Professor William Henderson of Indiana University and Professor Dr. Christopher Zorn of Penn State University have published Is Reliance on Lateral Hiring Destabilizing Firms?, American Lawyer, 3 February 2014.
The article presents results of a statistical analysis of the lateral hiring of partners among law firms, and then discusses theoretical explanations for the results. The article is a very interesting example of the application of data analysis to legal institutions.
Here are excerpts of the article
[…] The market for lateral partners is a brisk one. Since 2000, the volume has varied between 1,900 and 3,500 lateral moves annually, with the volume peaking during the frothy days of 2007 and 2008.
[…] we sought to test a fairly simple hypothesis: Do firms that engage in more lateral partner hiring become more profitable over time? […]
Last year, using an arsenal of multivariate statistical methods, we were unable to find a relationship between a lateral partner hiring strategy and higher law firm profitability […]. […] the data is telling us that for most law firms there is no statistically significant relationship between more lateral partner hiring and higher profits.
Here is a good question — why [is lateral partner hiring still so frequent]? […] In the absence of organic growth, incoming lateral partners provide evidence that the firm is still vital and attractive. […]
For more details, please see the complete article.