ALLEVIATING MANAGERIAL DILEMMAS IN HUMAN-CAPITAL-INTENSIVE FIRMS THROUGH INCENTIVES: EVIDENCE FROM M&A LEGAL ADVISORS

摘要

Research summary: We examine how human-capital-intensive firms deploy their human assets and how firm-specific human capital interacts with incentives to influence this deployment. Our empirical context is the UK M&A legal market, where micro-data enable us to observe the allocation of lawyers to M&A mandates under different incentive regimes. We find that law firms actively equalize the workload among their lawyers to seek efficiency gains, while "stretching" lawyers with high firm-specific capital to a greater extent. However, lawyers with high firm-specific capital also appear to influence the staffing process in their favor, leading to unbalanced allocations and less sharing of projects and clients. Paradoxically, law firms may adopt a seniority-based rent-sharing system that weakens individual incentives to mitigate the impact of incentive conflicts on resource deployment.