Reflections on the connection between specialization and innovation

Your mother needs heart valve replacement surgery, and it’s time to choose between doctors. You will have to explain yourself to two siblings and a few other relatives, but as a practical matter the choice is in your hands. You interview two potential surgeons. Here’s what they have to say:

Surgeon #1: “I’ve done heart valve replacement many times, with success. We’ve got the right facilities here and my support staff are excellent. But – there’s more. I have experience in a wide range of medical procedures – shoulders, knees, tumors, appendectomies. I’ve worked with patients on nutritional and gastrointestinal issues, and handled challenging infectious diseases.”

Surgeon #2: “I have done nothing but heart valves for the last twelve years. I’ve done the procedure over 800 times. My team does nothing but support valve replacement. In fact, I don’t really do anything else.”

Clients, lawyers, and “wide ranges”

Across the last two decades, I have consulted with hundreds of corporate general counsel. A good deal of that work related to the selection and management of outside lawyers. The choice presented above – between a generalist and a specialist – is a daily occurrence in that kind of work, and as I watched clients make their decisions, it was always clear to me that lawyers simply don’t understand the tremendous problems they create for themselves by cultivating and promoting a “wide range” of experience.

Clients never go shopping for a lawyer to solve a wide range of problems; they are looking for a lawyer to solve the one problem they’ve got today. And needless to say, clients never have legal problems across a wide range of industries. Their problem relates to the one industry they’re in.

To be a little impolite about a near-universal practice in legal marketing: every reference to a lawyer’s “wide range” of experience on a “wide range” of matters is a direct admission of her lack of specialization in the one problem the prospective client is looking to solve today.

And of course it is. Why would it be any different from the surgical example? Your mother doesn’t need a wide range of procedures. She needs valve replacement surgery.

Surgeon #1’s script above is a more or less direct rephrasing of the pitch I’ve heard from dozens of lawyers. The first two points are perfect: “I’ve done it before, and we’ve got the right team.” If only they could stop talking at that point, take the time to listen to the client, to ask questions and drill down. But no, the words just keep coming out, and a pitch that started out just fine for them is undermined by an inevitable discussion of a “wide range” of experiences. At that point it’s game over. What the hapless lawyer thinks is an asset is in fact their biggest liability.

So, what’s a generalist for?

I have a Swiss Army knife in my desk. It can do 19 things – down from 20, because I lost the toothpick. I never use the Swiss Army knife, because when do I have 19 problems in need of a mediocre solution? I generally have one problem at a time, and I have a whole house full of stuff, including real knives, actual scissors, screwdrivers that don’t collapse onto my fingers when I try to twist them, and a massive corkscrew that I sometimes can’t remember how to use.

Each of these specialist tools is superior to the little red generalist. In truth, because my Swiss Army knife can solve 19 problems, 18 of its features are really liabilities at any given moment. It stays in the drawer.

But let’s not give up on the Swiss Army knife just yet. They are still sold, so what are they for? Basically two things:

  1. When I don’t know what problem I’m going to have, but for some reason I need to commit to a tool in advance. This situation is called camping, which involves sleeping outside. Some people do it on purpose.
  2. When for some reason (presumably an excessive amount of camping) I trust the Swiss Army knife more than other tools because I have a lot of experience working with it.

The same analysis applies to generalist lawyers. In-house counsel (and, of course, general counsel) are often generalists because the client needs to commit to them before knowing the full range of legal issues likely to arise. Having been hired, in-house lawyers become repeat players and are therefore trusted to diagnose and triage even specialty issues – but only up to a point. Once that point has been reached, the in-house lawyer goes shopping for outside counsel.

So why on earth are so many outside counsel still Swiss Army lawyers? Why do they reflexively promote their “wide range” of experience? Why on earth are they showcasing their awkward little bottle-opener and implausible tweezers?

The cult of the generalist lawyer has something to do with legal education, legal culture, and the risk-aversion of most individual lawyers. That’s a different article. But membership in this cult is almost always a mistake.

Group decisions and specialists

Returning to our two surgeons, let’s imagine now that the generalist is a far better communicator. You connected with her. You trust her. By contrast, the specialist was a little “off.” You just didn’t connect with him, and his only selling point was that he had done the procedure 800 times before.

