Industry and technical specialties

This is something I have mulled on for some time, but now have found a framework: the Industry v Capabilities 2x2 Matrix (or as I think of it, you do “what” for “whom”). The framework says, as individual lawyers, we can focus on (1) an industry (2) a technical skill (3) both and (4) neither.

If we focus on (a) one or (b) both, we narrow the range of clients we can serve (an individual lawyer who only does leases for shopping centres’ owners will have to turn a lot of potential clients away), but you can, by virtue of your specialised skill, command a higher price.

The matrix

If we focus on neither, and remain a generalist, we can increase the number of clients we serve, but generally have to accept a lower hourly rate – by doing wills, family law, criminal defence, workers compensation, commercial disputes and anything else, we will be busy, but it will be challenging to charge a premium as a jack-of-all-trades.

Preliminary Observations

A couple of further observations here. First, it appears to me that one of the primary reasons firms exist, is so lawyers can have their cake and eat it too, that is get the benefit of specialisation and generalisation. The firm allows each individual lawyer to specialise deeply, but collectively, the firm remains generalist and is able to service a wide variety of clients. When you have a large firm of specialists, there is little need to send work away.

Second, the focus of firms on hours billed encourages lawyers to say “yes” to any opportunity for billable work, and hence is a gravitation force driving many lawyers to be generalists (because this is where the most work is). More on this below.

Third, someone who focuses specifically on an industry is, by virtue of their intimate knowledge of the industry, more likely (I hypothesise) to be accepted by their client as a “trusted advisor.” They know the lingo, players, issues and pressure points, and can more readily “speak the client’s language” – an important part of building trust and credibility. On the other hand, someone who focuses more on the development of a technical skill is probably, rightly or wrongly, going to be considered a back room technician, or a narrow subject matter expert, rather than a front-end trusted-advisor.

Fourth, from a career path perspective, we all start a generalist without any specialisation. Yet we must, I think, start moving as soon as we can along the industry or technical skill specialisation path (or both). Doing anything for anyone at a low hourly rate might be acceptable for the early years of a career, but at some point you have to distinguish yourself in the market for something. And in my view, this is not done by just “settling” in a practice group. You just enter a new, deeper level of the matrix. Once you settle in (for instance) M&A, you need to ask: right, now I am an M&A generalist. I need to start focusing on a technical M&A task or a specifically M&A industry. I can’t remain a generalist forever.

Gravitation Pull

As outlined above, one thing this matrix makes explicit is how the use of the billable hour encourages each lawyer to gravitate towards generalisation.

Under the billable model, a lawyer makes money by multiplying the hours worked by the rate charged (hours x rate). Should they desire, a lawyer can make more money by (1) increasing their rate or (2) increasing the number of hours worked.

Which is the easier path to increased riches? We probably all like to feel that we deserve to be compensated at a higher rate for our time, but reality and collective experience has shown, sadly for our ego, it is much easier to increase profits by working more hours, as opposed to the difficult task of fighting market forces and increasing the rate. Working more hours is within your control, but the market controls the rate. This makes increasing profits by increasing your rate difficult. It can be done, but it requires you to convince the legal market you are truly exceptional. Few lawyers by definition can do this. The principle strategy for the rest of us chums is simply to try and work more hours.

This poses a dilemma for those seeking to specialise. By specialising, you are – by definition – reducing the number of (1) clients or (2) functional tasks that you do. You will be working fewer hours. You hope to compensate for this long term by increasing your rate, but there is a lag. The market does not increase your rate at the speed to which you have reduced your hours. Short term, therefore, moving towards specialisation hurts profitability. You are doing less work at the same rate. If the lawyer has sufficient financial reserves to ride out this period of decreased profitability, before the benefits of specialisation start to kick in, all well and good. But if they can’t afford to reduce profits short term, this can scupper attempts to specialise. You try to develop a focus, but when you have bills to pay (or billable targets to hit) saying “sorry, I’m not going to accept your money to do that because I am trying to focus on other things” can sound, and feel, inappropriately indulgent, even fiscally naive. As my Dad, a freelance consultant, once told me: “Sam, I wish I had said “no” to more things. But then I looked around at the four of you kids and the mortgage, and thought ‘I better do it.’”

Hence the observation that the billable hour exerts a gravitational pull towards being a generalist. But, of course, it’s a tendency only. With sufficient recognition, and willingness to invest, an escape velocity can be obtained.

Comments on the career paths

The matrix also gives a rich insight into the nature of work in each career path.

