Moving Away from 'Up or Out': Determinants of Permanent Employment in Law Firms

Large law firms are increasingly moving away from the "up or out" organizational model by employing lawyers on a permanent basis under a variety of titles, a trend with important consequences for the structure of lawyers' career opportunities. Some firms, however, have moved farther in this direction than others. Using data from a nationwide sample of law firm establishments, this study investigates factors that lead firms to implement permanent employment arrangements. The results show that firms that are more exposed to new features of the changing legal environment make greater use of permanent employees. Permanent employment arrangements are more common in law firms where work is more complex, ties to clients are weaker, and lawyers place less emphasis on collegiality. Effects are stronger for lawyers with nontraditional titles such as "senior attorney" and "senior counsel" than for permanent associates, suggesting that firms employ two distinct categories of permanent nonpartner lawyers. Since the early 1980s, large law firms have increasingly implemented permanent employment arrangements alongside traditional probationary ones (Bower 1989; Buchholz 1995; Galanter & Palay 1991:37-76; Heintz & Markham-Bugbee 1986; Wren & Glascock 1991 ).1 Some permanent employees hold titles that clearly indicate the permanent nature of their employment, such as "senior attorney," "principal attorney," "counsel," "of counsel," "senior counsel," and "special counsel."2 Other permanent employees hold the title "associate," as probationary employees do; they are referred to informally as "permanent associates."3 Permanent employees may be former probationary associates of the firm who have been rejected for partnership, or they may have been hired directly into their current positions. In some firms, permanent employees remain eligible for possible promotion to partnership; in others, they do not. Even if they do remain eligible, they have no guarantee of consideration, and no fixed time period within which it must occur. This new pattern represents a marked departure from the employment model that was dominant in large law firms for much of the twentieth century.4 Under traditional "up-or-out" arrangements, associates are employed on a probationary basis for a fixed period, usually between 6 and 10 years from law school graduation. Through on-the-job training, associates are expected to develop practical skills that are not taught in law school. Upon the expiration of the probationary period, firm partners consider the associate for admission to the firm's partnership. If the associate is "passed over," or rejected, he or she is expected to leave the firm within a reasonable period of time. The spread of permanent employment arrangements has important consequences for lawyers' careers, the organization of legal practice, and the cohesion of the bar. Some lawyers are likely to welcome the opportunity for permanent employment, emphasizing the relative security of such positions and the freedom they offer to focus on law practice rather than on management or client development. Others are likely to view a permanent-employee position as a signal of career failure. Whether viewed positively or negatively, permanent-employee positions necessarily rank below partners in status and authority, and they thus conflict with lingering professional norms of autonomy and formal equality among professional colleagues (Freidson 1984; Hall 1968; Goode 1957). Permanent-employee positions also add a layer of hierarchy within large firms, thus advancing the bureaucratization of the organizational settings in which law is practiced. In addition, as part of the proliferation of status distinctions among lawyers, permanent employment arrangements contribute to the growing stratification of the bar. Despite a general increase in the use of permanent employment, law firms vary considerably in the extent to which they have created permanent positions. …