Institutional Change in Large Law Firms: A Resource Dependency and Institutional

Perspective
Author(s): Peter D. Sherer and Kyungmook Lee
Source: The Academy of Management Journal, Vol. 45, No. 1 (Feb., 2002), pp. 102-119
Published by: Academy of Management
Stable URL: http://www.jstor.org/stable/3069287
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? Academy of Management Journal
2002, Vol. 45, No. 1, 102-119.

INSTITUTIONAL CHANGE IN LARGE LAW FIRMS:

A RESOURCE DEPENDENCY AND
INSTITUTIONAL PERSPECTIVE

PETER D. SHERER
University of Oregon

KYUNGMOOK LEE
Seoul National University

We integrate resource dependency and institutional theory to argue that resource

scarcity drives, and legitimacy enables, institutional change. Building on a historical
account, we examine the sources and timing of innovation departing from standard
human resource practices using event history analysis of over 200 principal offices of
large law firms. Offices with human resource scarcity innovated to acquire alternative
resources; highly prestigious offices had the legitimacy to be first or early adopters.
Our findings highlight the value of looking to the resource side and to the notion of
legitimacy in building an institutional theory of change.

When an organization departs from standard
practice and innovates, it is common to see other
organizations in its organizational field or industry
adopt the innovation early on and still other or-
ganizations adopt it later. This chain of events
prompts the following questions: What about the
organizational field or industry made it ripe for an
innovation departing from a standard? What about
a particular organization explains why it was the
first to innovate? Did the early and late adopters
have different reasons for innovating?
These questions are at the heart of institutional
change and are the focus of this article. We use re-
source dependency theory (Leblebici, Salancik, Co-
pay, & King, 1991; Pfeffer & Salancik, 1978; Sherer,
2001) to show that resource scarcities brought on by
the widespread use of a standard drive organizations
to innovate with the aim of acquiring alternative re-
sources. We use institutional theory (DiMaggio &
Powell, 1983; Meyer & Rowan, 1977) to show that
organizations with prestige are enabled by their legit-
imacy to innovate from a standard and that these
initial innovators and early adopters legitimize
change for late adopters. We integrate the theories to
We wish to thank Huseyin Leblebici, Daniel Levinthal,
W. Richard Scott, and three anonymous reviewers for
their valuable comments on an earlier version of this
work. We also appreciate the many comments of seminar
participants at the University of Illinois at Urbana-Cham-
paign, Northwestern University, the University of Ore-
gon, and the University of Pennsylvania. We appreciate
the considerable efforts of Lynnette Claire and Jonghyang
Oh in the data collection process.
show how the interplay of these competitive and
institutional processes (DiMaggio & Powell, 1991;
Scott & Meyer, 1991) more fully explains institutional
change.
Our starting point is managerial practices that act
as standards. By a standard, we mean an accepted
way of doing things with an arguable technical ratio-
nale (Leblebici et al., 1991). It is labeled as a "best
practice" and confers legitimacy on organizations
(DiMaggio & Powell, 1983, 1991; Leblebici et al.,
1991; Meyer & Rowan, 1977; Tolbert & Zucker, 1983).
Since it is widely used, the resources associated with
it can become scarce and costly to acquire (Leblebici
et al., 1991; Pfeffer & Salancik, 1978). When that hap-
pens, organizations have an incentive to innovate so
that they can acquire alternative resources. But only
some organizations have the legitimacy to vary from a
standard-those that initially innovate often have a
prestige or high status that enables them to be differ-
ent (Rogers, 1983). These organizations are better able
to develop and disseminate technical rationales for
their innovations because they have the legitimacy to
differ. Early on, other organizations with prestige
adopt the innovations. They too have the legitimacy
to differ. The initial and early adopters create legiti-
macy for those who follow (Tolbert & Zucker, 1983).
Freed from having to defend the legitimacy of their
actions, other organizations decide whether to adopt
the innovations later on the basis of their value in
acquiring alternative resources.
We address these arguments in the context of the
principal offices of large law firms, organizations that
practice law on behalf of large corporations (Heinz &
Laumann, 1982; Smigel, 1969; Spangler, 1986). We

102

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 2002 Sherer
describe the Cravath model, which was standard hu-
man resource (HR) practice in the offices of large U.S.
law firms for much of the 20th century (Galanter &
Palay, 1991; Gilson & Mnookin, 1988). Its central
component was an "up-or-out" system. Lawyers
straight from elite law schools were placed on a "part-
ner track" and moved up to the position of partner or
out of a firm after six or so years. We examine two
major innovations in HR practice that arose in the
1980s as important challenges to the up-or-out sys-
tem. We focus on the two law firms that were the
initial innovators of these two innovations, examin-
ing why and how they innovated. We reconstruct the
history of these innovations through a review of trade
journals and newspaper articles. The historical ac-
count shows how widespread use of the Cravath
model, meeting the burgeoning demand for legal ser-
vices, led to competition in acquiring scarce human
resources-lawyers straight from elite law schools-
and how particular highly prestigious firms were first
to innovate. We then describe our use of event history
analysis to formally test hypotheses on the sources of
early and late adoption with data on over 200 princi-
pal offices of large U.S. law firms. The results show
early adopters were motivated by competitive pres-
sures to acquire alternative human resources and
were enabled to change by their prestige. Late adopt-
ers, also motivated to innovate by competitive pres-
sures to acquire alternative human resources, were
freed from having to defend the legitimacy of their
actions.
The study contributes to an institutional theory of
change in several ways. First, the study shows how
resource dependency theory speaks to competitive
processes on the resource or input side that drive
change in response to a standard. It contributes to
explaining what drives challenges to standards and
how standards often create challenges to themselves
(Leblebici et al., 1991). Second, the study shows how
institutional theory, through its central notion of le-
gitimacy, contributes to explaining change. We thus
build on institutional theory to understand organiza-
tional change (Greenwood & Hinings, 1996; Leblebici
et al., 1991; Oliver, 1992). Third, the study integrates
resource dependency and institutional theories to ex-
amine change. It shows how the interplay of institu-
tional and competitive processes is often critical for
institutional change to occur.
THEORETICAL BACKGROUND
Resource Dependency Theory and
Institutional Change
Resource dependency theory speaks to competi-
tive processes by which resource scarcities brought
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and Lee 103
about by widespread use of a standard lead to
change (Leblebici et al., 1991; Pfeffer & Salancik,
1978; Sherer, 2001). It allows scholars to see how a
standard has implications for change in terms of
competition among organizations on the resource
or input side.
Resource dependency theory suggests standards
lead to resource scarcities in two ways (Leblebici et
al., 1991). One way is endogenous. A standard can
raise challenges to itself through its success. As a
resource is typically finite in supply, increasing use
of a standard can make the resources associated
with it scarce, or costly to acquire. The second way
is exogenous. Growth in the demand for a product
or service in an industry may lead to greater de-
mand for the resource associated with the standard.
As a result, the resources associated with the stan-
dard again become scarcer, or more costly to ac-
quire.
Exogenous and endogenous forces often work to-
gether. A standard that is under pressure because of
endogenous forces gets pushed beyond its limits by
exogenous forces involving demand-side growth.
The compounding of these forces makes it even
more likely that there will be resource scarcities.
Competitive pressures can then make it difficult to
stick with a standard (Leblebici et al., 1991). Organ-
izations compete at greater costs for the scarce re-
sources associated with a standard. Organizations
are then "at risk" for departing from standard prac-
tice in their pursuit of alternative resources.
Resource dependency theory does not, however,
specify which at-risk organizations in an organiza-
tional field or industry will be the initial innovators
or the early adopters of a change. It simply suggests
that organizations facing resource scarcities will
seek to be more competitive in acquiring resources
or to innovate in ways that allow them to make use
of alternative resources. It is here that institutional
theory provides an important contribution. Through
its notion of legitimacy, institutional theory helps to
identify which organizations are most apt to be initial
innovators and early adopters.
Institutional Theory and Institutional Change
Legitimacy has a central role in institutional the-
ory as a force that constrains change and pressures
organizations to act alike (DiMaggio & Powell,
1983). Concern over legitimacy forces organiza-
tions to adopt managerial practices or organiza-
tional forms that other organizations have. Concern
over legitimacy thus forces organizations to look
alike and not be different for fear that they will lack
credibility.
Tolbert and Zucker's (1983) well-known study
 104 Academy of Management Journal February

