The Lawyer as a Portfolio Manager: How Does the Fee System Influence on the Lawyer's Decision of Handling Legal Claim?


We use the portfolio theory to analyze the lawyer's decision regarding the type of case the lawyer will handle. We offer some insights into the widespread idea that contingency lawyers are providing a risk sharing service. We demonstrate that a contingent fee lawyer diversifies his portfolio. We show that reputation induces more, but not fully, concentration, since a lawyer with greater reputation or expertise selects more risky cases. The size of the law firm has the same result.


Legal Profession

Date of this Version

September 2005