The Puzzle and Persistence of Biglaw Clustering

Abstract

Elite U.S.-based global law firms (“Biglaw” firms) concentrate in the costliest
districts of superstar cities, especially two neighborhoods in Manhattan. This
pattern has persisted despite both the dispersal of Biglaw clients across lessdense,
lower-cost U.S. geographies and the development of telework capacity.
It suggests a puzzle: law is among the occupations most conducive to remote
work, yet Biglaw prior to the coronavirus pandemic required in-person work
in the priciest places—meaning it paid (and continues to pay) a premium on
both of its biggest expenses, wages and real estate. How might this equilibrium
be explained, and what might lead it to change? This Article contends that
Biglaw clustering reflects a management preference for the exploitation of
proven strategies over the exploration of novel and uncertain ones—but that
the pandemic telework experience is eroding this dichotomy. This analysis
has direct implications for private international law (“PIL”) practice, where
large-scale transactions and disputes are handled by Biglaw firms and involve
significant international travel. This Article contributes to a growing literature
on telework’s impacts on cities, labor markets, and industries, and is the first
to extend that focus to Biglaw and PIL. A post-pandemic Biglaw embrace of
dispersal via telework would destabilize standard accounts of collaboration in
agglomeration economies. While the Article expresses skepticism about that
outcome, it identifies a mechanism by which it might plausibly come about.
Crucially, this mechanism—the replacement of an exploit vs. explore choice
with two different exploit options—posits as the key driver not technology but
management learning and innovation that quickened during the pandemic.