on civil service reform (adoption of written exam- how institutional forces enable initial innovation
inations and job tenure) in U.S. municipalities il- and early adoption of change. However, without
lustrates the role that legitimacy has typically competitive forces, organizations will not need to
played in research on institutional change. They change. Both forces thus play off one another.
found that early adopters were driven to change by We examine these theoretical arguments in the
technical-competitive reasons and that late adopt- context of large law firm offices' use of the Cravath
ers were driven to conform to what had become model as standard practice and their innovations
best practice. Tolbert and Zucker (1983) argued that departing from it. We begin by describing the Cra-
the early adopters of civil service reforms provided vath model.
the legitimacy for innovation and that other or-
ganizations were then under pressure to adopt the
A HISTORICAL ACCOUNT OF THE
reforms for fear of losing legitimacy. In effect, the
CRAVATH MODEL
late adopters succumbed to coercive pressures to
change. Institutional Beginnings
The question left unanswered, however, is how
The Cravath model was the standard in the of-
initial and early adopters are enabled to be differ-
fices of large law firms for much of the 20th cen-
ent. Some authors (DiMaggio & Powell, 1983; Leb-
tury.' Various authorities in the field of law and
lebici et al., 1991) have argued that organizations at
management have called it the general rule, domi-
the margin are the first to innovate, but we argue
nant employment practice, industry standard, or
that the prestige of an organization is important to
institutionalized practice (Galanter & Palay, 1991;
the initiation of change in many organizational
Gilson & Mnookin, 1988; Hobson, 1986).
fields, particularly where prestige matters. Organi-
The origins of the model date back to the late
zations with prestige have the legitimacy to act as
1880s and to Paul Cravath, the one-time managing
initial and early adopters (Rogers, 1983). Initial in-
partner of the highly prestigious law firm now
novators, especially, and early adopters use their
known as Cravath, Swaine, and Moore (Swaine,
prestige or status to pull off being different by cre-
1946, 1948). Upon his arrival, Paul Cravath reor-
ating and disseminating new technical rationales.
ganized the firm that came to bear his name. He
Their status allows them to experiment with or try
began a practice of hiring lawyers straight from
innovations that have not been legitimized.
elite law schools (initially, Harvard and Columbia)
This view of legitimacy as a force for change is
who had high grades (Swaine, 1946: 658-659).
suggested in an alternative interpretation of Tolbert
They were paid generous salaries, and their work at
and Zucker's finding on city size. Although large
the firm was to be their sole source of income
cities had technical reasons for adopting civil ser-
(Swaine, 1946: 659).
vice reforms, they also had greater leeway, based on
The up-or-out system became the central compo-
legitimacy, to be different and to innovate. A large
nent of Paul Cravath's model.2 The "up" part is
city with a great deal of prestige, like New York
encapsulated in this statement made by Cravath:
City, would have a much easier time pulling off
"Every lawyer who enters the Cravath office has a
being different than a small city with less prestige.
right to aspire [sic] his life career there-but only
Although human resource scarcities motivate or-
by attaining partnership" (Swaine, 1948: 7). By "ev-
ganizations to change, and legitimacy enables it,
ery lawyer," Cravath meant every new lawyer fresh
the interaction of these forces increases the likeli-
from law school. These lawyers were not partners
hood of change. Integrating the arguments from
and were referred to as "associates." The "out" part
resource dependency and institutional theory con-
of the system is captured in this statement: "No
tributes to further understanding and predicting
one should be permitted to stay in the office more
the sources of institutional change.

Theory Integration 1 We make an effort to distinguish between a law firm

We argue that both institutional theory and re-
source dependency theory help explain institu-
tional change, but they are more predictive of
change when taken together. Resource dependency
theory speaks to how competitive pressures drive
organizations to be different. However, without le-
gitimacy, organizations will not initially and early
be enabled to change. Institutional theory speaks to
and its principal office. But that is not always possible.
The industry and legal management literature use the
terms interchangeably, and some firms have only one
office.
2 The up-or-out system appears to have originated in
universities, notably Harvard (Quincy, 1977). Metzger
(1973: 121) noted that "Harvard began [in the mid 1800s]
to apply the rule that became breezily known as 'up-or-
out"' (1973: 121).

