Comment on "Aligning the Interests of Lawyers and Clients"

Polinsky and Rubinfeld (2003) propose a novel system for eliminating the conflict of interest between lawyers and clients over how hard the lawyer should work on a given case. In their analysis of the system, however, Polinsky and Rubinfeld implicitly assume that the lawyer's marginal cost of effort is common knowledge. This comment shows that, when this assumption is relaxed, though their scheme does reduce the agency problem relative to the standard contingency fee arrangement, it no longer eliminates it. Copyright 2004, Oxford University Press.