Unobservable Contract and Endogenous Timing in Legal Contests

Abstract

It is possible that a plaintiff uses information about delegation contract as a means of responding strategic interactions between his lawyer and the defendant. We induce this possibility within the class of two-player contests with delegation. In detail, we have the following main results. (i) If the defendant’s total hourly fee rate is not large, the plaintiff who becomes the underdog wants to hide information on delegation contract. (ii) If the defendant’s total hourly fee rate is large, the plaintiff wants to release the information so that the defendant is the leader and the plaintiff’s lawyer is the follower, while enjoying being the favorite. In addition, we show that if the plaintiff can choose whether to disclose the information, the total expenditure will be reduced.