High-Status Conformity and Deviance: Pressures for Purity among U.S. Corporate Law Firms *

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1 High-Status Conformity and Deviance: Pressures for Purity among U.S. Corporate Law Firms * Damon J. Phillips University of Chicago Booth School of Business Catherine J. Turco Harvard University Department of Sociology Ezra W. Zuckerman MIT Sloan School of Management * Authorship is alphabetical. We benefited greatly from the comments of Joel Brockner, Rodrigo Canales, Barry Cohen, Jared Curhan, Jason Davis, Zev Eigen, John-Paul Ferguson, Bob Freeland, Fiona Murray, Elena Obukhova, Kelly Patterson, Hayagreeva Rao, Carroll Seron, Susan Silbey, Alan Zuckerman, and audiences at MIT, the University of Chicago, and the American Sociological Association. The fault for any remaining errors lies entirely with the authors.

2 1 High-Status Conformity and Deviance: Pressures for Purity among U.S. Corporate Law Firms Abstract We advance a new theory to explain why high-status actors receive an effective license to violate some norms but are more severely sanctioned when they violate other norms. Past theory explains this difference in terms of the importance of the norm involved. However, this approach is problematic because: (a) violations of seemingly minor norms are often treated as very serious breaches of categorical purity; and (b) it cannot account for the empirical pattern we examine, whereby high-status corporate law firms are given leeway to diversify into the very low-status practice of family law (FL) (Phillips and Zuckerman 2001), but are barred from the somewhat higher-status practice of plaintiffs personal injury law (PIL). Our theoretical framework derives both different norms and how their importance varies by status from the two stages (categorization and selection) and the two key desiderata (capability and commitment) that govern valuation by any achievement-oriented audience. Based on this framework, we argue that FL represents a membership-norm violation, which sends a signal of categorical impurity that is damaging to lower-status actors. By contrast, PIL represents a loyalty norm violation, which sends a signal that the commitment to the audience is impure (audience impurity). This second type of impurity is particularly damaging to high-status actors-- but only in the eyes of the audience that is betrayed. This interpretation and the theoretical framework that supports it are substantiated by two sets of studies: (a) quantitative analyses of diversification patterns and labor-market reactions to such diversification in Silicon Valley, over the years ; and (b) a interview study of relevant actors in the Boston legal market.

3 1 the problems that fundamentally challenge basic professional categories are impure and professionally defiling. It is at once clear why Laumann and Heinz (1977) find that legal practice involving corporations in nearly all cases stands above that of private individuals. The corporation is the lawyers creation. The muck of feelings and will is omitted from it ab initio. Where feelings are highest and clients are most legally irrational-- in divorce-- intra-professional status is lowest. -- Abbott (1981: 824) Interviewer: Respondent: Interviewer: Respondent: How would you react if you learned your outside law firm was doing personal injury law? That s bad They d lose credibility instantly It s just the feeling, like they re taking the other side, like they re disloyal. How would you react if you learned your outside law firm was doing family law? I don t really care That s more of just an optics issue. These high-end law firms market themselves as being premium firms and family law just doesn t really fit in. --Excerpt from an interview with the General Counsel of a publicly traded healthcare company I. Introduction One of the great truths of social life is that while a given action carries a default value in a given culture (e.g., taking another s life is condemned), such an action may carry a different value if it occurs outside the default context (e.g., in war) and the value may vary depending on the identity of the actor who undertakes the action (e.g., by a uniformed soldier or someone wearing civilian garb) and which of multiple, possibly competing audiences (e.g., someone who identifies with the killer or the killed) is making the valuation. At first blush, the implications of this truth are epistemologically forbidding-- i.e., that the social analyst can neither understand an action nor anticipate its social consequences without situating it in the context of the culture, the particular situation, and the identity of the actor and audience(s). Given how difficult it seems to satisfy this imperative, we might be tempted to give up on understanding how and why an action acquires its social value. But such a concession is untenable because it implies that social interaction itself is impossible. As Hollis (1987: 7) puts it, the Other Cultures (Problems)

