Human Resources Management and its Impact on the Performance of Professional Services Firms: an Empirical Analysis of Law Firms in the German Market

As a dominant segment of the professional services industry (Scott, 2001,12), law firms attract rising attention on the part of practice and research. Beside the amount of literature on professional service firms in general (e.g. Alvesson, 1995; Lowendahl, 2000; Maister, 1993; Müller-Stewens et al., 1999; Ringlstetter et al., 2004), specific research on law firms has so far focused on the different aspects of internationalization (Chang et al., 1998; Segal-Horn & Dean, 2005) or its consequences for law firms (Ramcharran, 1999; Silver, 2000; Spar, 1997) and institutional or archetype change in law firms (Cooper et al., 1996; Morris & Pinnington, 1998; Pinnington & Morris, 2003; Suddaby & Greenwood, 2005). Whereas other segments of the professional services industry, such as auditing, have faced the challenges of customer driven internationalization, fee pressure, recruiting and retention of highly qualified professionals and a changing nature of competition for a long time, such issues have come to law firms somewhat later (Segal-Horn & Dean, 2005). Today, partners in law firms do not only have to be great lawyers, but they also have to be good managers. Especially when it comes to the crucial and main resource of all professional services firms: their professionals. In combination with the idea of managed professional businesses, one can assume that human resources management becomes important. Following this argument, the paper focuses on two central questions. The first question is to a greater extent of descriptive nature. As professional management approaches find their way into law firms, we aim at focusing on the question how human resources management is conducted within law firms in the German market. Issues related to this research question are the grade of institutionalization and professionalization of HR departments and the HR practices used within these law firms. Going further with the analysis of HR practices in law firms, the paper secondly focuses on the question, whether specific human resource practices or human resource systems contribute to the success of law firms. Based on the theoretical framework of “high performance work systems” (HPWS) we aim at finding single HR practices and different types of human resource systems leading to the success of law firms.