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More and more law firms specializing in corporate taxes are paid on 04 Jun 2020, 03:24
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What would strenghtne the prediction that most firms are likely to make more under the contingency-fee arrangement.

The answer D tells you that "they are able to assess accurately their chances of winning each potential case"

Yes of course if majority of the cases have chances of winning >50% this will definitely strengthen the prediction.
However, if majority of the cases have chances of winning less than 50%, this will not strengthen the prediction!

Especially when the answer didn't tell you about the chances of winning.

how could answer D correct???????????????????????????? are you kidding
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More and more law firms specializing in corporate taxes are paid on 20 Jan 2021, 01:47
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I have seen this logic above, which I am inclined to disagree with:

Choice D is correct. This tells us that firms can be choosy, selecting only those cases that they are likely to win. This way they won’t suffer too many losses, which helps reinforce the assumption that the added gains will help make up for the loss in revenue for lost cases. Otherwise, if they DID suffer many losses, then the hourly rate basis would make more sense.

That's great if a firm can be choosy, but suppose the firm just sucks in general (crappy lawyers) ...then what happens in cases when the number of cases they are likely to win is very low? Not suffering too many losses is not the same as making a lot...

C to me is bulletproof. Irrespective of whether they win or lose...the lawyers still get an hourly wage. The wins are a nice top up.

More and more law firms specializing in corporate taxes are paid on a contingency-fee basis. Under this arrangement, if a case is won, the firm usually receives more than it would have received if it had been paid on the alternate hourly rate basis. If the case is lost, the firm receives nothing. Most firms are likely to make more under the contingency-fee arrangement.

Which of the following, if true, would most strengthen the prediction above?


(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.
-tempting…said differently this tells us that under the hourly arrangement, the hours are fewer for cases that are successful…
-first issue is we don’t know how much ‘fewer’ actually is
-second issue is that this doesn’t really tell us why the contingency fee arrangement would be more fruitful…

(B) Some litigation can last for years before any decision is reached, and, even then, the decision may be appealed.
-length of litigation is irrelevant

(C) Firms under the contingency-fee arrangement still pay their employees on an hourly basis.
-Correct…this is clear as day…they get a contingency fee ON TOP of the hourly wage? Sounds like a win-win situation to me. This certainly gives us more reason to think that they could make more.

(D) Since the majority of firms specialize in certain kinds of cases, they are able to assess accurately their chances of winning each potential case.
-irrelevant

(E) Firms working under the contingency-fee arrangement take in fewer cases per year than do firms working under the hourly rate arrangement.
-could potentially weaken
-suppose those firms take on substantially fewer cases…then this could absolutely shatter the argument (the total cumulative payout for hourly rate >>>contingency fee-arrangement)
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More and more law firms specializing in corporate taxes are paid on 20 Aug 2021, 03:28
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I think you have misunderstood option C.
(C) Firms under the contingency-fee arrangement still pay their employees on an hourly basis.
Meaning - Employee/Lawyers of the firms (who opt for contingency-fee arrangement) are paid on an hourly basis. Discussion is about employees within the firm.
This option doesn't say that the firms themselves get paid by their client on an hourly basis. The passage is concerned with how firms earn more money through contingency-fee arrangements. The internal expenses within the firm are not relevant for this passage.  

I hope this explanation helps to reject C

CEdward
I have seen this logic above, which I am inclined to disagree with:

Choice D is correct. This tells us that firms can be choosy, selecting only those cases that they are likely to win. This way they won’t suffer too many losses, which helps reinforce the assumption that the added gains will help make up for the loss in revenue for lost cases. Otherwise, if they DID suffer many losses, then the hourly rate basis would make more sense.

That's great if a firm can be choosy, but suppose the firm just sucks in general (crappy lawyers) ...then what happens in cases when the number of cases they are likely to win is very low? Not suffering too many losses is not the same as making a lot...

C to me is bulletproof. Irrespective of whether they win or lose...the lawyers still get an hourly wage. The wins are a nice top up.