4 2 that are plainest in anthropology are just tuppence-coloured versions of (the) Other Minds problems that any human being must solve in managing social interaction. That is, successful interaction with others requires that we make sense of their decision to choose one action over another. And this in turn implies that, despite significant heterogeneity, inconsistency, and contestation in how they are applied, social life is governed by general principles of valuation. And yet, to say that general principles of valuation govern social life does not imply that these principles are easy to discern. In particular, let us consider why audiences react in seemingly contradictory ways when a high-status actor performs an action that is generally devalued by that audience. In such cases, it seems straightforward to expect that such an action will lead to a decline in status that is proportional to the difference between his former status and the status that is implied by the action. However, we also observe two deviations from such meritocratic scenarios: (a) status advantage scenarios, whereby the actor s status does not decline, and may even rise; and (b) status disadvantage scenarios, whereby there is a disproportionate decline in the actor s status, such that the actor s new status may even be lower than the implied status of the action. These deviations are particularly puzzling when there is no change in the audience or the actors involved. How can we account for such deviations? Much of the sociological literature has focused on scenarios of type (a). In particular, three mechanisms have been identified as providing valuation advantages to high-status actors: (i) high-status dominance (Gould 2002a), whereby high-status actors enjoy a great deal of control over their audience, either by shaping its interpretation of actions (e.g., Coleman 1961; Martin 2002) or by hiding unfavorable actions from the audience s view (e.g., Fine 1997; Adut 2008; Phillips and Kim 2009) ; (ii) the Matthew Effect, which applies to settings where status does not imply dominance, but which holds that high-status actors enjoy an advantage because audiences resolve ambiguity in the value of actions by assuming that the action is of greater value when it is performed by a high-status actor (Merton 1968, 1995; Podolny 1993, 2005; cf., Foschi 1996, 2000); and (iii) security in membership, which applies even to settings where the value of actions is unambiguous, and which suggests an additional valuation advantage, whereby high-status actors enjoy an effective license to engage in actions that are forbidden to aspiring members of a social category because high status implies unquestioned membership (Hughes 1946: 517; cf., Blau 1963; Dittes and Kelley 1956; Kelley and Shapiro 1954; Hollander 1958, 1960; Homans 1961, Menzel 1960; Phillips and Zuckerman 2001).

5 3 Given such valuation advantages, one might wonder whether meritocratic or status disadvantage scenarios are ever observed. And yet, it seems clear that they are. Podolny (1993, 2005) argues that the Matthew Effect must be limited in competitive markets because, were high-status producers to enjoy an advantage with respect to any action they committed, this would imply that they would drive lower-status producers out of business. He thus argues for the importance of status leakage processes, whereby high-status actors lose status whenever they (use the same identity to) serve lower-status audiences (Podolny 1993: 845; cf., Gould 2002b). And while status leakage may provide a check on the valuation advantages enjoyed by high-status actors, other actions seem to produce a valuation disadvantage. In particular, it has long been recognized that there are certain transgressions for which the high-status actor s security-in-membership does not provide a license, and may engender an even more dramatic downfall for the high-status actor. For instance, Blau (1963: cf., Alvarez 1968; Becker 1970; Giordano 1983; Menzel 1960) distinguishes basic or explicit norms that protect the group s fundamental interests from norms that are akin to folkways and are of lesser saliency even if favored by majority opinion. Similarly, Homans (1961: 339) sees high-status actors as receiving leeway only with respect to lesser things and Hollander (1958, 1960) focuses on idiosyncratic behavior. And the literature on scandals (Adut 2005, 2008; Fine 1997; 2001) suggests that high-status actors face particularly severe consequences when their transgressions are publicized. For a given violation, higher-status actors face a much greater risk of becoming infamous. It would seem then that in settings (such as competitive markets) where status does not imply dominance, the nature of the action involved will determine the audience s reaction. In particular, status seems to change from advantage to disadvantage when the action involves serving lower-status audiences or violating basic or important norms. Yet while intuitively appealing, these criteria are conceptually and operationally problematic. Consider for example, Rao, Monin, and Durand s (2005) demonstration that high -status chefs were the vanguard of the movement to incorporate nouvelle cuisine into French haute cuisine. There seem to be multiple reasons to expect status advantage in this case. First, the incorporation of nouvelle cuisine did not seem to risk status leakage because the chefs continued to cater to upscale audiences. Second, Rao, et al argue that high- status actors (enjoy) leeway in how much they should conform to the conventions of a genre (2005: 972) a license they associate with the Matthew

6 4 Effect, but which could be understood as security-in-membership. Regardless, the difficulty with such explanations is that they are awkward when viewed prospectively. In particular, given how severely nouvelle cuisine was regarded by the French culinary establishment, it seemed to involve very basic or important norms, which it should have been very risky for high-status chefs to transgress. Moreover, much theory appears to support the idea that mixing elements from such opposed categories is deeply problematic. Recently, Hannan, Carroll, and Polos (2007: 104-6) see violations of identity codes by organizations as occasioning powerful punishment by their audiences. This mirrors Abbott s (1981) contention that purity in professional work is the foundation for status within a profession. In sum, impure actions are often treated as if they violate quite important norms. But for some reason, such violations sometimes seem unimportant when high-status actors violate them. And yet, other norms (those whose violation is the basis for scandals) seem more important when high-status actors violate them (Adut 2005, 2008; Fine 1997, 2001). Thus, rather than use the importance of a norm to explain when status advantages turn to disadvantage, we must explain why the importance of the same norm changes (in opposite directions depending on the norm) depending on the status of the actor. The main objective of this paper is to advance a theoretical framework for addressing this challenge. We develop and test this framework via analysis of a puzzling case, one that has the analytic advantage of allowing us to compare a status advantage scenario with a status disadvantage scenario within the same social context. This puzzle is captured in Figure 1. As discussed in Phillips and Zuckerman (2001) and in the Appendix, the data from this figure pertain to Silicon Valley law firms, and they concern the tendency for such firms to diversify into two low status practice areas in the US bar (Heinz and Laumann 1982: 68, Heinz et al., 2005: 87-88): family (principally, divorce) law (FL) and (principally, plaintiffs ) personal injury law (PIL). The puzzle is that relative to middle-status firms, high-status law firms display a relatively high proclivity for diversifying into FL, but a very low proclivity for diversifying into PIL. 1 As discussed below, it is not the case that high-status firms are less attracted to or capable of diversifying into PIL. Rather, as suggested by the second epigraph to this paper, the difference derives from a stark contrast in the reaction by corporate clients i.e., corporate law 1 As discussed below and in Phillips and Zuckerman (2001), middle-status (corporate) law firms are the appropriate reference point because low-status law firms can be assumed to have given up on the prospect of upward mobility.