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 2002 Sherer
than six years unless the partners had [sic] deter-
mined to admit him into the partnership" (Swaine,
1948: 7).
Cravath provided a technical rationale for the
up-or-out system. The possibility of moving up was
argued to be a major source of motivation. Cravath
argued that "up" motivated associates to handle
cases with greater responsibility and to aspire to
promotion to partner (Swaine, 1948: 7). "Out" pro-
vided a guard against a lack of motivation (Swaine,
1948: 7):
A man who is not growing professionally [that is,
has been passed over or has no chance for partner-
ship] creates a barrier to the progress of the younger
men within the organization and himself, tends to
sink into a mental rut-to lose ambition; and loss of
ambition induces carelessness. It is much better for
the man, for the office and for the clients that he
leaves while he still has self-confidence and deter-
mination to advance. The frustrated man will not be
happy, and the unhappy man will not do a good job.
The technical rationale for the up-or-out system
was based on there being a steady source of lawyers
fresh from elite law schools (Swaine, 1948). But
what would large law firm offices do if the avail-
ability of these lawyers came into question? As
Selznick (1957: 19) would argue, institutionaliza-
tion of a standard like the up-or-out system leads to
its being infused with value beyond its technical
rationale. That made it difficult for offices to
change.
By the 1980s, however, questions about the up-
or-out system were becoming more common. Cor-
porate law firms were growing (Gilson & Mnookin,
1988; Glendon, 1994; Kronman, 1993; Linowitz,
1994) and becoming more competitive with one
another over legal talent. What had been unques-
tionable was about to come under strong cross-
examination.
The Sources of Initial Innovation and
Early Adoption
The origin of innovation- departure from up-or-
out-rests with the human resources it required of
large corporate law firm offices. Up-or-out required
offices to acquire junior lawyers straight out of elite
law schools. That requirement ultimately contrib-
uted to a scarcity of these lawyers. Competitive
forces arose both endogenously and exogenously
(DiMaggio & Powell, 1991; Leblebici et al., 1991) to
create the scarcity.
Endogenous forces arose from the up-or-out sys-
tem itself. As Galanter and Palay (1991) argued, the
system results in offices growing ever larger. The
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and Lee 105
growth occurs because "leveraging" of associates is
integrally tied to up-or-out (Gilson & Mnookin,
1988; Sherer, 1995). Leveraging involves having
associates assigned to the cases of a partner with
the aim of generating more revenues for that part-
ner (Gilson & Mnookin, 1988; Sherer, 1995). A firm
with a higher leverage ratio (that is, the number of
associates divided by the number of partners) have
more associates assigned to a partner and generate
more of the revenue per partner through associates
(Sherer, 1995). For every associate made partner,
several new associates are added, a proportion of
whom later make partner. If this proportion stays
constant, a firm grows as it adds new associates for
each new partner. Given a relatively constant pro-
portion of associates making partner, an office's
growth appears to be proportional but is actually
exponential (Galanter & Palay, 1991). Thus, firms
that leverage associates have increasingly greater
needs for associates.
Exogenous forces were operating at the same
time. As several authors have argued (Glendon,
1994; Kronman, 1993; Linowitz, 1994), corporate
law firms became a business that depended more
on generating increasingly higher revenues and
profits. Expansion in federal, state, and municipal
legislation increased the demand for the services of
large law firms. Trade journals such as the Ameri-
can Lawyer fueled the increased focus on law firms
as businesses by publicizing financial information
on them (Margolick, 1984). These exogenous forces
prompted corporate law firms to grow larger.
Exogenous and endogenous forces compounded
one another. The increasing focus on increasing
revenues and profits and the growth in the demand
for legal services required firms to grow. When
firms grew, they had more partners, and they then
needed more junior lawyers. However, the elite
schools did not grow in number or in the sizes of
their classes. The result was a very real human
resource scarcity.
The scarcity began brewing in the late 1970s, and
its impact became clear over time to partners in law
firms and to the legal press. Robert Raven, a partner
at Morrison and Foerster of San Francisco, made
this point at a conference sponsored by the Amer-
ican Lawyer:
[There is] a tremendous imbalance in supply and
demand for new graduates out of law school. De-
pending on how many schools you go to and how
deep you go in the class, there's a pool of about
1,200 to 1,400 people out there that you would like
to confine your offers to.
If the largest 100 firms take 50 apiece [a conservative
estimate] .. . that accounts for 5,000. The next 100
firms must take an average of 20; that's another
 106 Academy of Management
2,000. So you go through the applicant pool in a
hurry. I think there are about five offers for every
person. (American Lawyer, 1987: 29)
Stephen Brill, editor of the American Lawyer, elab-
orated on this same point:
The biggest problem law firms have today is that
they can't possibly put enough product [lawyers] on
the shelf. The math is easy and grim. The best law
schools are producing the same number of graduates
they've produced since the early 1960s, yet demand
for them has multiplied almost exponentially. To-
day a large firm ... is making enough first-year
offers to employ nearly every member of the Yale
graduating class who's not clerking for a judge. The
top ten L.A. firms are probably seeking the equiva-
lent of all the graduates from Stanford, Yale, and
Harvard put together who are inclined to go to pri-
vate firms. (Brill, 1986: 30)
As resource dependency theory suggests (Leble-
bici et al., 1991; Pfeffer & Salancik, 1978; Sherer,
2001), a scarcity in human resources motivates or-
ganizations to take action. As Robert Raven argued,
there were two options:
What do you do about that [the imbalance in supply
and demand]? You can either build a better mouse-
trap and be super-competitive or you can try to live
with your share and restructure your firm in order to
salvage people that you ordinarily wouldn't choose.
(American Lawyer, 1987: 29)
Although many firms sought to build a "better
mousetrap," firms also sought to build a "different
mousetrap."
The question was, which law firm or firms would
be first to innovate and build the different mouse-
trap. At the very end of 1982, Davis, Polk, &
Wardell (Davis Polk), a highly regarded "silk-stock-
ing" firm located principally in New York, inno-
vated by creating a track for associates who did not
make partner and would not go up again for partner
(Pollock, 1982). Their status would be that of con-
tinuing, or "permanent," salaried employees who
would not receive draws on the firm's profits like
those of partners. They would be on a "senior at-
torney track," which was to commence in 1983.
This innovation was initially aimed at keeping
those associates who had experience, often in
highly specialized areas of practice (Pollock, 1982),
such as blue-sky law, that might be narrow, or not
central to the firm, or intellectually abstract. The
new track was also targeted at lawyers in areas like
taxes, those that did not leverage many junior law-
yers and generated modest revenues but that did
provide valued services.
News of the advent of the senior attorney track at
the New York City office of Davis Polk was a major
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Journal February
news event. Its planning stage was covered by the
American Lawyer (Pollock, 1982), and its inception
was announced in the Legal Times (Graham, 1983:
3). It was later covered in the New York Times
(Lewin, 1984), the Los Angeles Daily Journal
(Galante, 1983a), and the National Law Journal
(Galante, 1983b). Even two years later, the ABA
Journal saw it as "a dramatic departure from tra-
dition" (Quade, 1984: 30).
Davis Polk got the idea for its innovation from its
leading client, the New York City investment bank-
ing house Morgan Stanley (Glasser, 1983; Pollock,
1982). When Morgan Stanley changed its legal form
from a partnership to a corporation, it created a
career track for employees, referred to as "princi-
pals," who did not get promoted to the highest
level, managing director. Principals had continuing
employment but not the stock options of managing
directors (Pollock, 1982).
Davis Polk's partners developed and dissemi-
nated a technical rationale for the senior attorney
track that they took to the legal news media. Prior
to its announcement, Richard Spizzirri, a partner at
Davis Polk, was quoted in the American Lawyer as
saying: "To lose someone [who went through the
partner track but just missed making partner] who's
that good is crazy.... Maybe some of them would
prefer to stay on a somewhat different basis if we
had a program" (Pollack, 1982: 8). And Stephen
Case, chairman of the committee that came up with
the senior attorney track, argued this: "Other pro-
fessional service organizations such as the account-
ing firms and the investment banks, which ten
years ago were organized like law firms, have cre-
ated a more fragmented hierarchy.... If it was such
a good thing for them, are we missing something?"
(Pollack, 1982: 8).
Other highly prestigious firms saw the logic of
Davis Polk's actions and echoed their technical ra-
tionale. Stephen Benjamin, a lawyer at the well-
regarded New York firm of Debevoise & Plimpton,
was quoted in the American Lawyer as saying:
"Up-or-out maybe just doesn't make sense any-
more.... You've invested a lot of effort in training
good lawyers, good people, nice people. All of a
sudden, when they reach their highest level of
proficiency, they're forced by the system to look
elsewhere for employment" (Pollock, 1982: 8).
That the senior attorney track caught the eye of
other firms was no doubt inspired by the prestige of
Davis Polk and the other prestigious law firms that
initially adopted it. Graham quoted a partner at
Davis Polk as saying that several law firms had
provided them with the feedback that they were
pleased "a firm like Davis Polk has led the way"
(1983: 7). Galante noted that "partners on both
 2002 Sherer
coasts began taking sharper notice ... after word
leaked early this year that New York's silk stocking
Davis Polk & Wardell had created ... 11 'senior
attorneys"' (1983a: 1). When the highly regarded
Los Angeles office of O'Melveny & Myers created a
senior attorney track in 1983, a year after Davis-
Polk's innovation, a legal reporter for the American
Bar Journal saw it as "lending a measure of credi-
bility to the idea" (Quade, 1984: 30). Galante
(1983b: 28), reporting for the National LawJournal,
stated that it gave the new track an "extra measure
of respectability." Oliver Green, a managing partner
at another highly prestigious firm, Paul Hastings,
was quoted by Galante as saying, "If O'Melveny can
do it and get away with it, and be successful, it's
like Baptism by fire" (1983b: 28). Galante also
reported that in 1983 "the list of other firms that
have considered the idea [of a senior track] reads
like a who's who of important national firms"
(1983b: 28).
The senior attorney track did not automatically
receive legitimacy, however. Echoing Paul Cravath,
concerns were raised that it would bruise egos, hurt
office morale, and create a caste system (Graham,
1983; Lewin, 1984; Pollock, 1982; Singer, 1987).
Davis Polk and other high-status firms had used
their prestige to justify adopting the senior attorney
track through the press to their partners, associates,
and clients. They did not have an easy sell, but
their prestige allowed them to convince others of
the legitimacy of the innovation.
A second innovation occurred in late 1985. The
second largest firm in the country, Jones, Day,
Reavis, & Pogue (Jones Day) of Cleveland, pio-
neered the practice of hiring lawyers as permanent
employees with no chance to make partner (Free-
man, 1987; Galanter & Palay, 1991; Gilson &
Mnookin, 1988; Lewin, 1987; Orey, 1987; Wall
Street Journal, 1986). They were on the "staff attor-
ney track." The innovation of the staff attorney
track was covered by the Wall Street Journal in a
news flash on the front page that read: "Jones, Day,
Reavis, & Pogue, the big Cleveland firm, experi-
ments by hiring 'staff attorneys' at starting pay
about a third less than associates who may make
partner. Staff attorneys can't" (1986: 1).
Jones Day's reason for adopting the staff attorney
track was explained as follows in the American
Lawyer: "In 1985, Cleveland's Jones, Day, Reavis, &
Pogue found it could not recruit top-level lawyers
to keep pace with its expanding practice. Its solu-
tion: lower traditional recruiting requirements to
hire a new class of attorney, who would be paid
less than regular associates and not be on the part-
ner track" (Orey, 1987: 20). The managing partner
at Jones Day explained just what had happened in
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and Lee 107
a quote to the New York Times: "We have been
desperate for manpower.... So we went to some
local law schools to see if there was anyone who
wanted to work at Jones Day for a while in a tem-
porary kind of position. Hundreds of resumes
poured in, from people who seem ecstatic to get a
chance to work with us" (Lewin, 1987: D3).
Staff attorneys were hired on renewable yearly
employment contracts (Orey, 1987). They did rou-
tine price-sensitive work with low to moderate bill-
ing rates (Orey, 1987). Richard Pogue noted at a
1987 American Lawyer conference that much of
this work was labor-intensive document and depo-
sition reviews for litigation cases.
Although Jones Day was the initial adopter of the
staff attorney track in the organizational field of
large law firms, the track had its origins in legal
clinics such as Hyatt Legal Services and Jacoby &
Meyers (Sullivan, 1979). These clinics did not pro-
vide legal services to large corporations and did not
compete directly with firms like Jones Day (Sulli-
van, 1979). They specialized in low-cost work, with
the vast majority of it divorce cases for those with
lower to middle incomes (Lancaster, 1980; New
York Times, 1982; Sullivan, 1979). They had many
lawyers for whom there was no possibility of at-
taining partnership. Thus, there was an innovation
transfer from the organizational field of legal clin-
ics to that of large law firm offices, with Jones Day
taking the lead in the field of large law firm offices.
Other large law firm offices adopted the staff
attorney track. As Orey reasoned: "Manpower
shortages have led other firms to take similar steps"
(1987: 20). Their reason for adopting it was thus to
acquire legal talent that could handle routine cases.
Consultants had an important role in legitimizing
the senior and staff attorney tracks. They wrote
books and articles and conducted surveys in an
effort to encourage adoption of these tracks. One
notable example is a monograph on devising alter-
native tracks written by Heinz and Markham-
Bugbee (1986), two consultants from Arthur Young,
for the Economics of Law Practice Section of the
American Bar Association. Consulting firms also
conducted surveys showing which offices had se-
nior and staff attorney tracks. The names of offices
with the tracks were publicized in highly visible
trade journals such as the American Lawyer and the
National Law Journal.
By the late 1980s, the legitimacy of the senior and
staff attorney tracks was no longer in question. As
