Berkeley Program in Law and Economics

This exploratory article considers the diversity-performance nexus among elite American law firms. I present a taxonomy of existing theories - the neoclassical economic theory of discrimination, the "new markets" hypothesis, and the organizational efficiency/managerial theory of diversity - that explain this nexus with greater or lesser success. I argue that these theories do not seem fully to explain certain institutional and behavioral realities among the elite American law firms with respect to workplace diversity. The article thus supplements the existing theories with a (deliberately) parsimonious social norms (signaling) model of diversity that (at least at first blush) seems more consistent with some of the observed institutional and behavioral regularities among these firms. However, the social norms model that I describe is deficient in that it treats diversity as an exogenous norm. I therefore propose to embark upon future research involving a deeper exploration of the question whether (and why) elite American law firms have internalized a diversity norm and the potential obstacles to such internalization, as well as an empirical analysis.