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Backhaus, Jürgen G. --- "Class Action Finance and Legal Expense Insurance" [2012] ELECD 307; in Backhaus, G. Jürgen; Cassone, Alberto; Ramello, B. Giovanni (eds), "The Law and Economics of Class Actions in Europe" (Edward Elgar Publishing, 2012)

Book Title: The Law and Economics of Class Actions in Europe

Editor(s): Backhaus, G. Jürgen; Cassone, Alberto; Ramello, B. Giovanni

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847208033

Section: Chapter 8

Section Title: Class Action Finance and Legal Expense Insurance

Author(s): Backhaus, Jürgen G.

Number of pages: 4

Extract:

8. Class action finance and legal
expense insurance
Jürgen G. Backhaus


INTRODUCTION

In an interesting development, the Wall Street Journal1 reported that Pfizer,
in the name of Amy Schulman, its chief counsel, is sick and tired of having
to pay billable hours for winning regulatory approvals. She wants to adopt
a system of contingency fees to reward lawyers who win approvals for new
drugs and applications. Those who fail to win approvals will not be
compensated for their efforts.
Contingency fees are at the heart of class action finance. To this aspect
we now turn in the eighth chapter.


1. THE ATTORNEY AS THE BANK AND PORTFOLIO
CHOICE
Fee-for-service (in medicine or law) is a financial arrangement which unties
the service and its respective outcome. Fee-for-service is the method of
choice when irrespective of the outcome a well-prescribed standard and
indisputable service needs to be rendered. For instance, for checking the
well-functioning of a car, you want to opt for a fee-for-service arrangement
in order to prevent the mechanic from making unnecessary repairs. Like-
wise, the services of a notary public need to be rendered according to
prescribed rules and formalities. When the service is successful, we never
hear about the case. But the fact that we never hear about a particular case
does not mean that the service was successful. It may simply mean that a
fault turned out to be inconsequential or just never surfaced. A totally
different financial ...


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