Barbara Lynne, a writer for the National Law Jour-
nal, noted: "What was once considered a nether-
world of sorts-a no man's land that connoted sec-
ond class stature-the nonpartner tier of 'others'
 108 Academy of Management
has become acceptable at many law firms nation-
wide" (National Law Journal, 1990: 1).
Devout adherence to the standard of the Cravath
model had faded. Technical rationales had been
devised for the senior and staff attorney tracks that
were now operating alongside the technical ration-
ales for the up-or-out system. After the initial inno-
vations by Davis Polk and Jones Day, other law
firms had followed as early adopters. The initial
innovators and early adopters paved a trail of legit-
imacy that later freed up other firms to change
when their human resource demands so dictated.
We propose formal hypotheses that build on this
argument in the next section.
HYPOTHESES ON THE SOURCES AND TIMING
OF ADOPTION
Our theoretical argument and historical account
suggest that the initial innovators and the early
adopters were motivated to institutional change by
a human resource scarcity and that their legitimacy
enabled them to be different. Late adopters did not
have to legitimize their actions, since others had
done that for them. They adopted innovations
when competitive pressures so dictated. Our view
of institutional change, therefore, calls for seeing
competitive and institutional processes as playing
different roles in the sources of early and of late
adoption.
We formalized these arguments in hypotheses on
early versus late adoption, which we tested with
event history analyses on over 200 principal offices
of large law firms. Our hypotheses on the sources of
adoption for the senior and staff attorney tracks
parallel one another but are separate. We believe
there are similar sources for the adoption of each.
We do not, however, hypothesize on the joint adop-
tion of the senior and staff attorney tracks.
The first hypothesis refers to human resource
scarcity. Resource dependency theory (Pfeffer &
Salancik, 1978; Sherer, 2001) and our historical
account make it clear that the principal law firm
offices that faced greater human resource scarcity
were more motivated to adopt senior and staff at-
torney tracks. The tracks were a means to acquire
alternative human resources. We hypothesize:
Hypothesis 1. Principal law firm offices with
greater human resource scarcity will be more
likely to adopt senior and staff attorney tracks.
The second hypothesis refers to the legitimacy of
organizations, as reflected in their prestige. We do
not specify a "main effect" for prestige. Institu-
tional theory does not provide guidance on the
general effects of prestige in organizations adopting
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Journal February
changes. Nor do we generally believe that highly
prestigious offices were more or less at risk of
adopting senior and staff attorney tracks than their
less prestigious counterparts. Although the most
prestigious offices had the strongest demand for
graduates from elite law schools and therefore
would have been expected to have greater human
resource scarcity, they were also better able to draw
graduates from elite law schools. They attracted
graduates through their names, paid high salaries
and bonuses, and provided strong outplacement
options when junior lawyers failed to make partner
(Gilson & Mnookin, 1988).
We argue instead that the prestige of principal
offices affected the timing of adoption as reflected
in early versus late diffusion windows. Our theo-
retical argument and historical account suggest that
highly prestigious offices were enabled by their
legitimacy to be early adopters of senior and staff
attorney tracks. Their legitimacy allowed them to
try or to experiment with such innovations with
little risk of loss. Once these offices adopted a track
during the early diffusion window, less prestigious
offices were freed up to adopt them in the late
diffusion window. These less prestigious offices
did not have to be concerned with justifying their
adoption of the tracks to clients and were able to
sell lawyers on them. The prestige of principal of-
fices would, therefore, have had a stronger, positive
effect on the adoption of senior and staff attorney
tracks during the early than during the late diffu-
sion window. We hypothesize:
Hypothesis 2. Highly prestigious principal of-
fices will be more likely to adopt senior and
staff attorney tracks during the early diffusion
window than during the late diffusion window.
We also contrast our theoretical argument with
Tolbert and Zucker's (1983) argument that compet-
itive-technical pressures explain early adoption but
do not account for late adoption. Their argument
suggests that human resource scarcity would have
increased adoption during the early diffusion win-
dow, but not during the later one. Thus,
Hypothesis 3a. Principal offices with greater
human resource scarcity will be more likely to
adopt senior and staff attorney tracks during
the early diffusion window than during the late
diffusion window.
We argue instead that competitive pressures are
predictive of early adoption when they are com-
bined with institutional forces having to do with
legitimacy. We thus suggest that the interactive ef-
fects of competitive and institutional processes in-
creased the likelihood of early adoption. During the
 2002 Sherer
early diffusion window, when the tracks were not
yet legitimized, offices with prestige had the legit-
imacy to adopt the tracks, and they were especially
likely to do so when they encounted human re-
source scarcity. In other words, prestige enhanced
the effect of human resource scarcity on the adop-
tion of the tracks during the early diffusion win-
dow. Prestige did not, however, enhance the effect
of the human resource scarcity during the late dif-
fusion window, since the new practice was legiti-
mized. The argument leads us to the following hy-
pothesis:
Hypothesis 3b. Highly prestigious principal of-
fices with human resource scarcity will be
more likely to adopt senior and staff attorney
tracks during the early diffusion window.
Taken together with Hypotheses 1 and 2, Hypoth-
esis 3b suggests that, during the late diffusion win-
dow, offices with less prestige will have been more
likely to adopt the senior and staff attorney tracks
when they had a human resource scarcity. They
were freed up to change by early adopters. The
prediction is contrary to Hypothesis 3a.
METHODS
Sample
We collected data on all the law offices in the 11
largest U.S. cities that had 25 or more lawyers in at
least one year during the period 1985-94, as re-
ported in the annual directories of the National
Association for Law Placement (NALP). Law firm
offices interested in recruiting lawyers straight
from law schools complete a standardized ques-
tionnaire developed by the NALP, taking a pledge
to provide accurate information. Offices are asked
to provide information as of February 1, and each
office of a law firm completes its own survey.3
Completed questionnaires are compiled into a
placement guide that is sent to law schools around
the country.
All our information, except for that on the status
(principal or not), prestige, and age of each office
were collected from the NALP directories. We used
the 1989 directory, the National Law Journal
(1989), and the American Lawyer (1989) to deter-
mine the status of offices. Prestige data were ob-
3 The NALP uses the office rather than the firm as the
unit of analysis. We believe that this unit of analysis is
the more appropriate because offices may differ on size,
practice portfolio, and the like. Combining the offices for
a firm involves aggregation issues that lead data to be
potentially misleading.
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and Lee 109
tained through the American Lawyer's annual sur-
veys of the nation's top 100 revenue generators.
The founding date for each office was obtained
through a telephone interview with a representa-
tive of that office.
We selected 1985 as the starting year of observa-
tion, since the NALP directory began to report the
existence of the senior attorney track in 1987. Our
analyses required that we have data for two years in
advance of 1987 in order to examine adoption of
the senior attorney track. We did not collect data
after 1994, since additional adoption for both the
senior and staff attorney track was minimal after
that year. We selected the top 11 cities because they
all had a significant number of principal offices
with 25 or more lawyers. We avoided offices
smaller than 25 lawyers because they typically do
not compete directly with large offices and do not
draw from the same human resource pool. The
sample comprises the vast majority of principal
offices of large law firms with 25 or more lawyers
for these 11 cities over these years.
Data collection resulted in a sample of 261 prin-
cipal offices. We examined adoption of the senior
and staff attorney tracks in principal offices but not
the branch offices. We investigated only principal
offices because they are very often the main, larg-
est, and most prestigious offices of firms.
Variable Specifications
Dependent variables. The dependent variables,
senior attorney track and staff attorney track, were
based on the adoption of the senior attorney and
staff attorney track for each principal office. We
flagged the adoption of these practices when a prin-
cipal office reported the presence of a senior attor-
ney and staff attorney track for the very first time in
its history in the NALP. For example, we treated a
principal office as having adopted the senior attor-
ney track during the period February 1, 1989, to
February 1, 1990, if the office reported its existence
as of the second date but had not reported its exis-
tence as of the earlier date. The NALP allowed us to
assess during which year a track was adopted, but it
did not allow us to assess specifically when in that
year it was adopted. Each variable was coded 1 for
adoption, 0 otherwise.
Independent variables. We gained information
on human resource scarcity through evaluating
each office's growth rate. The variable growth was
measured by the increase in the number of an of-
fice's lawyers during the years t - 1 and t and was
used to predict the adoption of the tracks during
times t and t + 1. Offices that are growing and need
to hire additional lawyers have more potential to
 110 Academy of Management
experience a human resource scarcity. Offices that
are not growing have less need for additional law-
yers and have less potential for human resource
scarcity.
The variable prestige assessed the prestige of
principal offices through annual data from the
American Lawyer on the top 100 most profitable
firms. We used profits per partner for a firm to
impute a measure of prestige for the principal of-
fice. We assigned a value of 1 to the principal
offices of firms that ranked in the top 50 on profits
per partner and a 0 otherwise.
Our selection of the top 50 firms as the most
prestigious was based on the following reasoning:
those in the top 50-100 are apt to move in and out
of the top 100 from year to year and do not all enjoy
the same reputation for prestige. We selected 50
rather than a smaller number (such as 25) because
we wanted a large enough number of offices that
the results were not skewed by a few offices.
We created a time variable in order to distinguish
early from late adopters of the senior and staff
attorney tracks. For the senior attorney track, the
variable year 1987 was coded a 1 for 1987 and a 0
for 1988-94. The year 1987 was the first in which
the NALP provided information on the existence of
senior attorney tracks in principal offices. For the
staff attorney track, we coded a 1 for the year 1989
and a 0 for years 1990-94. The year 1989 was the
first in which the NALP provided information on
the existence of staff attorney tracks in principal
offices. The two variables for year divide our obser-
vations into early and late diffusion windows. We
also conducted sensitivity tests with alternative
timing specifications to investigate when the ef-
fects of time dissipated.
Control variables. We controlled for the leverage
ratio of each office, calculated as the number of
associate lawyers relative to the number of partners
(Sherer, 1995). Principal offices that leverage
more-that is, have more associates relative to part-
ners-need more nonpartner talent (Gilson &
Mnookin, 1988; Sherer, 1995) and have a higher
likelihood of losing talent, given that they have a
lower percentage of associates making partner (Gil-
son & Mnookin, 1988). We expected that principal
offices with higher leverage ratios would be more
likely to adopt senior and staff attorney tracks.
We controlled for the age of an office. Older
organizations have been found to be more rigid and
less able to change (Aldrich & Auster, 1986; Han-
nan & Freeman, 1984; Haveman, 1993). We there-
fore expected older offices to be less likely to adopt
senior and staff attorney tracks. We used the natu-
ral logarithm of an office's age, calculated as the
year of observation minus founding year, since
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Journal February
some offices were founded in the 1800s and were
outliers to the many founded in the middle of the
1900s.
We controlled for office size and office size
squared. Large principal offices need more hierar-
chical differentiation, and small principal offices
find it easier to be responsive to innovation. We
expected middle-sized principal offices to be less
likely to adopt senior and staff attorneys than small
or large offices. We measured office size as the total
number of lawyers at a principal office.
We also controlled for firm size (the total number
of lawyers in a firm). Larger law firms have greater
resources, which make it easier for them to be dif-
ferent, but they may be less willing to change be-
cause of their size. We therefore did not have a
clear expectation on the effect of firm size on the
adoption of senior and staff attorney tracks.
We controlled for the areas of an office's legal
practice (Sherer, 1995). Eight areas of law were
specified: corporate/banking (percent corporate),
tax and trust (percent tax), property (percent prop-
erty), employment (percent employment), litigation
(percent litigation), government (percent govern-
ment), international (percent international), and
other (percent other). Percentages for the practice
areas were calculated as the number of lawyers in a
practice area divided by the total number of law-
yers in an office. We did not include the govern-
ment, international, and other categories in the
equations because they accounted for a small per-
centage of lawyers in most offices, and an omitted
category was needed to estimate the coefficients.
We expected that offices with a greater presence in
the corporate and litigation areas would be more
likely to adopt the senior and staff attorney tracks.
These areas require more nonpartner lawyers be-
cause they involve considerable documentation
and preparation work.
We controlled for practice specialization by us-
ing a Herfindahl index of specialization, calculated
as the summation of (Pi/P)2, where Pi is an office's
number of lawyers in the ith practice area (i = 1-8)
and P equals the total number of lawyers in the
office (Sherer, 1995). A value approaching 1 indi-
cates high specialization, and 0 indicates high di-
versification. We expected that offices with greater
specialization would be more likely to adopt senior
and staff attorney tracks, since partners in those
offices are better positioned to leverage nonpart-
ners (Sherer, 1995).
Model Specifications
We employed discrete event history analysis us-
ing logistic regression models to separately exam-
 2002 Sherer and Lee 111

