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Evaluating the technical efficiency of large US law firms

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  • Weiren Wang

Abstract

We conduct a performance evaluation in terms of technical efficiency of large law firms based on a unique sample of 163 large law firms in the USA in 1994. To estimate technical efficiency for individual firms, we use the stochastic frontier production function with composed errors where output (measured in terms of revenue) is a function of various labour and human capital inputs. Based on the sample, the average level of technical efficiency in the production of legal service in large US law firms is estimated at 82.20%. More than 87% of the firms attained 75% or higher level of technical efficiency. The estimation results also indicate that the number of lawyers, the number of paralegals, and the number of associates per partner, have a positive and statistically significant effect on the production of legal service.

Suggested Citation

  • Weiren Wang, 2000. "Evaluating the technical efficiency of large US law firms," Applied Economics, Taylor & Francis Journals, vol. 32(6), pages 689-695.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:6:p:689-695
    DOI: 10.1080/000368400322309
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    Cited by:

    1. Nuno Garoupa & Fernando Gómez, 2002. "Cashing by the hour: Why large law firms prefer hourly fees over contingent fees," Economics Working Papers 639, Department of Economics and Business, Universitat Pompeu Fabra.

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