Betrayal as Market Barrier: Identity-Based Limits to Diversification among High-Status Corporate Law Firms.

Why are some diversified market identities problematic but others are not? We examine this question in the context of high-status corporate law firms, which often diversify into one low-status area of work — family law (FL) — but face a barrier (strong disapproval from existing clients) that prevents diversification into another such area — plaintiffs’ personal injury law (PIL). Drawing on a qualitative study of the Boston legal market, we argue that this barrier reflects a situation where loyalty norms have been violated, and it surfaces because service to individual plaintiffs is tantamount to betraying the interests of corporate clients. Our analysis clarifies identity-based limits to diversification, indicating that they are rooted in concerns about the firm’s commitments as well as its capabilities, and suggests a more general refinement of theory on status and conformity.