7 5 firms principal audience. But neither the principle of status leakage nor the criterion of norm importance can explain this difference in reaction. Status leakage is indeed a potential threat since each practice area is typically associated with lower-status personal plight clients rather than wealthy individuals and corporations (Heinz and Laumann 1982; Heinz et al., 2005; Sandefur 2001). But this threat is no greater in the case of PIL than it is for FL. Moreover, highstatus law firms successfully manage this threat in the case of FL by focusing on wealthy clients, a strategy that is equally available to them in the case of PIL. In addition, one cannot explain the difference by claiming that relative to PIL, FL involves a less important norm. As indicated in the first epigraph to this paper, Abbott (1981:824) specifically cited FL as the canonical example of a highly impure form of law that involves practices that are professionally defiling, thus leading to its very low status. In short, while both practice areas are generally associated with low-status customers and involve important violations (thus leading both to be low-status), it appears that high-status law firms are given leeway to enter FL but are penalized more sharply if they enter PIL. Why? FIGURE 1 HERE As developed in the next section, our approach to this question-- and the more general challenge of explaining why different norms are important depending on an actor s status -- involves building on the two-stage model of audience valuation underlying the claim that highstatus actors enjoy security-in-membership (Phillips and Zuckerman 2001). This advantage pertains to the first stage of the valuation process, whereby the field of candidates to be considered is set, and audiences screen out candidates who do not appear to merit membership in the set of candidates to consider. Past research (e.g., Abbott 1981; Hannan et al. 2007; Phillips and Zuckerman 2001) has been vague about why audiences form category boundaries where they do and how norms are used to determine membership. 2 We argue that if we focus on audiences that value actions and actors on the basis of achievement rather than ascription, the criteria of categorical membership and associated membership norms pertain to actions that demonstrate: (a) minimal, relevant capabilities; and (b) sufficient commitment to serving the audience. It then follows why a high-status actor will enjoy a certain security-in-membership, 2 The main problem with each of these past conceptualizations is that it is difficult to use them to explain why audiences sometimes seem to care a great deal about these relevance criteria, and sometimes they do not (see Ferguson 2010). For example, Phillips and Zuckerman (ibid.) must patch in a caveat that security-in-membership does not apply to actions so discrediting that (they) will tarnish even a secure, high-status player. By clarifying what audiences care about, we avoid such an ad hoc scope condition.

8 6 and therefore a license to violate membership norms: if an actor has achieved high status, this necessarily means that she has in the past demonstrated at least a minimal, relevant capability and applied that capability to meet the performance standards endorsed by that audience. But in addition to providing a basis for status advantage, this framework also suggests the conditions under which status is a disadvantage. The problem for the audience and actor is that the achievement of status can never fully resolve the question of commitment. No audience can endorse an actor who clearly serves himself at the expense of the audience-- i.e., who violates ethical norms -- or one who serves rival audiences whose interests compete with the focal audience-- i.e., who violates loyalty norms. And these forms of betrayal elicit particularly severe punishment when conducted by high-status actors because: (a) the record of capable service of the audience implied by status entails that the high-status actor has accumulated knowledge of the audience that can be used to harm it; and (b) insofar as audience members are held accountable for their selections, betrayal by a high-status actor threatens their reputation for sound judgment. In sum, while status implies membership for the actor, thereby providing the high-status actor a license to engage in actions that generally signal nonmembership; it is also the case that status implies vulnerability for the audience, thereby leading to particularly severe reaction when the high-status actor betrays the audience. Put differently, purity matters both for low and high-status actors, but a different form of purity is important at each stage of selection, and corresponding status: What matters most for low-status actors is categorical purity, while what matters most for high-status actors is purity of (commitment to the) audience. And we argue that the key difference between PIL and FL is that engagement in FL is a signal of membership or categorical purity that is rendered moot by the achievement of status, whereas engagement in PIL is a signal of purity of commitment or disloyalty, in that it implies a commitment to an audience that is intrinsically hostile to corporate clients i.e., individual plaintiffs who sue corporations. The remainder of the paper is organized as follows. In the next section, we develop our theoretical framework. In the following section, we discuss how it relates to the literature on the US legal services market and particularly the contrast between PIL and FL. In addition to providing a contrast of status advantage and disadvantage within the same setting, this case is useful for ruling out the main alternative to our argument i.e., that status disadvantage pertains to the violation of more important norms. We then present two empirical studies that jointly

