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Specialization, firms, and markets: the division of labor within and between law firms

Garicano, Luis and Hubbard, Thomas N. (2009) Specialization, firms, and markets: the division of labor within and between law firms. Journal of Law, Economics, and Organization, 25 (2). pp. 339-371. ISSN 8756-6222

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Identification Number: 10.1093/jleo/ewn003


This article uses confidential microdata from the Census of Services to examine law firms' field boundaries. We find that the share of lawyers working in field-specialized firms increases as market size increases and lawyers field specialize, indicating that transaction costs among lawyers, and not just complementarities in clients' demands, affect law firms' field boundaries. Moreover, we find that this pattern is mainly true when looking at fields where lawyers are involved in dispute resolution rather than in structuring transactions. We then analyze which combinations of specialists tend to work in the same firm and which tend not to do so. We relate our results to theories of law firms' boundaries from the organizational economics literature. Our evidence leads us to eliminate risk sharing as an important determinant of firms' field boundaries and narrows the set of possible monitoring or knowledge sharing explanations.

Item Type: Article
Official URL:
Additional Information: © 2009 OUP
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
K Law > K Law (General)
Date Deposited: 05 Apr 2011 13:45
Last Modified: 20 Aug 2021 00:27

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