NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

When Knowledge is an Asset: Explaining the Organizational Structure of Large Law Firms

James B. Rebitzer, Lowell J. Taylor

NBER Working Paper No. 12583
Issued in October 2006
NBER Program(s):   LS   IO

We study the economics of employment relationships through theoretical and empirical analysis of an unusual set of firms, large law firms. Our point of departure is the "property rights" approach that emphasizes the centrality of ownership's legal rights to control important, non-human assets of the enterprise. From this perspective, large law firms are an interesting and potentially important object of study because the most valuable assets of these firms take the form of knowledge - particularly knowledge of the needs and interests of clients. We argue that the two most distinctive organizational features of large law firms, the use of "up or out" promotion contests and the practice of having winners become residual claimants in the firm, emerge naturally in this setting. In addition to explaining otherwise anomalous features of the up-or-out partnership system, this paper suggests a general framework for analyzing organizations where assets reside in the brains of employees.

download in pdf format
   (177 K)

email paper

This paper is available as PDF (177 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12583

Published: James B. Rebitzer & Lowell J. Taylor, 2007. "When Knowledge Is an Asset: Explaining the Organizational Structure of Large Law Firms," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 201-229. citation courtesy of

Users who downloaded this paper also downloaded these:
Gompers and Lerner The Determinants of Corporate Venture Capital Success: Organizational Structure, Incentives, and Complementarities
Garicano and Hubbard w10432 Hierarchies, Specialization, and the Utilization of Knowledge: Theory and Evidence from the Legal Services Industry
Kremp and Mairesse w10237 Knowledge Management, Innovation, and Productivity: A Firm Level Exploration Based on French Manufacturing CIS3 Data
Gompers and Lerner w6725 The Determinants of Corporate Venture Capital Successes: Organizational Structure, Incentives, and Complementarities
Frankel w10090 The Environment and Globalization
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us