9 7 substantiate our theoretical framework. The first study, which is an extension of Phillips and Zuckerman s (2001) analysis of the Silicon Valley legal services market, shows that the results in Figure 1 are significant and robust and that law firms experience a pattern of penalties in the labor market that is consistent with our argument. The second study, based on interviews with key players in the Boston legal services market, provides more direct insight into the mechanisms that underlie the difference between PIL and FL. Results from this study support our assumption that PIL is at least as feasible and attractive as FL as a practice area for highstatus corporate firms, help us rule out alternative explanations, and better identify the operation of loyalty norms in the legal market. In the final section, we discuss more general implications of our theoretical framework. II. Theoretical Framework Puzzles of Capability and Commitment Our objective in this section is to develop a theoretical framework that can account for why the same audience might react to actions by a high-status actor in the seemingly contradictory ways summarized in the prior section. The general case we consider is one where an audience of evaluators responds to a low-default-value (LDV) action by a high-status actor. By status, we mean the publicly recognized value that audience members attribute to one actor over another, such that if the cost of exchange with two actors is equal, audience members favor exchange with the higher status actor. This definition entails that, to a certain degree, the audience can be considered a single decision-maker. In particular, we assume that every audience member is aware of, and is held accountable for, certain commonly known conventions of valuation, which include a common status hierarchy (Ridgeway, Correll, and Zuckerman 2010; cf., Heinz et al. 2005: 82-83; Zhou 2005) as well as performance standards and norms. We discuss below how audiences use performance standards and norms to assign value to actions. For now, let us define the default value of an action to mean the status that conventional valuation metrics would imply for that actor when nothing is known other than that she conducted this action. Thus, common to each of our three scenarios is an inconsistency, whereby an actor has performed an action that, were she to perform that action exclusively, it would merit a lower status than she had assumed to this point.

10 8 Given these definitions and assumptions, meritocratic scenarios seem straightforward, while the other two scenarios-- status advantage and status disadvantage-- seem more puzzling. Yet once we clarify the social foundations that underlie meritocratic scenarios, we will see that the other two scenarios rest on the same foundations. We begin then by considering what is necessary for a meritocratic scenario to be observed. To fix ideas, consider a case where a sports star fails in an important contest. A single such failure may not tarnish the star s luster. But such a failure will certainly not raise her status; and the more such failures, the more likely is she to lose status. Such a downgrade seems intuitive, even obvious. Yet specific conditions must hold for a downgrade to be a predictable consequence of failure. In particular, it must be the cases that audience members: (a) evaluate actors-- i.e., confer status-- on the basis of achievement rather than ascription (see Phillips and Zuckerman 2001:422-3); and (b) use common standards of performance in assessing such achievement, with such standards indicating that the star s action is a failure. These conditions may be framed as a matter of how audience members justify their evaluations. Insofar as an audience member must justify her evaluations of actors on the basis of the actions they produce, and an actor has failed according to conventional standards of performance, she will face pressure to downgrade the star. For example, a sports fan may wish to ignore the failure of her favorite star or may wish to use the occasion to promote alternative standards, but this will be more difficult if she seeks to win a debate with other fans who rate stars based on conventional standards of performance. And if this is so for sports fans, it will be true a fortiori for the general managers of sports teams, whose careers depend on their judgment of talent. Thus, a downgrade in status is more likely to result from a LDV action insofar as the audience consists of actors who are themselves concerned about the prospect of losing status were they not to resolve the inconsistency between an actor s status and the LDV action, where the low value is implied by reference to conventional performance standards. Note further that it will not make sense for an audience to confer status on the basis of achievement unless it believes that actors exhibit stable differences in the actions they can be expected to produce. And the belief in stable differences among actors in turn depends on some combination of two underlying beliefs: (a) that there are stable differences in actors capabilities for producing action that is valued by the audience; and (b) that there are stable differences in actors degree of commitment to using (or developing) their capabilities for producing action that

