| Abstract: | Polinsky and Rubinfeld (2003) propose a novel system for eliminatingthe conflict of interest between lawyers and clients over howhard the lawyer should work on a given case. In their analysisof the system, however, Polinsky and Rubinfeld implicitly assumethat the lawyer's marginal cost of effort is common knowledge.This comment shows that, when this assumption is relaxed, thoughtheir scheme does reduce the agency problem relative to thestandard contingency fee arrangement, it no longer eliminatesit. |
