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When Knowledge Is an Asset: Explaining the Organizational Structure of Large Law Firms Author info | Abstract | Publisher info | Download info | Related research | Statistics James B. Rebitzer
Lowell J. Taylor
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We study the economics of employment relationships in large law firms. Our point of departure is the “property-rights” approach that emphasizes the centrality of ownership’s legal rights to control significant nonhuman assets of the enterprise. From this perspective, law firms are an interesting object of study because the key asset in these firms is knowledge, particularly knowledge of the needs and interests of clients. We argue that two distinctive organizational features of 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.
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Article provided by University of Chicago Press in its journal Journal of Labor Economics .
Volume (Year): 25 (2007)
Issue (Month): ()
Pages: 201-229
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Handle: RePEc:ucp:jlabec:v:25:y:2007:p:201-229Contact details of provider: Postal: The University of Chicago Press, Journals Division, P.O. Box 37005 Chicago, IL 60637 Fax: (773) 753-0811 Email: Web page: http://www.journals.uchicago.edu/JOLE/home.html
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Paper James B. Rebitzer & Lowell J. Taylor, 2006.
"When Knowledge is an Asset: Explaining the Organizational Structure of Large Law Firms ,"
NBER Working Papers
12583, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) James B. Rebitzer & Lowell J. Taylor, 2006.
"When Knowledge is an Asset: Explaining the Organizational Structure of Large Law Firms ,"
Economics Working Paper Archive
wp_477, Levy Economics Institute, The.
[Downloadable!] James B. Rebitzer & Lowell J. Taylor, 2006.
"When Knowledge Is an Asset: Explaining the Organizational Structure of Large Law Firms ,"
IZA Discussion Papers
2353, Institute for the Study of Labor (IZA).
[Downloadable!] References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Christopher Ferrall, 1991.
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Other versions: Malcomson, James M, 1984.
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Other versions: Prendergast, Canice, 1993.
"The Role of Promotion in Inducing Specific Human Capital Acquisition ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 108(2), pages 523-34, May.
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Jonathan Levin & Steven Tadelis, 2005.
"Profit Sharing and the Role of Professional Partnerships ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 120(1), pages 131-171, January.
Other versions: Garicano, Luis & Hubbard, Thomas, 2005.
"Managerial Leverage is Limited By the Extent of the Market: Hierarchies, Specialization and the Utilization of Lawyers' Human Capital ,"
CEPR Discussion Papers
4924, C.E.P.R. Discussion Papers.
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Other versions:
Garicano, Luis & Hubbard, Thomas N, 2007.
"Managerial Leverage Is Limited by the Extent of the Market: Hierarchies, Specialization, and the Utilization of Lawyers' Human Capital ,"
Journal of Law & Economics ,
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Garicano, Luis & Hubbard, Thomas N., 2005.
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Hart, Oliver & Moore, John, 1990.
"Property Rights and the Nature of the Firm ,"
Journal of Political Economy ,
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Other versions: Joseph Farrell and Suzanne Scotchmer., 1986.
"Partnerships ,"
Economics Working Papers
8616, University of California at Berkeley.
Other versions: Kevin Lang & Peter-John Gordon, 1995.
"Partnerships as Insurance Devices: Theory and Evidence ,"
RAND Journal of Economics ,
The RAND Corporation, vol. 26(4), pages 614-629, Winter.
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Grossman, Sanford J & Hart, Oliver D, 1986.
"The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration ,"
Journal of Political Economy ,
University of Chicago Press, vol. 94(4), pages 691-719, August.
[Downloadable!] (restricted)
Other versions: Holmstrom, Bengt & Milgrom, Paul, 1994.
"The Firm as an Incentive System ,"
American Economic Review ,
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Kahn, Charles & Huberman, Gur, 1988.
"Two-sided Uncertainty and "Up-or-Out" Contracts ,"
Journal of Labor Economics ,
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Carmichael, H Lorne, 1988.
"Incentives in Academics: Why Is There Tenure? ,"
Journal of Political Economy ,
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Waldman, Michael, 1990.
"Up-or-Out Contracts: A Signaling Perspective ,"
Journal of Labor Economics ,
University of Chicago Press, vol. 8(2), pages 230-50, April.
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Other versions: Stole, Lars A & Zwiebel, Jeffrey, 1996.
"Organizational Design and Technology Choice under Intrafirm Bargaining ,"
American Economic Review ,
American Economic Association, vol. 86(1), pages 195-222, March.
[Downloadable!] (restricted)
Raghuram G. Rajan & Luigi Zingales, 2000.
"The Firm as a Dedicated Hierarchy: A Theory of the Origin and Growth of Firms ,"
NBER Working Papers
7546, National Bureau of Economic Research, Inc.
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Other versions: Rebitzer, James B & Taylor, Lowell J, 1995.
"Efficiency Wages and Employment Rents: The Employer-Size Wage Effect in the Job Market for Lawyers ,"
Journal of Labor Economics ,
University of Chicago Press, vol. 13(4), pages 678-708, October.
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Brendan O'Flaherty & Aloysius Siow, 1992.
"On the Job Screening, up or out Rules, and Firm Growth ,"
Canadian Journal of Economics ,
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[Downloadable!] (restricted)
Other versions:
O'Flaherty, B. & Siow, A., 1990.
"On the Job Screening, Up or Out Rules, and Firm Growth ,"
University of Chicago - Economics Research Center
90-11, Chicago - Economics Research Center.
O'Flaherty, B. & Siow, A., 1989.
"On The Job Screening, Up Or Out Rules, And Firm Growth ,"
Discussion Papers
1989_02, Columbia University, Department of Economics.
Landers, Renee M & Rebitzer, James B & Taylor, Lowell J, 1996.
"Rat Race Redux: Adverse Selection in the Determination of Work Hours in Law Firms ,"
American Economic Review ,
American Economic Association, vol. 86(3), pages 329-48, June.
[Downloadable!] (restricted)
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Naomi Lamoreaux & Jean-Laurent Rosenthal, 2004.
"Corporate Governance and the Plight of Minority Shareholders in the United States Before the Great Depression ,"
NBER Working Papers
10900, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
repec:bep:thetop:v:6:y:2006:i:1:p:1297-1297 is not listed on IDEAS
Heski Bar-Isaac, 2004.
"Something to Prove: Reputation in teams and hiring to introduce uncertainty ,"
Working Papers
04-07, New York University, Leonard N. Stern School of Business, Department of Economics.
[Downloadable!]
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.
[Downloadable!]
Robert Gibbons, 1997.
"Incentives and Careers in Organizations ,"
NBER Working Papers
5705, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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