The lawyer who wishes to develop an expertise in a type of industry (for instance, the motor industry, tech industry, construction industry) must have a genuine passion for those types of clients. Success in this field of specialisation is going to require you learn the ins and outs of this industry backwards, which is easier if immersion is something you love, and harder if you are doing it as a chore because you feel like you should.

On the other hand, the functional expert should be a “legal geek,” someone who loves the law for what it is, and relishes the opportunity to get their hands on the most complex and difficult legal problems. While an industry specialist might be able to get away with a degree of superficiality in some areas, this is not possible for the technical specialist. Like pilots, there is nowhere to hide if they cannot land the plane.

Given the perishable nature of time, it is also inescapable that, unless a significant additional effort is made to specialise in both an industry and a functional skill, the lawyer must trade off the level of specialisation between developing a technical legal skill, and developing an industry appreciation. There are just insufficient hours in a normal working day to do both. Skill points must be allocated as in an online gaming avatar. Of course, if you wish to work twice as hard on self improvement, a joint expertise is possible, but this may fall outside the scope of many lawyers’ tolerance for discretionary effort. It is the rare lawyer who has been able to invest sufficient time (and resist attempts to dilute their focus) to be outstanding at “one thing” for “one industry.”

For those who choose to focus on an industry specialisation, this focus means they are inevitably going to be dragged “away from the tools,” and focus less on being a black-letter lawyer, and more on being an intermediary, and translator, between the non-expert client and the deeper functionality experts. They will start to form a quasi-general counsel role, providing primary care and advice for a range of legal matters, sub-contracting for deeper expertise as required, and serving as a translator to the client when the advice is received.

As any industry consists of nothing more than the sum of its people, a lawyer chasing an industry speciality is going to have to get to know people well. It is a route therefore suited to a gregarious networker who gets energy from connecting with others in the same industry, but will be a path less compatible with the archetypical introvert who prefers the company of themselves. A lawyer who has had a previous career, a family connection, or dual qualifications, in the chosen industry (with an outgoing personality) would be a good fit. A good litmus test – how active are you on professional social media, like LinkedIn? If active or very active, you could be temperamentally suited to an industry specialisation. If you are a more taciturn soul, it might be that bunkering away in the back room working on functional problems will be more your speed.

The march of technology

Whose jobs will the robots come for first? Which specialisation is the (most) protected to technological disruption? This is a relative question, as in the sufficiently long-term, technology is likely to entirely sweep us away. As Richard Susskind puts it (sort of), we will almost certainly find, at some point, a technology-based solution for the problem to which lawyers are currently society’s answer.

But in the medium term, where technology and flesh and blood lawyers will co-exist, in respect of the future trajectory of each specialisation, it is difficult, of course, to reach firm conclusions. The future is shrouded with a fog of war which makes any prediction uncertain. But some generalised trends might be observed.

First, there is little doubt that technology will continue to become more capable. The question is which human capability it will encroach on first – the technical, functional skill, or the connecting, human skill associated with industry specialisation? My present position is that technology will (as above) ultimately expand to cover both, but it is the technical skills which will be the first to be overtaken. Industry knowledge, depending as it does on knowing the people and characters as much as the “dead” technical knowledge, will be impervious for longer, in my view, from the inevitable advance of technology. Computers can already beat us at dry, technical games like chess, but have not yet learnt to read the subtleties of human emotion which allow them to replace deeply interpersonal tasks, like in-person psychology.

I should stress though that in the relentless advance of technology there is no finish line, and I, and many, can see a day where technology can perform the vast majority of work of all professionals, not just lawyers. It is not a matter of whether technology will replicate the industry-based expertise of the best professionals, it is a matter of when. An industry-based career path is simply more immune, at present, to the march of technology. But its comparative advantage to legal skills is relative, not absolute – it simply sits a little further up the beach as the tide of technological advancement rolls in. Long term, everyone gets wet.

Conclusion

The updated matrix

As a lawyer, as we progress through our career, we can specialise in: (a) a technical speciality (like drafting wills), (b) an industry (providing a variety of services for a specific clientele, like technology start-ups), (c) neither (at our peril), or (d) both (with an exceptional level of investment).

It’s worthwhile to consider these alternative pathways when mapping out our career, and asking how each stream fits into our ambitions, predilections and desires. It is also productive to consider how this specialisation might fare in light of the advance of technology, which will not abate, and certainly will cause some degree of displacement of our traditional roles within the career-span of most readers.