Estimating Efficiency In The Foreign Operations Of The USA Legal Services Industry

Abstract

This study analyzes the efficiency, resulting from overseas expansion, of the USA legal services industry. Expansion of trade in services has resulted in an increasing number of: (i) lawyers employed abroad, and (ii) countries with foreign offices. The results, derived from a production function methodology with cross-sectional data on large law firms, indicate that: (i) the number of lawyers employed abroad is optimal in terms of generating positive contribution to the production of legal services, and (ii) the foreign countries targeted by law firms for operations also yield positive contribution to revenue. In response to globalization and competition, the industry, using the FDI mode of entry, has exploited location advantage abroad in allocating lawyers and offices efficiently to benefit from the global integration of the industry.