Suppose a plaintiff hires a lawyer to represent her in a court case.The lawyer will be paid by the hour.Under this contract,
A) production efficiency is not achieved.
B) the client bears all of the risk.
C) the lawyer has an incentive to lie about his hours worked.
D) All of the above.

Question

Quizplus · Accepted Answer

When a lawyer is paid by the hour, production efficiency is not achieved because the lawyer may not have an incentive to work efficiently, potentially leading to more hours billed than necessary. The client bears all the risk of the case taking longer than expected, increasing their costs. Additionally, the lawyer might have an incentive to overstate the hours worked to increase their compensation, although ethical standards are supposed to prevent this.

Suppose a Plaintiff Hires a Lawyer to Represent Her in a Court