Page 168 - The Handbook - Law Firm Networks 2018
P. 168
The Handbook - Law Firm Networks
Appendix 8 Law vereins as networks
Definition of a Verein
A verein is “an association, society, club, or union.” CASSELL’S GERMAN DICTIONARY 662 (1978); see
also LANGENSCHEIDT DICTIONARY OF THE ENGLISH AND GERMAN LANGUAGES 1163 (6th ed. 1970).
It is also defined in Newsweek as “a German word meaning association, club or network.” Lynnley
Browning, Legal Swiss Cheese, NEWSWEEK, Dec. 15, 2014, www.newsweek.com/legal-swiss-cheese-
291745.
The term is commonly used for clubs in sports, non-profit organizations, and NGOs in which the
members have no formal affiliation, but do share common interests or purposes. Vereins are not
partnerships, corporations, or other legal entities, but a type of contractual arrangement between parties.
Self-definition: Networks commonly refer to themselves as groups, i.e., Advocacy Group, Energy Law
Group, European Law Group, World Law Group, World Services Group, and more. Dentons, a verein,
uses the same language: “Dentons Group (a Swiss Verein) does not itself provide legal or other client
services.”434
Swiss Civil Code: Law governing vereins. Schweizerisches Zivilgesetzbuch (ZGB), Code Civil (CC)
Dec. 10, 1907, SR 210, RS210, art.61 (Switz.).
What is a Verein in Professional Services?
In prior years, vereins were associations/networks used by the Big 4 and other accounting firms. While
registrations have changed from Switzerland to other countries, their organizational structure remains in
place as networks of independent firms (see table below.) They are organizations whose members provide
more than $100 billion dollars’ worth of annual accounting and consulting services (Accountancy
Magazine).
The verein entered the legal profession only in the past 12 years. Baker & McKenzie, the world’s most
recognized and largest law firm, reconstituted itself as a verein in 2004. The other six vereins were the
result of combining existing firms to operate under a new name, similar to any number of networks or
alliances.
In essence, a verein permits “tax, accounting and partner compensation systems (to remain) separate
while allowing strategy, branding, information technology and other core functions to be shared between
the constituent partnerships.”435 This is very different from a law firm.
Given that the “traditional” law firm is a partnership type structure, vereins were immediately critiqued as
being “just a brand.” They were also questioned as to whether they operated in contravention of
regulations governing the legal profession. This is because their members are independent and do not
operate as one fiscal unit. It was argued that they do share revenues, as they also share expenses. The
expenses are paid for by a percentage contribution of total revenue and a percentage of each referral from
other members. To use a recently-coined term, they are “pay-to-play.”
434 See DENTONS, LEGAL NOTICES, http://www.dentons.com/en/legal-notices (last visited July 22, 2016).
435 Chris Johnson, Global Law Firms and Vereins: The End of the Affair? The Am Law Daily, March 22, 2017 discusses the rise of the CLG as an
alternative form of network that reduces the risk of vicarious liability; Nick Jarrett-Kerr & Ed Wesemann, Enter the Swiss Verein: 21st-Century
Global Platform or Just the Latest Fad?, EDGE INT’L, Oct. 2012, www.edge.ai/2012/10/enter-swiss-verein.
155
Appendix 8 Law vereins as networks
Definition of a Verein
A verein is “an association, society, club, or union.” CASSELL’S GERMAN DICTIONARY 662 (1978); see
also LANGENSCHEIDT DICTIONARY OF THE ENGLISH AND GERMAN LANGUAGES 1163 (6th ed. 1970).
It is also defined in Newsweek as “a German word meaning association, club or network.” Lynnley
Browning, Legal Swiss Cheese, NEWSWEEK, Dec. 15, 2014, www.newsweek.com/legal-swiss-cheese-
291745.
The term is commonly used for clubs in sports, non-profit organizations, and NGOs in which the
members have no formal affiliation, but do share common interests or purposes. Vereins are not
partnerships, corporations, or other legal entities, but a type of contractual arrangement between parties.
Self-definition: Networks commonly refer to themselves as groups, i.e., Advocacy Group, Energy Law
Group, European Law Group, World Law Group, World Services Group, and more. Dentons, a verein,
uses the same language: “Dentons Group (a Swiss Verein) does not itself provide legal or other client
services.”434
Swiss Civil Code: Law governing vereins. Schweizerisches Zivilgesetzbuch (ZGB), Code Civil (CC)
Dec. 10, 1907, SR 210, RS210, art.61 (Switz.).
What is a Verein in Professional Services?
In prior years, vereins were associations/networks used by the Big 4 and other accounting firms. While
registrations have changed from Switzerland to other countries, their organizational structure remains in
place as networks of independent firms (see table below.) They are organizations whose members provide
more than $100 billion dollars’ worth of annual accounting and consulting services (Accountancy
Magazine).
The verein entered the legal profession only in the past 12 years. Baker & McKenzie, the world’s most
recognized and largest law firm, reconstituted itself as a verein in 2004. The other six vereins were the
result of combining existing firms to operate under a new name, similar to any number of networks or
alliances.
In essence, a verein permits “tax, accounting and partner compensation systems (to remain) separate
while allowing strategy, branding, information technology and other core functions to be shared between
the constituent partnerships.”435 This is very different from a law firm.
Given that the “traditional” law firm is a partnership type structure, vereins were immediately critiqued as
being “just a brand.” They were also questioned as to whether they operated in contravention of
regulations governing the legal profession. This is because their members are independent and do not
operate as one fiscal unit. It was argued that they do share revenues, as they also share expenses. The
expenses are paid for by a percentage contribution of total revenue and a percentage of each referral from
other members. To use a recently-coined term, they are “pay-to-play.”
434 See DENTONS, LEGAL NOTICES, http://www.dentons.com/en/legal-notices (last visited July 22, 2016).
435 Chris Johnson, Global Law Firms and Vereins: The End of the Affair? The Am Law Daily, March 22, 2017 discusses the rise of the CLG as an
alternative form of network that reduces the risk of vicarious liability; Nick Jarrett-Kerr & Ed Wesemann, Enter the Swiss Verein: 21st-Century
Global Platform or Just the Latest Fad?, EDGE INT’L, Oct. 2012, www.edge.ai/2012/10/enter-swiss-verein.
155