11 9 is valued by the audience (cf., Correll and Benard 2006). Consider the counterfactual. Were an achievement-oriented audience to believe that two actors are equally committed to, and equally capable of, serving it, there would be no reason for it to expect differences in the likelihood that each meets performance standards. But were such an audience to observe a sign that one of those actors is either less capable of, or less committed to serving it, this actor would logically be downgraded in status. Achievement-oriented audiences monitor performance in an attempt to infer capability and commitment. In the example of the failure of a sports star, his level of commitment is typically not at issue because he is actively engaged in serving the audience and he is presumed to have a great deal at stake in the outcome (cf., Foote 1951). And the very reason the stakes are so high is because when highly-committed actors vie in public setting, the audience will typically treat relative performance as distinguishing the actors relative capabilities, and thereby determine their future status (Geertz 1973). Our analysis thus clarifies when it is reasonable to expect meritocratic scenarios. 3 In addition, it suggests why scenarios of status advantage and status disadvantage are difficult to explain on the basis of the importance of the norms involved. We have seen that insofar as the audience is achievement-oriented, and insofar as audience members subscribe to a common metric of valuation according to which an actor s action implies lower capability and/or commitment, the actor should be downgraded. The relative importance of a norm seems relevant for such an audience insofar as the violation of a more important norm suggests lower capability and/or commitment to the audience. Accordingly, while any norm violation would carry a negative default value and thus lead to a status downgrade, the violation of a more important norm should lead to a greater decline in status. As such, if actors must have at least minimal status to be acceptable or legitimate exchange partners for the audience, the violation of a minor norm may be all that is required to render a low-status actor illegitimate. By contrast, higher-status actors have further to fall, such that it takes a more serious violation to delegitimize the actor. However, this logic cannot account for the deviations from meritocracy reviewed above. In particular, it is puzzling why any actor would ever receive an effective license to engage in LDV actions, such that her status is not impaired, and may even increase, as a result. 3 Such meritocratic scenarios include the status leakage process noted by Podolny (1993, 2005). There is no basis for expecting an actor s association with a low-status client or actor to lead to a decline in status except insofar as it suggests a decline in the focal actor s capability and/or commitment.

12 10 And it is puzzling why, if two actors performed the same LDV action, the higher status actor might suffer a steeper drop in relative status. Our goal then is to explain how these apparent deviations from meritocracy are in fact consistent with an achievement orientation on the part of the audience and in particular, with the assumption that status is conferred on the basis of an actor s capability and her commitment to (use that capability to) serve the audience. We will also retain our focus on actions that are public and have a very clear default value, and on contexts where the achievement of high status does not imply dominance over the audience. Our approach involves extending our framework in two ways. First, we distinguish between two conventions of valuation used by achievementbased audiences-- performance assessment and normative judgment. Second, we show how normative judgment is applied differently depending on whether audiences are at the first or second stage of the valuation process, thus leading to the two characteristic deviations from meritocracy. In short, we argue that capability and commitment are inferred in distinct ways at each stage, and these correspond to two different sets of norms those that are used to screen for categorical membership, and those that are used to limit betrayal and the first (second) set of norms are enforced most zealously when the actor is of low (high) status. Two Sets of Norms, Two Stages, Two Types of Purity Performance Standards vs. Norms. The basis for the meritocratic scenario sketched above was assessment on the basis of shared standards of performance. Such performance standards map action into value by specifying a range of performance that is legitimate or acceptable to the audience. In short, the hallmark of performance assessment is that differentiation is expected. Differentiation should occur if audiences: (a) trade performance off against cost (e.g. ballpoint pen vs. a fountain pen); (b) trade various features of performance off against one another (e.g., automobile fuel-economy vs. safety); or (c) regard high performance as meaningful only if others are low performers (e.g., in sports, and other zero-sum activities). By contrast, let us define norms as rules to which all actors in a social category are enjoined to conform. Norms do not specify a range of legitimate action, but rather a division between legitimate and illegitimate action. Accordingly, they do not lose their salience if all actors adhere to them to the contrary, they gain salience as a result (e.g. Centola 2009). Our emphasis is on cases where it is clear to everyone that an actor has performed an LDV action by

13 11 violating a norm, perhaps because the actor has embraced an identity that is defined by the violation of the norm (e.g., by declaring oneself to be a proponent of nouvelle cuisine at a time when the rules of haute cuisine are regnant). Under such conditions, an audience that is accountable for judging action on the basis of such a norm cannot (by definition) endorse its transgression. Such an audience must downgrade the actor s status-- except perhaps if the status of the actor provides a license for transgressing the norm. Our question is why such a license might ever be issued by an achievement-oriented audience; and why in some cases, such an audience might enforce norms even more aggressively when they are violated by a high-status actor. To explain this, we clarify why such audiences engage in normative judgment in the first place by recalling why one should regard valuation as occurring in two stages-- categorization and selection. We then consider what achievementoriented audiences assess at each stage. Membership Norms in First Stage of Valuation. One might be tempted to reduce valuation to the selection stage i.e., a process by which audiences select from a set of differentiated offerings and prioritize their choices based on their perception that they will meet their performance and price criteria. This is the process that has informed our discussion to this point, as in the case of the failure of the sports star. But selection cannot occur without preliminary work to make selection possible (see e.g., Shocker et al., 1991; Urban, Weinberg, and Hauser 1996). In short, valuation requires an ontology-- clarification of what set of offerings are to be considered for selection. Accordingly, when evaluating athletes, sports buffs first group them by sports, and then by position, and then perhaps by era (Purcell 1996). When sociologists evaluate our colleagues, we group them by subfield, by methodology, and by cohort. Categorization necessarily precedes selection because selection is necessarily from a set of comparable items. This framing of the valuation process suggests why achievement-based audiences engage in normative judgment in addition to performance assessment. Audiences will focus only on actors who meet some threshold for capability and commitment. If performance on relevant criteria is known, such data will be used. But such performance data are often unavailable. Moreover, past performance does not guarantee commitment to continue such performance, nor does it guarantee capability to repeat that performance. As a result, audiences will base their decisions, at least in part, on indirect indicators of capability and commitment.

