A provocative law review article, Lester Brickman, “The Market for Contingent Fee-Financed Tort Litigation: Is It Price Competitive?,” 25 Cardozo L.R. 65, 99 argues that contingency-fee firms stick to the same fee percentage (about 30% of the recovery) because of the so-called “signaling function” of the standard rate. The one-third fee is very well known and states a threshold. Brickman argues that a lower fee conceded by a lawyer signals to a tort plaintiff a “shirking or inferior quality lawyer.” Like perfume and yachts, expensiveness cries out quality.
Major law firms operate in a journalistic orgy of economic signals. The billing rates of leading firms are trumpeted; their revenues come out in league tables; the stratospheric salaries paid new lawyers make headlines; and net profits per partner are published like lottery winners. Taken together, all this economic data creates for corporate consumers of these firms’ legal wares a clear signal: “We are very good and very costly, and we are all equally costly at the high-end sellers’ market.”