Date of Award

5-2017

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Economics

Committee Member

Dr. Andrew Hanssen, Committee Chair

Committee Member

Dr. Thomas Hazlett

Committee Member

Dr. Patrick Warren

Committee Member

Dr. Matthew Lewis

Abstract

This dissertation examines how different payment methods affect the behavior of criminal defense attorneys. In particular, I study the impact of switching from an hourly rate to a flat fee affects attorney behaviors across several measures. In my first paper, I begin by looking at how the switch affects the number of hours being reported. I identify the casual effect of switching from an hourly wage to a flat fee by exploiting a policy change that the South Carolina Commission on Indigent Defense instituted for private attorneys who handle indigent defense cases. I find that defense attorneys report 48\% less hours when they are paid a flat fee compared to an hourly wage. Additionally, I look at how the attorney's in-court behavior changes. In-court behavior is a better measure of effort because in-court hours are observable by other members of the court. I find that attorneys are 25\% less likely to go to court under the flat fee system; then, conditional on them going to court, they reduce the number of hours in court by about 30\%. Next, I study how the change in payment methods affect the outcomes of criminal cases. Theoretically, neither payment method provides an incentive for the attorney to protect the client's interests. Thus, it is empirical question as to which method does a better job at protecting the client's interests. I construct a new data set on court outcomes using information on the South Carolina county web pages. The outcomes that I focus on are the sentence length that the defendant receives, the probability of the case being resolved with a guilty outcome, and the probability that the case is resolved at a lesser included charge. Although not statistically significant, I find that defendants receive a sentence length that is, on average, about 3 months shorter under the flat fee system compared to the hourly rate. This represents about a 10\% reduction in sentence length. On the other hand, there does not seem to be a difference between the two systems in the probability of being found guilty or in the probability that the case is resolved at a lesser included charge. My second paper looks at how the payment method could affect the plea bargaining process. I develop a model where the defense attorney is an imperfect agent of the defendant. This model shows that, holding all else constant, defense attorneys are willing to accept a plea with a longer sentence length for the defendant when they are paid a flat fee compared to an hourly rate. I also show that introducing an incentive where effort in the current case affects the probability of receiving future cases may offset the payment method effect. I then empirically test the model by taking advantage of a policy change by the state of South Carolina. Using a difference-in-difference model, I find that the sentence length is not statistically different when paying the attorney an hourly rate and paying him a flat fee where effort in this case affects the probability of receiving future cases.

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