The Problem of Contingent Fees for Waiters

In a series of influential papers, Lester Brickman (2003a, 2003b, 2004) has argued that the income and effective hourly rate of tort lawyers using contingent fees has increased by 1400 % since 1960 and that the market for contingent fee lawyers is uncompetitive as evidenced by lack of price advertising and uniform pricing across practitioners, cases and time. He also argues that contingent fee lawyers use “contingent-fee math ” to build up additional costs and fees. I critically examine Brickman’s calculations and compare contingent fees in the market for lawyers with contingent fees, usually called tips, in the market for waiters. How much has Lawyer Income Increased? Brickman (2003a, Appendix A) does not calculate lawyer income and its growth directly but reasons that “increases in average verdicts, adjusted for inflation, translate into proportionately higher annual incomes. ” Using this method he calculates that the income of contingent fee lawyers and their effective hourly rate has increased by 1400 percent since 1960. A growth rate of 1400 percent, however, appears to be inconsistent with what w