Adversarial Career Concerns: Theory and Evidence on Lawyers' Career Trajectories

Rosa Ferrer and Danisz Okulicz

No 19854, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper theoretically and empirically examines career-concerns incentives between opponents. The performance of adversarial agents is negatively correlated, making the agents' individual performance non-separable and imperfectly observed (e.g., lawyers' performance based on court outcomes). We study the interaction of such informational friction with the potentially higher observability/verifiability associated to adversarial performance outcomes. In the theory model, we show that when performance is both adversarial and binary, non-ambiguous results emerge that depend on how close is the confrontation between the agents. In addition, we show how the interaction between asymmetric opponents amplifies implicit incentives potentially leading to larger aggregate effort. Empirically, we use panel data on lawyers early career trajectories to analyze the potential returns from good job performance. We find evidence consistent with markets learning about skills and high returns at the top of the earnings' growth distribution. Moreover, we find that the earnings' gain is particularly skewed to the right for personal-injury plaintiff lawyers relative to the baseline lawyer and to personal-injury defense lawyers, which is consistent with higher career stakes associated to performance (i.e., larger potential salary increase for top performers). We address selection concerns by taking advantage of detailed information on educational background as well as individual fixed effects. The asymmetries between plaintiffs and defendants' side personal injury lawyers align with our theoretical framework and support our additional empirical findings of stronger career effort incentives --measured as early-career weekly hours worked relative to their own later-career hours-- for lawyers on the plaintiff side.

JEL-codes: D80 J24 J44 K41 L14 (search for similar items in EconPapers)
Date: 2025-01
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