When Being Different Pays Off: Two Stories of Legal Innovation and Niche Practice
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When Joe Flom was a young lawyer at Skadden, Arps, Slate, Meagher & Flom, it was conventional wisdom that "white-shoe" Wall Street law firms should avoid hostile corporate takeover work. There wasn’t that much work in this space to begin with (at least relative to what was to come), and the work was considered unseemly.
Flom, who didn’t fit the mold of the typical Wall Street lawyer, saw this as an opportunity. He dove into hostile takeover work during the 1960s, and when the corporate takeover boom of the 1970s and 1980s came around, he was positioned to be the go-to lawyer, and Skadden the go-to firm, in this space.
Flom was so feared and respected in his niche that companies concerned with becoming takeover targets paid him hefty retainer fees so that he couldn’t be engaged to lead a corporate raid against them. In essence, they bought expensive insurance to avoid facing Flom in battle. This tactic was known as “sterilizing Joe.” He couldn’t come after you if he worked for you.
All of the law firms that considered this type of work undignified in the past were racing to catch up. Flom’s focus on this niche didn’t just benefit him; it lifted his colleagues and firm as well. Skadden’s explosive growth, and expansion into new practice areas and markets in the 1970s, 1980s, and beyond, was in large part due to Flom’s focus on a relatively small and “undesirable” niche market in the 1960s.
Three thousand miles away, at almost the same time that Flom was starting to make a splash on Wall Street, a recent law school graduate named Larry Sonsini joined a small group of lawyers who started a law firm in Palo Alto, California.
The firm focused on serving young entrepreneurs and their venture capital-backed technology companies. Sonsini and his colleagues saw an opportunity that others did not, which was to build a full-scale law firm that catered to members of an emerging industry.
This strategy, focused on exclusively representing fledgling technology companies, may seem obvious now, but it was revolutionary in the early 1960s. And as we now know, it succeeded in a significant way.
Wilson Sonsini Goodrich & Rosati is one of the premier law firms representing technology companies around the world. Its reputation stems from the vision and courage of lawyers like Larry Sonsini, who decades ago recognized an opportunity to represent a small niche market that grew into a big one.
The key takeaways?
Identify and Embrace Underserved Markets: Both Flom and Sonsini recognized opportunities in areas that established firms overlooked or actively avoided. Look for legal niches that are currently undervalued or emerging, rather than competing in oversaturated markets.
Build Deep Expertise Before the Market Matures: Flom developed his takeover expertise in the 1960s, before the boom of the 1970s and 1980s. Getting in early allows you to develop unmatched expertise and relationships that become invaluable when the market expands. First-mover advantage in legal specialization can be powerful.
Turn Perceived Disadvantages into Advantages: Flom, who didn't fit the traditional Wall Street lawyer mold, turned this outsider status into an asset by embracing work that elite firms considered beneath them. What might seem like a career limitation can actually be an opportunity to differentiate yourself.
Think Long-Term About Practice Development: Both stories show how focusing on a niche can create a foundation for broader firm growth. Becoming known for excellence in a specific area can generate opportunities to expand into adjacent practices and markets over time.
Create Unique Value Propositions: The "sterilizing Joe" phenomenon shows how deep expertise in a niche can create unique forms of value for clients - in this case, the ability to keep a feared opponent off the field. True specialization can allow you to command premium fees and create innovative service offerings that wouldn't be possible as a generalist.
Carving out a niche is easier said than done. It requires courage and confidence. There are great potential rewards for those who embrace the challenge.
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Jay Harrington is president of our agency, a published author, and nationally-recognized expert in thought-leadership marketing.
From strategic planning to writing, podcasting, video marketing, and design, Jay and his team help lawyers and law firms turn expertise into thought leadership, and thought leadership into new business. Get in touch to learn more about the consulting and coaching services we provide. You can reach Jay at jay@hcommunications.biz.