What then? Would you go with the generalist you trust over the specialist that you (sort of) don’t?

Possibly, but only if the decision is truly yours and yours alone. Once it starts to look like a group decision, soft factors like “connection” and “trust” lose their potency. Nobody wants to explain a “gut feel” decision to a hostile audience when they could have hired the specialist with overwhelming credentials. Solo decisions can incorporate je ne sais quoi factors – but when there’s a crowd of anxious onlookers, je ne sais quoi is a particularly bad rationale for a decision.

In law, this has a familiar maxim: “Nobody was ever fired for hiring Cravath.” It presumes that important client decisions are heavily a function of group mechanics – and they are. Every day in the corporate world, big matters float up-market from the AmLaw 200 to the AmLaw 10 because the decision-maker is going to be second-guessed by the CEO, CFO and possibly the board. It is common in my experience for a general counsel to concede that the local AmLaw 200 firm with whom he has a longstanding relationship may have been a better choice, but once the matter gained an interested audience outside the legal department, the work moved to New York. C’est la vie.

There’s a brand dimension to that move, of course, but I want to emphasize that there’s a heavy specialization aspect in play. AmLaw 10 firms are the Mayo Clinics of the legal market – they have enough high-stakes workflow that any given lawyer can keep himself busy within a narrow band of work. Lawyer biographies at these firms are reliably focused. Hourly rates are reliably high. This is not a coincidence.

By contrast, most AmLaw 200 firm lawyers’ online biographies and in-person pitches promote their experience in a wide range of matters. Indeed, a Google search for the phrase “wide range”, restricted to the website of one typical AmLaw 200 firm, yielded 849 hits. In my experience, those two words are responsible for the loss of an enormous amount of legal work.

A note about “Range”

There’s an excellent recent book by David Epstein entitled, Range: Why Generalists Triumph in a Specialized World (2019). I highly recommend it as a deep dive into this important topic. Epstein’s framing example is Roger Federer, an athletic genius whose towering dominance of professional tennis was preceded by a childhood of wide athletic experimentation, unconventional learning experiences and a reluctance to specialize in tennis alone until well after his peers has given up all other sports.

Epstein’s other examples follow this pattern – professional and intellectual winners who learned very broadly, and sometimes worked across a wide range of seemingly unrelated fields, before coming to dominate (and usually innovate in) their ultimate specialty.

This is a powerful argument in favor of restoring joy in youth sports, rededicating ourselves to the value of a liberal arts education, and pursuing rich avocations. But Epstein’s protagonists all have one thing in common: they specialized. Roger Federer was awfully good at soccer, and Epstein’s argument is that Federer is better at tennis because he spent more time playing soccer than his peers. They specialized too early. I buy this argument. What I don’t buy – and what nobody would suggest – is that Federer should really have played both soccer and tennis professionally at the same time. The final stage of development is always some form of professional specialization.

I was once helping a large corporation find a campaign finance regulatory lawyer, and was earnestly pitched by a lawyer at a good firm whose campaign finance work was accompanied by a wide range of IP litigation experience. If the decision were mine alone, perhaps her energy and enthusiasm would have carried the day — she was smart and probably very capable. But these decisions are never solo, and the idea of hiring her didn’t pass the laugh test precisely because of her wide range of experience. There are people in Washington D.C. who do this all day long.  How on earth could we entrust a sensitive specialist matter to someone who looks, at least on paper, entirely like a dilettante?

You have likely already objected — aren’t there some very successful lawyers with a lot of professional range? Yes, but in most cases they are specialists of their own kind.

We should think about specialization not entirely –- or even mainly –- in terms of traditional practice areas. The Solicitor General, who touches a stunning variety of legal issues, is nevertheless a deep and narrow specialist in two things: a recondite appellate environment and the needs and predilections of a wholly unique client. Those the two specialties predominate for the kinds of cases handled by the office of the Solicitor General. And I can attest that former Solicitors General do a good business after their return to private practice for the same reasons.

