Under which one of the following conditions would a lawyer accept a case on a contingent basis?
A) The lawyer is risk averse.
B) The client is risk loving.
C) The lawyer has several cases on a contingent basis with payoffs that are not perfectly positively correlated.
D) The lawyer is more risk averse than the client is.

Question

Quizplus · Accepted Answer

Lawyers are more likely to accept a case on a contingent basis when they have several cases on a contingent basis with payoffs that are not perfectly positively correlated. This is because the lawyer can diversify their risk and potentially earn higher overall profits. Choosing option A or D is incorrect as it implies being more risk averse, which is not the necessary condition for accepting such cases. Option B is incorrect as it refers to client preferences rather than lawyer preferences.

Under Which One of the Following Conditions Would a Lawyer