ine the adoption of the senior and staff attorney
tracks in the principal offices of firms. The empir-
ical analysis of this study thus deals with time-
varying conditions that lead up to these adoptions.
We used these models for analysis since our main
data were collected from annual directories and we
therefore did not know the exact time at which
each law office adopted an innovation (Allison,
1982). Principal offices that did not adopt the in-
novation by 1994 were treated as "right-censored."
Having adopted an innovation, an office was no
longer at risk of adopting the practice, and it did
not provide any additional observations.
All independent variables were lagged by one year.
For growth, a "flow" variable (it captures the flow of
lawyers in and out of a firm), we used office growth
data during the period between time t - 1 and time t
to predict the adoption event during the period be-
tween t and t + 1. For example, we used growth
during the period February 1, 1989, through February
1, 1990, to predict the adoption of a senior attorney
track and a staff attorney track during the period
February 1, 1990, through February 1, 1991. For all of
the other independent variables, which are state vari-
ables (they capture the state of variables at a point in
time), we used data at time t to predict the adoption
event during time t through time t + 1. For example,
we used data on the leverage ratio on February 1,
1990, to predict the adoption of the senior attorney
track during the period February 1, 1990, through
February 1, 1991. We used lagged variables to ensure
that the independent variables were predicting fu-
ture, not concomitant, events.
Regression models for the two dependent vari-
ables were estimated as follows: Log[P1t/(l - Pi)] senior
= and staff attorney tracks occurred early on
a + BXit, where Pit is the conditional probability and after the initial year but that, by the last year,
that principal office i has an event of adoption
during the period time t through time t + 1, given
that the adoption event has not already occurred at
time t to that office, Xit is a vector in which there are
a flow variable for a principal office's growth dur-
ing time t - 1 through time t and state variables for
a principal office i at time t, a is a constant, and B
is a vector of logistic regression coefficients for the
respective set of independent variables.
RESULTS
Table 1 indicates the number of principal offices
observed in each year of the study. The table shows
that 19.5 percent of the principal offices had senior
attorney tracks in 1987, and 28.7 percent had the
tracks in 1994. The table also shows that 21.8 per-
cent of principal offices had staff attorney tracks in
1989, while 34.5 percent had them in 1994.
Table 2 provides data by office-year for the senior
and staff attorney tracks that were used for the
event history analysis. The office-year data for the
analysis of the senior attorney track cover 249 prin-
cipal offices and 1,038 office years. Over the office-
years, we observed 116 adoption events. The office-
year data for the analysis of adoption of the staff
attorney track cover 251 offices and 969 office-
years. Over the 969 office-years, we observed 104
adoption events. Table 2 also shows the number of
principal offices at risk of adopting senior and staff
attorney tracks and the number of adopting offices
among them in each year. For the senior attorney
track, 19.69 percent of principal offices adopted the
track in or before 1987, and none adopted it in
1994. For the staff attorney track, 22.42 percent of
principal offices adopted the staff attorney track at
or before 1989, and 2.90 percent adopted it in 1994.
Tables 1 and 2 indicate adoption of both the
there was little new adoption. The decline in the
later years mirrors drop in the growth of law firm
offices and reduction in hiring (Pollock & Moses,
1992; Woo & Moses, 1992). The tables also indicate

