One reason that lawyers might prefer a contingent contract when representing a plaintiff in a tort case is that
A) lawyers are risk neutral.
B) diversification of many cases allows lawyers to reduce risk.
C) lawyers are typically confident about winning every case.
D) hourly rates for lawyers are usually very low.

Question

Quizplus · Accepted Answer

Contingent contracts allow lawyers to reduce their risk by diversifying the cases they take on. Instead of relying on hourly rates, they only get paid if they win the case, which incentivizes them to take on more cases and spread their risk. Risk-aversion is a common trait among individuals, including lawyers. Therefore, they prefer to take on cases while reducing the risk by diversifying the cases.

One Reason That Lawyers Might Prefer a Contingent Contract When