Suppose a plaintiff hires a lawyer to represent her in a court case.The lawyer will receive a share of the settlement if the plaintiff wins.Under this contract,
A) production efficiency cannot be achieved.
B) the client bears all of the risk.
C) the lawyer bears all of the risk.
D) the risk is shared.

Question

Quizplus · Accepted Answer

In this type of contract, both the plaintiff and the lawyer share the risk. The lawyer takes on the risk of not being paid if the plaintiff loses the case, while the plaintiff shares the risk of potentially receiving less of a settlement due to the lawyer's fees. Therefore, the risk is shared, and as a result, this contract can still achieve some level of production efficiency.

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