TABLE 1
Adoption Rates by Year for the Full Sample

Senior Attorney Track Staff Attorney Track

Number of Number of Offices Percentage of Offices Number of Number of Offices Percentage of Offices
Year Offices with the Track with the Track Offices with the Track with the Track

1987 195 38 19.5

1988 233 62 26.6
1989 243 59 24.3 243 53 21.8
1990 242 66 27.3 242 66 27.3
1991 261 78 29.9 261 78 29.9
1992 237 69 29.1 237 72 30.4
1993 223 64 28.7 223 73 32.7
1994 223 64 28.7 223 77 34.5

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 112 Academy of Management Journal February

TABLE 2
Adoption Rates by Year for the Office-Year Sample

Senior Attorney Track Staff Attorney Track

Number of Offices at Number of Percentage of Number of Offices at Number of Percentage of

Year Adoption Risk Adopting Offices Adopting Offices Adoption Risk Adopting Offices Adopting Offices

1987 193 38 19.69

1988 144 19 13.19
1989 159 17 10.69 223 50 22.42
1990 153 13 8.50 182 22 12.09
1991 148 16 10.81 167 15 9.00
1992 128 8 6.25 148 10 6.76
1993 113 5 4.42 126 5 3.99
1994 102 0 0 123 2 1.63
Total 1,140 116 969 104

TABLE 3
Means, Standard Deviations, and Correlations for Senior Attorney Track Analysisa

Variable Mean s.d. 1 2 3 4 5 6 7 8 9 10 11 12 13

1. Senior attorney track 0.11 0.32

2. Growth 6.35 11.73 .18
3. Prestige 0.15 0.36 .13 .22
4. Leverage ratio 1.37 0.54 .11 .19 .34
5. Ageb 3.82 0.79 .05 .03 .08 .06
6. Office size/100 1.30 0.79 .20 .35 .55 .33 .34
7. Firm size/100 1.82 1.47 .08 .18 .50 .19 .11 .67
8. Percent corporate 0.30 0.15 .09 .06 .16 .07 .16 .17 .10
9. Percent tax 0.09 0.07 .12 .05 .10 -.03 .27 .18 .14 .15
10. Percent property 0.11 0.16 -.02 -.05 -.09 -.03 .05 -.13 -.14 -.31 -.06
11. Percent employment 0.05 0.09 .00 -.02 -.05 -.10 -.02 .01 .02 -.16 -.08 -.13
12. Percent litigation 0.33 0.17 -.07 -.04 -.02 .03 -.09 -.05 -.01 -.26 -.19 -.35 -.15
13. Specialization 0.35 0.17 -.09 -.05 -.11 .17 -.24 -.24 -.19 -.23 -.45 .26 -.07 .18
14. Year 1987 0.19 0.39 .13 .03 .09 .08 .00 .04 -.06 .09 .07 -.03 .01 -.05 -.04

a Correlations greater than 1.081 are significant at .01; r's greater than 1
office-years.
b Natural logarithm.

a significant minority of principal offices had either
a senior or a staff attorney track by 1994.
Table 3 provides means, standard deviations,
and correlations for the dependent variable and
independent variables used in the senior attorney
track analysis.4 Table 4 shows the results of the
discrete event history analysis for the senior attor-
ney track. We report the results of four hierarchical
models to show the improvement in goodness of fit
caused by the addition of variables of interest. We
tested each hypothesis with reference to the model
4 We did not include observations made in 1994, since
no principal office adopted the senior attorney track in
that year. Addition of the 1994 data did not substantially
change the results.
4 results and the incremental chi-square tests re-
ported in the last row of the table.
Hypothesis 1 states that principal offices with
greater human resource scarcity will be more likely
to adopt senior attorney tracks. As Hypothesis 1
predicts, growth has a positive and significant co-
efficient in model 4, and its addition to model 1
significantly enhances the goodness of fit.
Hypothesis 2 states that highly prestigious offices
will be more likely to adopt senior attorney tracks
during the early rather than the late diffusion win-
dow. Prestige alone does not have any significant
effect on the adoption of the senior attorney track,
as the coefficient of the variable in model 4 indi-
cates. As expected, the significantly positive coef-
ficient of the interaction of prestige and year 1987
in model 4 suggests that highly prestigious offices

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 2002 Sherer and Lee 113

TABLE 4
Results of Logistic Regression Analysis for Adoption of the Senior Attorney Tracka

Variable Model 1 Model 2 Model 3 Model 4

Intercept -3.33** (0.98) -3.56** (1.00) -3.43** (1.00) -3.43** (1.01)

Growth 0.04** (0.01) 0.03** (0.01) 0.04** (0.01)

Prestige 0.02 (0.32) -0.27 (0.53) 0.07 (0.51)
Growth X year 1987 0.02 (0.03) -0.01 (0.03)
Prestige x year 1987 1.01* (0.55) 0.97* (0.52)
Growth x prestige -0.01 (0.02) -0.03 (0.02)
Growth X prestige X year 1987 0.11* (0.06)
Leverage ratio 0.26 (0.20) 0.21 (0.21) 0.21 (0.22) 0.23 (0.22)
Ageb -0.25 (0.16) -0.20 (0.16) -0.23 (0.16) -0.25 (0.16)
Office size/100 1.30** (0.40) 1.02* (0.42) 1.03* (0.44) 1.09* (0.45)
Office size squared/10,000 -0.08 (0.08) -0.06 (0.08) -0.06 (0.08) -0.06 (0.09)
Firm size -0.32* (0.16) -0.31k (0.16) -0.30k (0.16) -0.34* (0.17)
Percent corporate 1.48 (0.97) 1.53 (0.98) 1.65k (0.98) 1.73k (1.00)
Percent tax 4.12* (1.61) 4.16** (1.61) 4.31** (1.63) 4.30** (1.62)
Percent property 1.22 (1.10) 1.29 (1.11) 1.31 (1.11) 1.37 (1.12)
Percent employment 1.37 (1.43) 1.50 (1.44) 1.63 (1.45) 1.60 (1.44)
Percent litigation -0.16 (1.00) 0.02 (1.01) 0.07 (1.01) -0.01 (1.01)
Specialization -1.23 (0.97) -1.18 (0.97) -1.20 (0.98) -1.29 (0.99)
Year 1987 0.66** (0.23) 0.70** (0.23) 0.15 (0.37) 0.44 (0.37)

-2 log-likelihood (df) 656.21 (12) 643.12 (14) 636.74 (17) 632.20 (18)
x2 (df)C 13.09 (2)** 6.38 (3)t 4.54 (1)*

a Data are for 249 principal offices, 1,038 office-years, and 116 adoptions of senior attorney tracks.
b Natural logarithm.
c Compared with previous nested model.
tp < .10
* p < .05
** p < .01
One-tailed tests for predictors; two-tailed tests for controls.

