This thesis uses a theoretical model to consider whether plaintiffs paying lawyers on a contingent fee basis receive smaller payoffs than those retaining lawyers on an hourly basis. This is the view in England, where contingent fees are illegal. It is also a view recognised in America, where contingent fees are legal and commonly used in some areas of law. The issue revolves around whether contingent fee lawyers will settle cases too soon for their clients to receive a substantial settlement offer. In an incomplete information, multiperiod bargaining model of personal injury litigation, we show that this need not be true: even if lawyers are self-interested, plaintiffs can receive higher payoffs under contingent fees than under hourly ones. Considerable ambiguity surrounds plaintiffs' preferred fee arrangement and the speed at which any settlement occurs under the different fee contracts. The most crucial role in this comparison is played by the distribution of legal expenses between plaintiffs and their lawyers. Our model therefore confirms the payoff ambiguity found in previous literature while being the first to address the settlement timing issue. It also suggests that the issue of how different fee arrangements affect the plaintiff in litigation is somewhat more complicated than policy debates on both sides of the Atlantic have implied.

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