cannot commit to a trial/settlement strategy, disregarding the attorney’s advice may take place more frequently. We also show that with larger settlement offers, the plaintiff pursues trial more often.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Articles in the same Issue
- Article
- Surprise! Most Blockbuster Jury Awards Are Ignored By The Stock Market
- Garden Leave vs. Covenants Not to Compete
- On Avoidance Activities After Accidents
- Disregarding the Attorney's Advice: An Agency Perspective
- The Efficiency of Comparative Causation
- Does Limited Liability Matter? Evidence From Nineteenth-Century British Banking
- Conviction, Partial Adverse Selection and Labor Market Discrimination
- Criminal Associations with Bargaining and Build Frictions
Articles in the same Issue
- Article
- Surprise! Most Blockbuster Jury Awards Are Ignored By The Stock Market
- Garden Leave vs. Covenants Not to Compete
- On Avoidance Activities After Accidents
- Disregarding the Attorney's Advice: An Agency Perspective
- The Efficiency of Comparative Causation
- Does Limited Liability Matter? Evidence From Nineteenth-Century British Banking
- Conviction, Partial Adverse Selection and Labor Market Discrimination
- Criminal Associations with Bargaining and Build Frictions
