TY  - JOUR
AU  - Rebitzer,James B.
AU  - Taylor,Lowell J.
TI  - When Knowledge is an Asset: Explaining the Organizational Structure of Large Law Firms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12583
PY  - 2006
Y2  - October 2006
UR  - http://www.nber.org/papers/w12583
L1  - http://www.nber.org/papers/w12583.pdf
N1  - Author contact info:
James B. Rebitzer
Professor of Management, Economics, Public Policy
Markets, Public Policy and Law Department
Boston University School of Management
595 Commonwealth Ave.
Boston, MA 02215
Tel: 617-383-7356
Fax: NA
E-Mail: rebitzer@bu.edu

Lowell Taylor
The Heinz School
Carnegie Mellon University
5000 Forbes Avenue
Pittsburgh, PA  15213-3890
E-Mail: lt20@andrew.cmu.edu
AB  - 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.
ER  -