were more likely to adopt the senior attorney track
in the early diffusion window than were nonpres-
tigious offices. During the late diffusion window,
prestige did not make a difference in adoption.
These results strongly support Hypothesis 2.
Hypothesis 3a states that principal offices with
greater human resource scarcity will be more likely
to adopt senior and staff attorney tracks during the
early rather than the late diffusion window. The
nonsignificant coefficient of the interaction of
growth and year 1987 in model 4 suggests that
human resource scarcity did not have any stronger
effect on adoption in the early diffusion window
than in the late diffusion window. We thus did not
find evidence to support the view that competitive
pressure influenced the adoption of the senior at-
torney track during the early diffusion window.
Hypothesis 3b states that highly prestigious prin-
cipal offices with a human resource scarcity will be
more likely to adopt senior and staff attorney tracks
during the early diffusion window. The signifi-
cantly positive coefficient of the three-way interac-
tion of growth, prestige, and year 1987 and the
incremental chi-square test reported in the last row
of model 4 strongly support Hypothesis 3b. The
results indicate that, in the early diffusion window,
competitive pressures increase the likelihood of
adoption when they are combined with prestige.
Taken together with our other results, they also
indicate that less prestigious organizations are
more likely to adopt the senior and staff attorney
tracks during the late diffusion window when they
have human resource scarcity.
We conducted sensitivity analyses to further ex-
amine the timing of the early window for adoption
of the senior attorney track with the two statisti-
cally significant interaction effects (prestige X year
1987, and growth X prestige x year 1987). The
direction and significance levels of the two inter-
action terms were not changed when we used the
year 1988 instead of 1987 to divide the diffusion
window, but the significance of both declined (to
p < .10, one-tailed test) when we used the year
1989, and both became insignificant for later years.
These results suggest the early window closed in
1988.
In model 4, the control variables for office size,
firm size, percent corporate, and percent tax had
significant effects on the adoption of the senior
attorney track. The significant, positive coefficients

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 114 Academy of Management Journal February

for office size indicate larger offices were more
likely to adopt the senior attorney track. The results
also show that firm size was negatively associated
with the adoption of the track. The significant,
positive coefficients for percent corporate and per-
cent tax suggest that principal offices with a stron-
ger emphasis on corporate and tax service areas of
practice in their legal service portfolios were more
in need of senior attorneys.
Table 5 provides means, standard deviations,
and correlations for the dependent variable and the
independent variables for the staff attorney track
analysis. Table 6 shows the results of the discrete
These results suggest that the early window was
closing in 1989.
No control variable except specialization and
year 1989 had a significant effect on the adoption of
the staff attorney track. The significant coefficients
for specialization suggest that diversified offices
are more likely to adopt staff attorney tracks. The
significant coefficients for year 1989 indicate that a
significant number of principal offices had adopted
the staff attorney track by or in 1989.
DISCUSSION AND CONCLUSIONS

event history analysis for the staff attorney track.
We found strong support again for Hypotheses 1, 2,
and 3b. Having human resource scarcity increased
the likelihood of adoption. Prestige increased the
likelihood of adoption in the early diffusion win-
dow. And having both human resource scarcity and
prestige increased the likelihood of adoption in the
early diffusion window. The results again did not
support Hypothesis 3a.
We conducted sensitivity analyses to examine
further the timing of the window for the adoption
of the staff attorney track with the two statistically
significant interaction terms (prestige X year 1989,
and growth X prestige X year 1989). Dividing the
window by the year 1990 instead of 1989 did not
change the directions of the two interaction terms
or the significance level of the prestige-year 1989
interaction, but it decreased the significance level
of the three-way interaction term (to p < .10, one-
tailed test). Both of the interaction terms became
statistically significant when we used later years.
Using resource dependency and institutional
theories, we argued that innovation in HR practice
in the principal offices of large law firms was mo-
tivated by competitive pressures having to do with
human resource scarcities and enabled by institu-
tional forces having to do with the legitimacy of
highly prestigious law firm offices. Our historical
account and statistical results both point to (1) a
human resource scarcity arising from the standard
of the Cravath model and (2) initial innovators and
early adopters of senior and staff attorney tracks
being enabled to be different because of their pres-
tige. Our statistical results suggest that late adopt-
ers adopted the innovations (senior attorney and
staff attorney tracks) when they had human re-
source scarcities.
Several questions were posed in the beginning of
the article that are important to now reconsider.
The first question asked what it was about an or-
ganizational field or industry, such as large law
firm offices, that makes it ripe for innovation devi-

TABLE 5
Means, Standard Deviations, and Correlations for the Staff Attorney Track Analysisa

Variable Mean s.d. 1 2 3 4 5 6 7 8 9 10 11 12 13

1. Staff 0.11 0.31

2. Growth 5.06 11.93 .19
3. Prestige 0.18 0.39 .03 .10
4. Leverage ratio 1.46 0.63 -.01 .15 .46
5. Ageb 3.89 0.74 .03 .01 .17 .12
6. Office size/100 1.48 0.92 .02 .21 .61 .51 .32
7. Firm size/100 2.08 1.47 .02 .13 .55 .39 .11 .78
8. Percent corporate 0.31 0.16 .05 .07 .28 .24 .20 .31 .23
9. Percent tax 0.09 0.08 .05 .04 .11 .06 .20 .17 .12 .13
10. Percent property 0.12 0.18 -.05 -.04 -.12 -.04 -.02 -.16 -.18 -.35 -.15
11. Percent employment 0.05 0.11 -.03 .00 -.11 -.14 -.01 -.03 -.01 -.19 -.09 -.14
12. Percent litigation 0.32 0.17 .02 -.03 -.01 -.04 .01 -.05 -.02 -.22 -.17 -.35 -.15
13. Specialization 0.36 0.17 -.08 -.02 -.09 .12 -.17 -.22 -.19 -.28 -.38 .38 .06 .05
14. Year 1989 0.23 0.42 .21 .15 .06 .05 .02 .00 -.03 .04 .07 -.03 -.03 .01 -.06

a Correlations greater than 1.081 are significant at .01; r's greater

office years.
b Natural logarithm.

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 2002 Sherer and Lee 115

TABLE 6
Results of Logistic Regression Analysis for the Adoption of the Staff Attorney Track

Model 1 Model 2 Model 3 Model 4

Intercept -2.41* (0.96) -2.47* (0.97) -2.45* (0.98) -2.58** (0.98)

Growth 0.06** (0.01) 0.07** (0.01) 0.08** (0.02)
Prestige 0.02 (0.36) -0.29 (0.59) 0.09 (0.57)
Growth X year 1989 -0.01 (0.02) -0.03 (0.03)
Prestige X year 1989 1.23* (0.59) 1.01* (0.51)
Growth x prestige -0.03 (0.02) -0.04 (0.03)
Growth x prestige X year 1989 0.08* (0.05)
Leverage ratio -0.17 (0.22) -0.25 (0.23) -0.23 (0.23) -0.23 (0.23)
Ageb 0.01 (0.17) 0.07 (0.17) 0.07 (0.18) 0.08 (0.18)
Office size/100 0.05 (0.38) -0.30 (0.40) -0.33 (0.39) -0.29 (0.40)
Office size squared/10,000 -0.01 (0.08) 0.01 (0.08) 0.03 (0.08) 0.01 (0.08)
Firm size 0.05 (0.12) 0.07 (0.12) 0.05 (0.13) 0.06 (0.13)
Percent corporate 0.94 (0.99) 0.83 (1.01) 0.82 (1.01) 0.83 (1.01)
Percent tax 0.87 (1.79) 0.98 (1.82) 0.92 (1.84) 0.91 (1.84)
Percent property -0.57 (1.22) -0.39 (1.23) -0.38 (1.24) -0.40 (1.24)
Percent employment -1.52 (1.83) -1.69 (1.87) -1.98 (1.91) -1.98 (1.90)
Percent litigation 1.04 (1.02) 1.18 (1.04) 1.18 (1.05) 1.17 (1.05)
Specialization -1.95 (1.21) -2.04k (1.22) -2.09' (1.23) -2.10 (1.23)
Year 1989 1.27** (0.22) 1.10** (0.22) 0.94** (0.33) 1.16** (0.35)

-2 log-likelihood (dfj 613.94 (12) 583.94 (14) 577.81 (17) 573.86 (18)
v (dfJc 30.00 (2)** 6.13 (3) 3.95 (1)*

a Data are for 251 principal offices, 96

b Natural logarithm.
c Compared with previous nested model.
t p < .10
* p < .05
** p < .01
One-tailed tests for predictors; two-tailed tests for controls.

