The authors examine how up-or-out rules operate as a screening device in the market for lawyers. Using data on large New York law firms, they show that firm growth is a slow and uncertain process because performance as an associate is not an especially informative signal about whether a lawyer will make a good partner and because the costs of mistaken promotion are relatively high. A newly hired associate is unlikely to be a suitable partner and the screening process is relatively imprecise. Firm growth therefore contributes between 5-7 percent of the present value of profits of a law firm. Copyright 1995 by University of Chicago Press.
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Volume (Year): 13 (1995) Issue (Month): 4 (October) Pages: 709-35 Download reference. The following formats are available: HTML
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Handle: RePEc:ucp:jlabec:v:13:y:1995:i:4:p:709-35
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