Mergers in professional service firms: A large-scale analysis of how law firm mergers shape attorney careers and the use and retention of human capital

This dissertation explores how mergers disrupt labor markets in professional service Firms using a unique longitudinal database of nearly every lawyer working in nearly every law firm (sized greater than 5 lawyers) in the United States. I theorize that mergers disrupt labor markets because they interfere with daily activities in the firm and disturb the lit between the firm and the individual. I argue that these two disruptions influence the propensity of lawyers to leave the firm and, for those who remain, their likelihood of promotion within the organization. After discussing the environmental influences of mergers in the United States legal industry, I empirically examine the impact of these mergers on individuals and firms. At the individual level, I find that mergers increase departures of associates and lower the promotion rates for those in the smaller of the two merging firms. However, there are also some positive outcomes for individuals in mergers. When partner departures increase, promotions of associates to the partner level also increase. indicating that mergers may open up opportunities for some individuals. At the firm level, although mergers increase departure rates, they also increase hiring rates of both associates and partners. While there is not much evidence that higher quality lawyers leave the firm after mergers than before, I do find that the quality of new hires declines in the post-merger period. This research shows that mergers do significantly impact labor markets and demonstrates that mergers can be a risky strategy for professional service firms.