This article examines the challenges posed by system specialization, as illustrated by the difficulties of coordinating the roles of the mental health and law enforcement agencies working with people with severe mental illness. Dealing with the needs of clients in one system when they are most appropriately served by the other may make both law enforcement and mental health systems appear ineffective and inefficient. This could increase the incidence of disorderly or violent behavior, which foments the myth that the seriously mentally ill are inherently dangerous. Despite the evident need to manage these issues, conventional methods of coordinating services have failed. This article concludes by developing a contracting model that creates more appropriate incentives for the two systems and bridges the gap between them.