More and more law firms specializing in corporate taxes are paid on a contingency-fee basis. Under this arrangement, if a case is won, the firm usually receives more than it would have received if it had been paid on the alternate hourly rate basis. If the case is lost, the firm receives nothing. Most firms are likely to make more under the contingency-fee arrangement.

Which of the following, if true, would most strengthen the prediction above?


(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.
-tempting…said differently this tells us that under the hourly arrangement, the hours are fewer for cases that are successful…
-first issue is we don’t know how much ‘fewer’ actually is
-second issue is that this doesn’t really tell us why the contingency fee arrangement would be more fruitful…

(B) Some litigation can last for years before any decision is reached, and, even then, the decision may be appealed.
-length of litigation is irrelevant

(C) Firms under the contingency-fee arrangement still pay their employees on an hourly basis.
-Correct…this is clear as day…they get a contingency fee ON TOP of the hourly wage? Sounds like a win-win situation to me. This certainly gives us more reason to think that they could make more.

(D) Since the majority of firms specialize in certain kinds of cases, they are able to assess accurately their chances of winning each potential case.
-irrelevant

(E) Firms working under the contingency-fee arrangement take in fewer cases per year than do firms working under the hourly rate arrangement.
-could potentially weaken
-suppose those firms take on substantially fewer cases…then this could absolutely shatter the argument (the total cumulative payout for hourly rate >>>contingency fee-arrangement)
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More and more law firms specializing in corporate taxes are paid on 20 Aug 2021, 04:01
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Hi Experts,
VeritasKarishma GMATNinjaTwo GMATNinja

Can someone explain the logic for rejecting A?
Also I want to check my understanding of the passage.

More and more law firms specializing in corporate taxes are paid on a contingency-fee basis. Under this arrangement, if a case is won, the firm usually receives more than it would have received if it had been paid on an alternate hourly rate basis. If the case is lost, the firm receives nothing. Most firms are likely to make more under the contingency-fee arrangement.

1) Firms are paid on CF vs HR plan
2) If they won, earn more through CF than HR 
3) If they lost, regardless of the plan they earn nothing (Doubt 1 - Both CF and HR get no money or just CF)
4) Firms will earn make more under CF than HF plan (Doubt 2 - compared to what they will make more money) Doubt 3 - Is the plan exclusive or firm can opt for any of the plans 

Question stem: Strengthen the prediction that most firms will make more money under CP than HF

(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.
Reasoning - From the passage, we know that firm earns more under CF than HR (Maybe because they win most of the cases or if they won very few hours spend in HF plan). Now we learn from this option that firms under the HR plan spend fewer hours so get less paid. Overall HR plan will be paid less.
Statement 2 in passage - Irrespective of no. of hours spend, HR will always make less money than CF. There is no way HR plan can make more money than CF.
Through this option, we are emphasizing on the same fact that HR plan will make less money even if they won the cases because no. of hours spend is less or on the assumption of the author that why firm earns more under CF than HR
In what scenario HR plan will earn more money than CF? 
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More and more law firms specializing in corporate taxes are paid on 21 Aug 2021, 20:20
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Sneha2021
Hi Experts,
VeritasKarishma GMATNinjaTwo GMATNinja

Can someone explain the logic for rejecting A?
Also I want to check my understanding of the passage.

More and more law firms specializing in corporate taxes are paid on a contingency-fee basis. Under this arrangement, if a case is won, the firm usually receives more than it would have received if it had been paid on an alternate hourly rate basis. If the case is lost, the firm receives nothing. Most firms are likely to make more under the contingency-fee arrangement.