14 12 In particular, and as depicted in table 1, we may identify two types of membership norms that are particularly salient in the categorization stage because they serve as indirect indicators that an actor has sufficient capability and commitment to warrant membership in the category. First, insofar as it has become common knowledge that certain practices are more likely than others to generate high performance, these will become practice norms. In the first instance, violating such a norm sends a signal to the audience that that the actor is incapable of serving it. Such norms are familiar from neo-institutional accounts of the role of adopting accepted organizational procedures so as to signal consistent performance (Meyer and Rowan 1977; Hannan and Freeman 1984). An example from baseball is the rule that batters should not bat cross-handed i.e., with the left hand above the right hand, if one is a right-handed batter. And an example from the film industry (or any labor market where employers think that serving it requires different skills than are required to serve other audiences), would be that actors should not work in a wide variety of subfields (Zuckerman et al., 2003; Zuckerman 2005). In addition, the very use of a practice as a screen engenders a second reason to obey such practice norms: deviation from that practice suggests that the actor is not committed to serving the audience. Thus, all practice norms are also service norms. And this logic suggests why there are also pure service norms, whereby audiences screen on the basis of actions that seem arbitrary or completely unrelated to capability. Classic examples of such service norms are those pertaining to the jargon or dress associated with service to particular audiences. Consider the remark of a headhunter in late 20 th century Atlanta: It never helps to wear an ankle bracelet (Finlay and Coverdill 2002: 153). While this particular dress code is specific to time and place, all service norms involve some kind of display of formality, as formal presentation conveys the message that that one has made efforts to discipline one s actions on behalf of the audience. In sum, the categorical imperative (Zuckerman 1999) for any actor who wishes to gain consideration by an achievement-oriented audience consists of adherence to the relevant practice norms (violation of which signals a lack of capability and secondarily, a lack of commitment to the audience) and service norms (violation of which signals a lack of commitment to the audience). TABLE 1 ABOUT HERE Advantage: Status Implies Membership. While adherence to these membership norms is critical for those who aspire to be selected by the audience, the nature of these norms also

15 13 suggests why this imperative is relaxed for high-status actors i.e., those who have been selected by the audience (or third parties that serve as proxies for the audience) in the past and exchanged successfully with that audience. In particular, adherence to membership norms is an indirect indicator of capability and commitment that can be overridden by more direct indicators. A high-status actor has been selected in the past, and has directly demonstrated sufficient capability and commitment to meet the audience s performance criteria. Moreover, insofar as the actor continues to use the same identity that was selected in a prior period, this in itself serves as a more direct signal of service to the audience than is accomplished by the indirect signal of adherence to service norms. In sum, status implies membership in the category from which audiences select. As such, she is free to violate the membership norms that are salient in the first stage. Put differently, there are two routes to constitutive legitimacy, whereby an audience is willing to recognize an actor as an acceptable exchange partner: adherence to membership norms or the achievement of status. Moreover, the license to violate membership norms is often quite appealing for two related reasons. First, by not having to conform to service norms that mark the actor as serving one audience only, the actor may be able to reach additional audiences. Second, violating both practice and service norms may allow the actor to achieve higher performance in serving the focal audience. This follows because practice norms codify conventional means of meeting performance standards, but they leave open the possibility that even higher performance can often be obtained through unconventional means. 4 Moreover, if violating practice norms affords the possibility of higher performance, this is a fortiori the case for service norms as adherence to them often signals nothing about the capability of the actor. 5 Of course, if these deviations in fact produce lower performance, the result will be the same as in any drop-off in performance i.e., the meritocratic outcome of a status loss. Thus, the constitutive legitimacy implied by high status provides a license for deviance, but not a guarantee that the deviance will pay off. And more generally, we may say that such an actor is given a pass on the norms associated with the first-stage of valuation, but that she is still subject to the valuation criteria that are salient in the second, selection stage of the valuation process. 4 For example, generalist Renaissance Men are often the most celebrated actors in a given labor market (Zuckerman et al. 2003). Similarly, mixing elements of nouvelle cuisine was attractive because it produced innovative food that was appreciated (Rao et al. 2005) 5 Consider, for example, Goffman s classic example of the chief surgeon who jokes around in the operating room, thereby defying a service norm but providing the benefits of a relaxed atmosphere (Goffman 1961; cf., Coser 1966).

