Playing Not to Lose

The members of any collective—whether citizens of a country or employees of a company—have essentially two possible responses when they perceive that the collective is stagnating or declining in quality. They can “voice” their concerns in the hope that the leadership will adapt and change. Or, depending upon their options, they can “exit.” That was the key analytical insight of the influential treatise Exit, Voice, and Loyalty, published in 1970 by economist Albert O. Hirschman.The willingness of members to voice or exit is influenced by how much loyalty they have to the collective. If there is a large reservoir of goodwill, the leadership has more latitude to learn from its mistakes, enabling voice to play its proper role.

Hirschman’s insights can be applied to law firms, and in particular to the decisions of partners to leave one firm and join another. Since 2000, more than 30,000 partners in the big-firm sector have moved from one organization to another. At the typical AmLaw 200 law firm, some 4.6 percent of the partnership laterals in each year while 3.0 percent laterals out, though the rates varies widely by firm and by year.

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