1) Firms are paid on CF vs HR plan
2) If they won, earn more through CF than HR 
3) If they lost, regardless of the plan they earn nothing (Doubt 1 - Both CF and HR get no money or just CF)
4) Firms will earn make more under CF than HF plan (Doubt 2 - compared to what they will make more money) Doubt 3 - Is the plan exclusive or firm can opt for any of the plans 

Question stem: Strengthen the prediction that most firms will make more money under CP than HF

(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.
Reasoning - From the passage, we know that firm earns more under CF than HR (Maybe because they win most of the cases or if they won very few hours spend in HF plan). Now we learn from this option that firms under the HR plan spend fewer hours so get less paid. Overall HR plan will be paid less.
Statement 2 in passage - Irrespective of no. of hours spend, HR will always make less money than CF. There is no way HR plan can make more money than CF.
Through this option, we are emphasizing on the same fact that HR plan will make less money even if they won the cases because no. of hours spend is less or on the assumption of the author that why firm earns more under CF than HR
In what scenario HR plan will earn more money than CF? 
Show more

A is open to argue . What if total number of cases won are still less than otherwise .
it means cost less for HR- agree , but their total profit is also reduced

D is stronger option, They know which cases they can win so they spend more energy on wining rather than some cases which they took before just for sake of time .

If you are confused among various options, you can think in practical sense, what makes one option stringer than other.
if there are 2 choices:
u can win more if u can assess correctly .then would you not take such opportunity , where u spend more time in assessing and increasing ur chances of winning and getting more.
hence D wins in practical sense.
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More and more law firms specializing in corporate taxes are paid on 22 Aug 2021, 22:23
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Bunuel
More and more law firms specializing in corporate taxes are paid on a contingency-fee basis. Under this arrangement, if a case is won, the firm usually receives more than it would have received if it had been paid on the alternate hourly rate basis. If the case is lost, the firm receives nothing. Most firms are likely to make more under the contingency-fee arrangement.

Which of the following, if true, would most strengthen the prediction above?


(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.

(B) Some litigation can last for years before any decision is reached, and, even then, the decision may be appealed.

(C) Firms under the contingency-fee arrangement still pay their employees on an hourly basis.

(D) Since the majority of firms specialize in certain kinds of cases, they are able to assess accurately their chances of winning each potential case.

(E) Firms working under the contingency-fee arrangement take in fewer cases per year than do firms working under the hourly rate arrangement.


NEW question from GMAT® Official Guide 2019


(CR01102)

Show Spoiler
Step 1: Identify the Question

The word strengthen in the question stem indicates that this is a Strengthen the Argument question.

Step 2: Deconstruct the Argument

Cont. fee: firm wins case → more $ than hourly

Lose case → no $

© most firms Cont. fee $ > hourly $

The argument describes the way in which a law firm’s earnings are determined under a contingency-fee arrangement. (The alternative arrangement is an hourly rate.) If the firm wins the case, it earns more money than it otherwise would; if it loses, it earns nothing. The author concludes that most firms will make more money under this arrangement. Note that this relies on an assumption: that the extra money the firms make by winning cases will outweigh the potential money they lose by losing cases.

Step 3: Pause and State the Goal

On Strengthen the Argument questions, the right answer will make the conclusion more likely to be correct. In this case, the right answer will suggest that law firms will, in fact, earn more money by charging a contingency fee.

Step 4: Work from Wrong to Right

(A) This answer choice compares two scenarios under the hourly rate arrangement. However, it does not provide any information about what happens under the contingency fee arrangement. The right answer must suggest that earnings will be higher under the contingency fee arrangement, so it needs to provide some information about what happens under this arrangement as well.

(B) This answer choice does not give any information about law firms’ earnings, regardless of the fee arrangement. Litigation lasting for years might result in either a win or a loss, and might result in a higher or lower fee for the firm, regardless of fee structure.

(C) This answer choice explains the way that employees are paid. However, the argument is concerned with how much the firms earn, so their costs do not affect the argument.

(D) CORRECT. The argument assumes that the firms will gain more by winning cases than they will lose by losing cases. This answer choice suggests that the assumption is correct: since firms can tell which cases they’re likely to win, they can choose to only take those cases, which makes it very likely that their earnings will outweigh their losses.

(E) This statement only affects the conclusion if certain outside assumptions are made. If firms with fewer cases make less money, the answer choice suggests that switching to a contingency fee might reduce earnings. However, this is the opposite of what the right answer should do. Also, the right answer will never require additional assumptions to affect the conclusion.
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Law firms are switching to payment on CF basis.
If they win, they earn more than they would have on that case on HR basis.
If they lose, they earn nothing.