ating from a standard like the up-or-out system. We
found that human resource scarcity prompted a
questioning of the technical rationale for the stan-
dard and the development and dissemination of a
competing technical rationale. We therefore believe
that the ripeness of an industry for innovation can
be gauged by assessing whether the resources asso-
ciated with a standard are becoming scarce.
The second question asked what it was about a
particular organization, like Davis Polk or Jones
Day, that explains why it was first to innovate.
Although it is difficult to say exactly why a partic-
ular organization is first, our historical account sug-
gests that these initial innovators were particularly
adept at using their prestige to develop and dissem-
inate technical rationales that justified being differ-
ent. Individuals in these firms constructed new
technical rationales that were credible and used the
news media to persuade others of that. Interest-
ingly, at Davis Polk, Stephen Case, the chairman of
the planning committee that had developed the
innovative senior attorney track, was also the part-
ner who handled press relations for the firm (Amer-
ican Lawyer, 1980). Individuals in these firms un-
derstood that to make initial changes, they needed
to engage in public relations campaigns to persuade
others of the legitimacy of their innovations. Thus,
we suggest that initial adopters will often be those
highly prestigious organizations that are willing
and able to go public with their actions.
The third question asked whether there were dif-
ferences between early and late adopters. Our his-
torical account and statistical results suggest early
adopters had prestige and human resource scarcity.
Late adopters responded to their human resource
scarcities. These findings are ostensibly at odds
with Tolbert and Zucker's (1983) findings that early
adopters of civil service were motivated to reform
by technical-competitive pressures, and late adopt-
ers, by institutional pressures. The sets of findings
are partly reconciled if we allow that early adopt-
ers, such as large cities, had technical-competitive
reasons to adopt as well as the prestige to do it
earlier.
The contrasting findings on late adopters, how-
ever, may not be reconcilable and may instead re-
flect the different natures of the changes in the two
studies. Tolbert and Zucker (1983) examined
change as reform from the "spoils" system to a civil
service system. The very word "reform" and what

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 116 Academy of Management
was being challenged reflect the moral impetus to
reform that cities experienced. Late adopters ap-
pear to have faced moral coercion to reform.
The senior and staff attorney tracks carried with
them no such moral force. They represented volun-
tary choices for organizations. Indeed, in the later
part of our study, a few offices dropped the new
tracks, as there was no longer a scarcity of human
resources (Pollock & Moses, 1992; Woo & Moses,
1992). Moreover, not all offices adopted the senior
and staff attorney tracks. Thus, innovations made
to deal with competitive pressures on the resource
or input side may speak to very different sources
of innovation than those that carry the moral force
of reform.
Our study has implications for several issues that
are important for theory building and research on
institutional change. One has to do with the role
of agency (Powell, 1988, 1991) in institutional
change. Individuals in our highly prestigious or-
ganizations appear to have used the media to re-
construct realities through new technical ration-
ales. That we were able to document so much
information on them is, therefore, not surprising.
Individuals in these firms went to the news media
to change views. We suggest that an important role
for research on agency and institutional change is
to examine how key actors in organizations actively
influence their publics' views of institutional change
through constructing new technical rationales.
A second has to do with what institutional
change means to an existing order. Theoretical ar-
guments have cast institutional change as a dein-
stitutionalization or erosion of an existing order
(Oliver, 1992), an emergence or reinstitutionaliza-
tion of a new order (Jepperson, 1991), and a sedi-
mentation or layering of a new order alongside an
existing order (Cooper, Hinings, Greenwood, &
Brown, 1996). These scenarios capture what we
observed at various points in time. At the onset, the
senior and staff attorney tracks were viewed as
challenges to the Cravath model that signaled its
erosion and the emergence of a new model to take
its place. Later, the senior and staff attorney tracks
were no longer challenges to the Cravath model-
they worked alongside it. What became clear even
later, however, was that the tracks had become
incorporated into the Cravath model and had made
it flexible. We believe that such change is often
what marks institutional change. Indeed, the very
term "institutional change" connotes the enduring
qualities of an existing order and its ability to mod-
ify itself in ways that ultimately makes it more
sustainable.
A third point has to do with the initial innovators
of change. Several authors (DiMaggio & Powell,
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Journal February
1983; Leblebici et al., 1991) have argued that initial
innovations often come from marginal or low-
status organizations. Our finding that highly pres-
tigious firms initiate change is at odds with these
arguments. A point of partial reconciliation is that
what the most and the least prestigious have in
common is that they both have less to lose by being
different. Highly prestigious firms can use their
prestige to legitimize their actions. Less prestigious
firms are often only able to compete with highly
prestigious organizations by changing the rules of
the game.
Our argument, nonetheless, is that within the
organizational field of large law firms, a field where
prestige matters, as it does in many other fields, it is
the highly prestigious that initiate change. Al-
though we do not believe that it is always the most
prestigious that initiate change, we do believe there
is a larger role for elites in initiating change than
has been suggested by recent research on institu-
tional change.
There may be, however, some confusion in our
argument about whether it was a highly presti-
gious organization that initiated change as it re-
lates to the staff attorney track-for it was initi-
ated by legal clinics like Jacoby & Meyers and
Hyatt Legal Services. The confusion here stems
from defining the boundaries of an organizational
field. Our view is that the two clinics are not
marginal or peripheral players in the same organ-
izational field as the likes of Jones Day, for they
do not compete with it for clients or lawyers.5
There was, however, an innovation transfer from
these clinics to Jones & Day, just as Davis Polk got
its idea for the senior attorney track from the
prestigious investment bank Morgan Stanley.
Future research is needed to examine more
fully how such innovation transfers occur across
organizational fields.
A fourth issue has to do with the role of presti-
gious organizations in the diffusion of innovations.
Unlike in other studies (e.g., Haveman, 1993), in
our study, the inclusion of imitation variables in
the equations did not lead to the finding that organ-
izations copied prestigious others or those larger
5 What is interesting, though, is that within the organ-
izational field of legal clinics, Jacoby and Meyers, and
Hyatt, are highly prestigious. They have much greater
resources and a great deal more visibility than most other
legal clinics, and they are viewed as pioneers (Lancaster,
1980). Their prestige may have enabled them to initiate
change within this other field.
 2002 Sherer
than themselves.6 Our results suggest that highly
prestigious organizations do not directly affect the
adoption behavior of less prestigious organizations,
but that does not lesson the importance of high-
prestige organizations to those with less prestige.
The lower-prestige firms need the high-prestige
firms to legitimize innovations. Only then are they
freed up to innovate.
That only about one-third of the law firm offices
adopted either the senior or the staff attorney track
highlights the difference between being freed up
and directly imitating. Being freed up means that
less prestigious law firm offices attended to their
human resource scarcities by adopting an innova-
tion later, once it had been legitimized. They did
not simply copy highly prestigious law firm offices;
they belatedly attended to human resource scarcity.
Moreover, as the human resource scarcity declined,
law firm offices stopped adopting the senior and
staff attorney tracks. If the offices had simply been
imitative, they probably would have continued to
adopt the tracks.
Our study also raises parallels to innovations
from up-or-out systems in other settings, partic-
ularly universities. They too are important to
study. Starting with "clinical professorships" in
medical, business, and other professional schools
in highly prestigious universities, there has been
a rise in the use of permanent nontenured faculty
members who are neither on their way up nor on
their way out. This departure from up-or-out is
now found in many universities of varying levels
of prestige and has been incorporated into the
traditional tenure model and up-or-out system.
Indeed, it has become part of the way that edu-
cation is conducted in the United States. Given
the importance of this innovation, it is an espe-
cially valuable context in which to test and fur-
ther develop theoretical arguments from resource
dependency and institutional theory on institu-
tional change.
We have argued and shown that resource depen-
dency theory and institutional theory provide an-
swers to questions at the heart of institutional
change. They provide a powerful way of building
an institutional theory of change on the resource or
input side that suggests what motivates change and
what enables it to occur. We hope that our research
suggests additional questions and answers that
contribute to an institutional theory of change.
6 The inclusion of the imitation variables did not
change the significance of the results.
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and Lee 117
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