16 14 Disadvantage: Status Implies Audience Vulnerability. Such valuation criteria clearly include performance standards. In addition, a distinct set of norms gain salience in this second stage. We may derive these moral norms by recognizing that neither adherence to membership norms nor assuming high-status can fully resolve the question of commitment. In particular, and as depicted in the right side of Table 1, actors who present themselves as being committed to an audience may be discovered to have one of two types of commitments that are incompatible with commitment to the audience, thereby constituting a moral violation. Deviance in these cases does not consist of attempts to serve the audience through unconventional means, but attempts to exploit the audience for the sake of a competing interest. Insofar as this exploitation has serious implications for the audience s interests, it renders the actor an unacceptable or illegitimate exchange-partner for moral reasons. The first and most general form of moral illegitimacy is ethical. An actor s commitment to serving an audience always competes with the actor s temptation to serve himself, often at the expense of the audience. The specific content of such ethical norms will vary from culture to culture and audience to audience. But insofar as an audience regards certain practices as promoting the private good at the expense of social arrangements to which audience members are held accountable, it will demand that actors avoid such practices (and cleave to others that have the opposite effect). Canonical examples of ethical norms are injunctions against murder, theft, and rape, as well as norms against corruption and fraud. The actor who clearly violates such a serious ethical norm must be regarded as morally illegitimate i.e., someone who threatens, rather than serves, the audience. The second and more contextual form of moral violation is that of disloyalty. In this case, the competing target of commitment is a second audience that the focal audience regards as a direct rival or threat. To support one means necessarily to oppose the other. The most familiar example of a loyalty-norm violation is treason, especially at a time of war. Each of the warring parties is a greedy institution (Coser 1974) in that it cannot tolerate an actor who claims to serve it while actually serving the enemy. Two related considerations suggest why it is important to distinguish between these two kinds of moral norms. First, while violators of both ethical norms and loyalty norms are cast as morally illegitimate, the violation is more contextual in the latter case. In particular, there is always an audience who can appreciate the action, and even the focal audience can appreciate the

17 15 action as long as it is described in the abstract and without reference to the audience that is served by the action. Second, while the primary implication of all moral violations is that the actor has betrayed the audience, the violation of an ethical norm can also be understood to represent a lack of a capability. In some cases, this lack of capability compounds the problem of the betrayal of commitment, in that the actor is discovered to have falsified his performance record (e.g., doping in athletic performances or scientific fraud). However, in other cases (e.g., corruption, crimes of passion), the actor may be able to justify his betrayal as reflecting a lack of discipline i.e., that he succumbed to the short-term temptations that any actor faces when guarding others interests. In this sense, the violation itself may be condemnable, but it may be sometimes pardonable, especially if the actor seems genuine in renouncing and correcting his weakness of will. By contrast, a loyalty-norm violation cannot be regarded as reflecting a lack of capability. In fact, when analyzed without regard to audience, such a violation may be regarded as reflecting significant skill and strength of will. The problem is that this skill is applied to a rival audience. And such treason cannot be tolerated. In the next section, we return to the issue of distinguishing between these two types of moral norms. For the moment though, we clarify why the salience of both types of moral norms increases in the second stage of valuation, leading to scenarios of status disadvantage. To be sure, moral norms are quite salient in the first stage. Clearly, adherence to dress codes is a much less reliable indicator of an actor s commitment to an audience than is his engagement in actions that serve himself or a rival audience at the audience s expense. Thus, while moral norms can also serve as screens in the first stage, an actor who has yet to be selected for service by the audience is not in position to harm it. Conversely, an actor s rise in status is accompanied by an increase in the audience s vulnerability to betrayal since: (a) in the course of successfully serving the audience and thereby earning greater status, an actor is more likely to learn about features of the audience that can be exploited, either by himself or by some rival to the audience; and (b) by conferring status on an actor, an audience effectively endorses the actor s future actions, such that the actor s misdeeds reflect poorly on the audience s judgment. Thus, both the temptation to betray the audience and the potential harm to the audience from such betrayal is increasing in an actor s status. And this is why, when a moral transgression is publicized, audience members feel strong pressure to repudiate it and the actor (Adut 2005). In short, insofar as violation of a moral norm involves a betrayal of the audience s fundamental interest, there is no reason for any actor

18 16 to receive a license for violating it. And insofar as status implies greater vulnerability to betrayal on the part of the audience, the penalties for moral-norm deviance will be increasing in status. We now summarize our argument with a general proposition accounting for how an achievement-oriented audience reacts to a LDV action to produce the meritocratic outcomes, as well as the two characteristic deviations from meritocracy-- status advantage and status disadvantage. Proposition: When an achievement-oriented audience believes that a high-status actor has performed an action that (were it to perform that action exclusively) conventional valuation metrics would imply a lower status for the actor (i.e., a LDV action), three different scenarios may be observed depending on the reason the action is deemed to have a LDV. If the reason for the LDV is that the action fails to meet performance standards, the actor s status will decline to a degree that is commensurate with the gap between the capability and commitment implied by the actor s status and his revised record of performance. However, if the reason for the LDV is that the action violates a norm, two additional scenarios are predicted: (a) Status Advantage: If the norm that is violated is a membership norm, the status of the actor is not reduced because high status implies membership i.e., that the actor is sufficiently capable and committed. The violation may in fact lead to an increase in the actor s status if the violation helps the actor better meet the audience s performance standards. (b) Status Disadvantage: If the norm that is violated is a moral norm, the status of the actor is reduced since the violation implies a betrayal of commitment to the audience. Since higher status implies greater audience vulnerability to betrayal, the degree of the reduction is increasing in the actor s status. III. Empirical Case: Family vs. Personal Injury Law Our framework explains status advantage and status disadvantage scenarios to reflect the operation of two distinct types of norms-- membership and moral-- that have lesser and greater force on high-status actors. But the utility of our framework remains to be demonstrated. In particular, insofar as moral norms appear to involve more serious violations than membership