Hypothesis: Most firms are likely to make more under the contingency-fee arrangement.

I would pre-think that the hypothesis would make sense if most firms win more cases than they lose. So from some cases they may earn nothing, but from more cases they will earn extra.

(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.

We don't know the rate connection between HR and CF so this statement doesn't help establish which arrangement will lead to higher earnings. But if more hours are put in cases that are lost, we completely lose that higher earning when we switch to CF basis. So if anything, it goes against our conclusion. Of course, the extra earnings from the cases we win could more than make up for this loss but we cannot establish one or the other because of lack of information.
So in any case, this certainly does not support our conclusion.

(B) Some litigation can last for years before any decision is reached, and, even then, the decision may be appealed.

Irrelevant. The time frame of receiving the payment is irrelevant. We are discussing the amount received.

(C) Firms under the contingency-fee arrangement still pay their employees on an hourly basis.

The costs are irrelevant. We are discussing revenue obtained.

(D) Since the majority of firms specialize in certain kinds of cases, they are able to assess accurately their chances of winning each potential case.

Correct. If at the beginning, they can access which cases they are likely to win and which they are likely to lose, they can easily take only the cases they are likely to win. This will increase their earnings.

(E) Firms working under the contingency-fee arrangement take in fewer cases per year than do firms working under the hourly rate arrangement.

Doesn't help our conclusion. Does fewer cases mean less earnings? Can't say but in any case, it certainly doesn't support more earnings.

Answer (D)
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More and more law firms specializing in corporate taxes are paid on 05 Jan 2022, 18:08
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Talks about Law firms which specialize in Corporate Taxes are paid under contingency basis and they get paid more than the alternate hourly basis.

Conclusion: More firms make more money through CB.

Pre-thinking: Law firms Specialization + More Money + Contingency Fee Arrangement

a) It talks about how many hours a firm spends on cases they win than on those they lose. It provide new info which is not relevant to the Q asked.
b) This infact slightly weakens the conclusion.
c) New Info, which is not required to strengthen the Conclusion.
d) This clearly talks about those special cases, wherein the firm calculate the chance of winning the case.
e) This doesnt help strengthen the conclusion.

So, D is the answer
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More and more law firms specializing in corporate taxes are paid on 01 May 2022, 07:15
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For A, let's say if a company goes for contingency-fee-basis arrangement, and say they win $1,000 for 1 case that they win and only spend 1 hour working on it. Their average per hour would be $1,000 / 8 hours = $125 per hour.

However, if they are already making, let's say, $299 on average per hour for every hour spent in the office, they will make more money than the contingency-fee-basis arrangement. Hence, A is irrelevant.
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More and more law firms specializing in corporate taxes are paid on 01 May 2022, 08:23
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Bunuel
More and more law firms specializing in corporate taxes are paid on a contingency-fee basis. Under this arrangement, if a case is won, the firm usually receives more than it would have received if it had been paid on the alternate hourly rate basis. If the case is lost, the firm receives nothing. Most firms are likely to make more under the contingency-fee arrangement.

Which of the following, if true, would most strengthen the prediction above?


(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.

(B) Some litigation can last for years before any decision is reached, and, even then, the decision may be appealed.

(C) Firms under the contingency-fee arrangement still pay their employees on an hourly basis.

(D) Since the majority of firms specialize in certain kinds of cases, they are able to assess accurately their chances of winning each potential case.

(E) Firms working under the contingency-fee arrangement take in fewer cases per year than do firms working under the hourly rate arrangement.
Show more

Any firm accepting the "nothing or double" fee structure would have to have a strong probability of winning a case in order for the firm to be profitable.

A, B, and C are out of scope.

E is a weaken to the outcome of the firm. Taking less cases wouldn't be feasible.

