Moving away from "Up or Out": Determinants of permanent employment in law firms

Law & Society Review, 1999 by Gorman, Elizabeth H

Dependent Variables

To measure the number of permanent employees in each establishment, I began by counting the number of lawyers with titles other than "partner" or "associate" listed by each establishment in Martindale-Hubbell. Although titles including "counsel" are now commonly used to designate permanent employees (Buchholz 1995; Wren & Glascock 1991), they are still sometimes given to retired partners. I used the following guidelines to exclude retired partners. Some firms provided sufficient biographical information to permit me to determine which "counsel" were and were not retired partners. Others listed retired partners under a separate title, such as "retired partners" or "emeritus partners"; in that case, I concluded that lawyers with a "counsel" title were not retired partners. Where neither of these conditions applied, I excluded "counsel" who were 65 years of age or older as of February 1996 as well as individuals whose names indicated that they had been "name partners" in their firms.

I obtained the number of "permanent associates" in each establishment by counting the number of lawyers listed as associates in Martindale Hubbell who had been out of law school for 3 or more years beyond the expiration of the establishment's probationary "partnership track" period. Establishments' partnership track periods are listed in the NALP Directory. The 3-year margin was intended to avoid counting associates who might be given a second chance at consideration for partnership as well as those who had been passed over but had not yet found another position. The number of permanent associates is missing for 133 establishments that either did not list their associates at all in Martindale-Hubbell or listed only their names, without biographical information. It seems unlikely that these missing values cause sample selection bias in the results. Sample selection bias occurs when, in effect, (1) selection into the sample is a function of some variable x; (2) the dependent variable in the analysis is a function of z as well as of xi, x2, and so on; (3) z is omitted from the equation estimating the dependent variable; and (4) z is correlated with one or more of the included x variables (Stolzenberg & Relles 1997). It seems likely that establishment size is the primary systematic determinant of establishments' decision to minimize or omit the listing of their associates in Martindale-Hubbell-establishments with hundreds of lawyers may simply want to economize on space in the directory-and establishment size is controlled here.ll Any other factors that might influence establishments' Martindale Hubbell listing preferences are unlikely to affect the number of their permanent associates.12

To assess the intensity of use of permanent employment arrangements, I examine the numbers of permanent employees as percentages of the total number of lawyers (including partners) and as percentages of the number of employed lawyers (excluding partners). In my view, the second modeling approach probably more accurately reflects the decision process that occurs in law firms. Due to the importance of leverage for firm profitability, it is likely that firms first-at least roughly-determine the relative proportions of partners and employees. Once the approximate size of the employee component has been fixed, firms decide how many of those employees will be employed on a probationary or permanent basis. If this view is correct, it makes sense to model the number of permanent employees as a percentage of employees, excluding partners, and to include a measure of leverage as an independent variable.