How the Market Solves an Assignment Problem: The Matching of Lawyers with Legal Claims

Abstract

In the market for lawyers, observable data on promotion and turnover can be explained by reference to the idea that there is positive assortative mating of lawyers and legal claims. There is a scale-of-resources effect, under which it is optimal to assign larger claims to lawyers of higher quality. In a law firm the institution of "tenure" performs a sorting function. Lawyers found to be of high quality are given tenured positions, and the rest leave. The value of legal claims handled by a firm determines its sorting problem, which in turn determines its promotion ladder and turnover.