D is the only option that confirms a firms strategy by strengthening it.
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More and more law firms specializing in corporate taxes are paid on 06 Apr 2024, 00:24
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Hi @KarishmaB @GMATNinja

Could you please explain why option A is wrong?
Do we reject it because there is no mention of a contingency fee here? Also, I think if option A becomes true then it becomes a weakener for the argument.
Please let me know if anything wrong with my thinking here.
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More and more law firms specializing in corporate taxes are paid on 22 Aug 2025, 09:28
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regarding A) most are crossing it off due to population mismatch.. but even if it wad talking about firms that use the contingency, this still doesn't cut it since we don't know for sure what the interplay is between hours and profitability right? Perhaps hard cases are extremely lengthy.
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More and more law firms specializing in corporate taxes are paid on 23 Aug 2025, 13:17
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More and more law firms specializing in corporate taxes are paid on a contingency-fee basis. Under this arrangement, if a case is won, the firm usually receives more than it would have received if it had been paid on the alternate hourly rate basis. If the case is lost, the firm receives nothing. Most firms are likely to make more under the contingency-fee arrangement.

Which of the following, if true, would most strengthen the prediction above?

This is a Strengthen question, and the correct answer will provide support for "the prediction above." So, to get this question correct, we have to identify the prediction.

The prediction is the following:

Most firms are likely to make more under the contingency-fee arrangement.

The passage doesn't provide much support for the prediction. It does say the following:

Under this arrangement [paid on a contingency-fee basis], if a case is won, the firm usually receives more than it would have received if it had been paid on the alternate hourly rate basis.

At the same time, it also says the following:

If the case is lost [under this arrangement], the firm receives nothing.

So, the passage does not provide a convincing case for the prediction. Rather, it provides both evidence for and evidence against the prediction.

The correct answer, in contrast, should clearly support the prediction.

(A) Firms that work exclusively under the hourly rate arrangement spend, on average, fewer hours on cases that are won than on cases that are lost.

Since this choice provides no point of comparison between firms working under the two different arrangements, it does not support the prediction.

Eliminate.

(B) Some litigation can last for years before any decision is reached, and, even then, the decision may be appealed.

If anything, this goes against the prediction.

After all, firms paid by the hour would get paid a lot in cases in which litigation lasts for years and would get paid even if a decision were appealed.

In contrast, in such cases, firms that get paid only when a case is won would have to wait years to get paid and might not get paid if a case that was won initially was then lost on appeal.

Eliminate.

(C) Firms under the contingency-fee arrangement still pay their employees on an hourly basis.

Whether this indicates that firms working under the contingency-fee arrangement would make more or less is not clear.

After all, the fact that they pay their employees on an hourly basis means only that the way the employees are paid and the way the firms are paid is not the same.

That mismatch could work for or against these firms' earnings.

If firms that get paid only when they win lose cases, they still have to pay employees by the hour. In such cases, paying employees by the hour could work against them.

On the other hand, when such firms win cases, according to the passage, these firms get paid more than other firms. So, if they pay their employees at the same hourly rates other firms pay, then, when these firms win cases, paying their employees hourly could work in their favor.

In short, this choice doesn't provide any clear reason to believe that firms working under the contingency-fee arrangement make more than other firms.

Eliminate.

(D) Since the majority of firms specialize in certain kinds of cases, they are able to assess accurately their chances of winning each potential case.

This choice is interesting.

If firms are able to assess accurately their chances of winning each potential case, then they can decide whether to take cases on the basis of their assessment of their chances of winning each potential case.

In that, case, even though firms that work under the contingency-fee arrangement don't get paid when cases are not won, they can make more money than other firms by taking only cases that they will likely win. Upon winning, they then make more than firms that get paid by the hour, as the passage indicates.

So, this choice provides support for the prediction.

Keep

(E) Firms working under the contingency-fee arrangement take in fewer cases per year than do firms working under the hourly rate arrangement.

If anything, this choice goes against the prediction.

After all, if firms working under the contingency-fee arrangement take in fewer cases per year than do firms working under the hourly rate arrangement, then, if anything, we'd expect firms working under the contingency-fee arrangement to make less, rather than more.

Eliminate.

Correct answer: D
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