So, it is possible to succeed in a “wide range” of things, as long as they occur inside a coherent specialty. Lawyers can succeed by knowing all aspects of one industry, one species of transaction, one government agency, one international issue, one court system or even one group of judges. However, because the market is defined, every lawyer needs a coherent ending to the following sentence: “I basically do one thing: ____________.”

Too few lawyers can finish that sentence well.

Innovation and Specialization

Specialization, then, is about market definition. Defining a market narrowly, and ideally in a way that makes you the only viable provider in that market, is the driving idea of Peter Thiel’s brilliant book, Zero to One: Notes on Startups, and How to Build the Future (2014). A careful and narrow market definition is partly for reasons of competitive marketing: it is best for potential customers to think of a firm as the only real provider in the space it has carved out. In that sense, it is a monopolist.

But narrow market definition is important for another reason: innovation is hard, and even the best firms can’t do it across a wide range of workflows and technologies simultaneously. Innovation happens more naturally in narrow spaces, where trial and error and customer feedback loops can be managed coherently. From one narrow space, an innovation can extend laterally to adjacent spaces.

The classic example of this is Amazon, which deliberately cut its teeth by radically disrupting the market — only for books and CDs. Amazon focused its innovation in a narrow space, and that narrow disruption only became tectonic innovation when it proceeded to take out one adjacent vertical after another. Amazon’s present wide range is only possible because its beginnings were so narrow.

It is no surprise to me that innovative lawyers and firms tend to show up in focused practice areas and market segments. Innovation can’t happen in “litigation” or “transactions”. Those areas are just too broad. It’s possible to innovate in a workflow within one of those areas; tech and process providers have done that. But I am convinced that the lack of innovation among most lawyers is caused in part by their relative lack of specialization. Cf. Post 071 (Type 0 innovations are focused on substantive law).

Innovation from the top?

If AmLaw 10 firms and other elite boutiques tend to be more specialized, shouldn’t they be hotbeds of innovation? Not likely. Specialization is a necessary but not nearly sufficient condition for innovation.

In Clayton Christensen’s model for disruptive innovation, firms at the top of a market find it nearly impossible to change. That has come to be known as “premium position captivity,” see Mathew S. Olson, et al., “When Growth Stalls,” Harv. Bus. Rev. (Mar. 2008), and it’s hard to imagine a more premium position than the AmLaw 10. In Christenson’s model, firms like this are disrupted from below by competitors offering a cheap, inferior, but innovative product that gains traction and quality over time. Those in a premium position fail to respond to this threat because they are captive to their best customers, higher margins and historic success. As a result, low-cost providers drive a disproportionate amount of innovation by pushing forward new, specialized solutions.

That’s the model, but in the legal market as currently structured, lower-cost providers are not specialized enough to innovate. If that’s true, how will innovation happen?

An imaginable example of progress

There is always hope, of course. I would point to privacy law. The law is still evolving, it is not dominated by existing providers, the issue is not going away, and there are not nearly enough true legal specialists to meet market demand. It is a nearly risk-free area in which to fully specialize, since the space is more or less guaranteed to grow, and clients simply can’t get enough specialist help. There are deep wells of industry-specific work emerging on a regular basis and a continuing flow of new jurisdictions creating more regulations. When I talk to young lawyers, I tell them that privacy is the new plastics.

Can we imagine a firm using AI and a deep well of specialist experience to build a privacy question-answering chatbot? Maybe, but it’s probably too broad. The narrower path would be a HIPAA chatbot or a FERPA chatbot to start; a California, Canada or GDPR product to follow. It would need to be targeted at a focused industry with particular privacy needs; it couldn’t realistically address the whole market at once. One way or the other, the opportunity would be for a specialist law and technology firm to knock out an initial vertical and then take out adjacent spaces systematically. Whether it’s a chatbot or something else, the ground for innovation seems fertile in privacy.

The most elite law firms have the resources to do this, but the reasoning discussed above suggests that they will never fully commit to it. An aggressive competitor could certainly attempt it from below, and there is reason to hope that privacy-specialist firms will thrive and then innovate in the next few years. With the right investments, it could happen.

But it’s not just about investment; it’s about strategy and culture. Lawyers need to leave their reflexive resort to a “wide range” of experience behind and make a commitment.