The Market for Elite Law Firm Associates

Abstract

This article focuses on three information-related puzzles related to how large law firms recruit entry-level lawyers. First, firms hire on the basis of limited information, usually restricted to two semesters of grades. Second, firms do not rely primarily on laterals, who are already trained. Third the recruiting process involves considerable redundancy, with both students and firms spending much time and energy talking with interlocutors they will not work with.

The article first develops a descriptive narrative based on an empirical study of recruiting in the Chicago legal market. The article then goes on to argue that each of the recruiting puzzles can be explained as a "two sided matching" problem, a common feature of labor markets. In contrast with certain other matching markets (notably the market for medical residents), the market for law firm associates is decentralized, meaning that there is no mechanism to coordinate the participants in the market. The article speculates on why no centralized matching mechanism for placing young associates exists. Why some professions utilize centralized matching mechanisms and others do not is a question that has not been addressed heretofore, despite a fairly well-developed literature on matching markets. Given that Canada has some experience with such a mechanism for placing young lawyers, to say nothing of the medical profession, the question is most certainly a relevant one with respect to the market for elite law firm associates.. The empirical study helps us understand the conditions under which a decentralized matching market will remain decentralized (or conversely, why a centralized matching market will centralize), a question not yet considered in the literature.

This article is relevant not only to the economics literature on matching markets, but also an addition to the literature on the sociology, economics and organization of the large law firm as a professional services firm. Despite a fairly broad literature on how law firms maintain, motivate and jettison their members, there has been little attention to how large law firms select these members in the first place.