No cure, be paid: super-contingent fee contracts

It is well-known that in a number of employment situations one uses nocure-no-pay contracts, usually denoted as contingent fee contracts (CFcontracts). A typical example is the fee system for attorneys in countries like the US. Under a CF-contract the plaintiff pays a positive fee to his attorney if the case is won and nothing if it is lost, see Hay (1996, 1997). These situations can be modelled as a principal-agent problem in which there is a contingent fee as a result of moral hazard. That is, the agent gets a positive fee if the output is ’high’ and nothing if the output is ’low’. However, in general, a CF-contract is not optimal for the principal. It