Competition and Contingency Fees

Document Type

Article

Publication Date

2026

Source Publication Abbreviation

Georgetown Law Journal

Abstract

A debate has long raged concerning whether the contingency fee market for legal services is or is not competitive. The debate has been fierce because its stakes are sky high. If the market is competitive, current efforts to cut or cap contingency fees are clearly wrong-headed. If the opposite, then at least some efforts to address the market failure probably make sense. Leveraging the results of a novel empirical study and drawing from both classical and behavioral economics, this Article assembles the best evidence to date to resolve that age-old question. We find that, much like the market for brokerage services in residential real estate, the contingency fee market for personal injury (PI) representation is neither efficient nor competitive. The market for PI representation does not behave like a competitive market, and the preconditions for competition are lacking. Mirroring the brokerage market, fees are not salient to consumers of legal services, and stubborn informational asymmetries cloud consumer search. Even so, contingency fee caps—many reformers’ reflexive fix—are not the answer. Price controls are generally harmful, and they are particularly counterproductive when deployed in this context. Rather than promoting access to legal services or reducing principal-agent problems, caps can be counted on to restrict access and skew attorney incentives. Perhaps worse, caps are regressive. Those who are already disadvantaged bear the brunt of this reform. We have a better idea. Because the problems we identify are chiefly traceable to inadequate information, policymakers ought to use “closing statements” to get proper information into consumers’ hands.

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