19 17 norms, it might appear that we have merely recapitulated the longstanding idea that some norms are more important than others, and that high-status actors must obey these important norms, while enjoying the freedom to transgress less important norms (Blau 1963: ; Hollander 1958; Homans 1961; cf., Alvarez 1968; Becker 1970; Giordano 1983; Menzel 1960). Why should our framework be preferred to this simpler alternative? We address this question by returning to the empirical patterns presented in Figure 1, and showing how our model addresses two aspects of these patterns that pose difficulties for the alternative model. In particular, our framework explains why: (a) acts of categorical impurity, as instantiated here by a family law (FL) practice, represent important norm violations for lowerstatus actors but not for high-status law firms; and (b) high-status (corporate) law firms avoid PIL despite the fact that it is regarded as higher status than FL. The relative status of the two fields is documented most clearly in Sandefur s (2001) analysis of the second Chicago Lawyer Study, which was conducted in 1995 (see Heinz et al. 2005), and which shows that divorce (the main line of work within FL) was the lowest status field among 42 fields of law and personal injury (plaintiffs) was 32nd. Whereas 14% of the sample thought that PIL had above average prestige or higher, only 4% of the sample think this of divorce law. We argue that the observed pattern of diversification can be reconciled with the relative status of the two fields only if we: (a) regard the categorical impurity represented by FL as reflecting a membership norm, which is used to screen out lower-status actors, but is not applied to higher-status actors; while (b) recognize engagement in PIL as a loyalty-norm violation, with such impurity of (commitment to the focal) audience being intolerable when undertaken by a high-status actor. Before elaborating on these points and then substantiating them in two empirical studies, we first note how this case matches the scope conditions set out in the previous discussion, and we clarify why the key contrast involves high versus middle status law firms. First, as with other (at least moderately competitive) economic markets, the legal services market is a setting where high-status actors cannot dominate their audiences, the primary one being their clients. Second, it is a setting where the selection of exchange partners (law firms) is justified on the basis of achievement rather than ascription. And this in turn derives from the reasonable assumption that law firms differ in their capabilities and commitments, as principally reflected by the attorneys they hire and the practice areas they choose to engage in. As a result, there is a very clear status hierarchy that is common knowledge to all participants in the market. In particular, students of

20 18 the U.S.bar (see e.g., Abel 1989; Kritzer 2004) have widely accepted Heinz and Laumann s (1982) observation that legal practice is sharply divided between a high-status corporate hemisphere (which draws on graduates of elite, nationally-competitive law school and serves corporate and wealthy clients in such practice areas as securities, tax, intellectual property, and international law) and a low-status personal plight hemisphere (which draws on graduates of regional law schools and serves individual clients in such areas as landlord/tenant, immigration, consumer protection, criminal defense, PIL, and FL). 6 Finally, our specific question why highstatus corporate law firms apparently suffer no penalty for engaging in FL, but are barred from practicing PIL-- pertains to activities that have a clear default value that implies low status, as suggested by results from the second Chicago Lawyers Study. Note further that while law firms might choose to hide such activities, we focus specifically on cases where the firms choose to announce their diversification into these lines of business. In short, diversification by a highstatus law firm into either PIL or FL constitutes the kind of action we are trying to understand, whereby a high-status actor commits an action that, were he to perform that action exclusively, he would merit a lower status (i.e., a LDV action). A final note concerns the lowest-status firms, which Figure 1 shows enter both PIL and FL. Phillips and Zuckerman (2001) explain why such low-status firms should be expected to violate the norms associated with the corporate hemisphere. In particular, as in many systems, they represent observable outsiders -- actors who essentially have no possibility of upward mobility and thus cease to attempt to do so. They are most associated with the low-status work of the personal plight hemisphere. Neither of the competing theories under consideration i.e, our framework or the received theory focusing on norm-importance would expect such actors to adhere to the norms of the corporate hemisphere. But the pattern of diversification by highstatus firms into low-status practice areas is puzzling for the received theory. FL as Categorical Impurity (Membership-Norm Violation) Let us first consider why the pattern of diversification into FL is awkward for this received theory. Insofar as such diversification is permissible for high-status actors, this theory would 6 Heinz et al. s (2005) analysis of their 1995 survey suggests a bit more differentiated picture of the (Chicago) bar than had been apparent in Heinz and Laumann s (1982) 1975 survey, where there also exists a personal/small business segment (consisting of such fields as personal tax, personal real estate, probate) and a political segment (criminal prosecution and municipal law). Our quantitative models address this through dummy variables for 14 additional practice areas.

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