Page 26 - The Handbook - Law Firm Networks 2018
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The Handbook: Law Firm Networks
Chapter 3 – History of Networks– Why Does They Matter?
Networks of professional services firms date to the 19th century with correspondent banks. In order to secure
assets, banks established networks and internal regulations for the transfer of funds. These networks were the
first organizations that operated independently of the members. The network established a set of common
standards with an organization that applied these standards for the benefit of members and clients.103 The
correspondent banking system also represented the first form of a global structure that prevails today.
In the last 25 years, the trend toward networks has been accelerated by a number of factors including (1)
globalization,104 (2) competition, (3) client regulations, and (4) the need for access to information. It is
simply impossible for a single professional services firm to be in every market where their clients require
services.105 Network membership addresses each of these environmental factors. As an alternative structure,
members can have access to offices in every city in the world. They can compete against the much larger
entities and address the myriad of new regulations affecting their clients. Access to information is essentially
unlimited.
The networks themselves are a reflection of the professions in which they are found. In professional services,
the principal of client-driven networks was first applied to accounting firms and later was extended to the
legal profession. The accounting networks reflect the clients’ needs for audit services in many different states
and countries. The legal networks reflect the fact that large law firms with offices in other states or countries
sought to seduce the clients of local firms by offering their more extensive services. The members need a
network to be able to offer the same level of services. An organized and well-managed network is the best
option for independent firms.
Networks are, however, more than organized structures in which members can service clients. They are
entities separate and distinct from the members. In this sense networks can establish a recognizable internal
and external brand for their members.106 Internal branding of a network instills confidence in it and its
members. Externally branding a network can increase the actual price of its services by distinguishing its
brand from those of its competitors.107
Today there are more than 170 legal networks108 and more than 40 accounting networks.109 Their sizes range
from multibillion-dollar global networks, such as the Big 4, to small specialist associations.110 Both face
similar issues. Each must translate a model into concrete results for members and their clients. To see how
this is done, it is necessary to look at the different levels of development of individual networks.
103 CORRESPONDENT BANKS, www.svpco.com/payment_services/check_image_exchange/connect/001591.php (last visited Jan. 30,
2016).
104 Harvard Law School Center on the Legal Profession reported in the Am Law Global 100 that U.S. law firms had 10 percent of
their lawyers based outside of the U.S., as compared to 26 percent of the non-U.S. firms. The U.S. firms averaged five offices.
HARVARD LAW SCHOOL, www.law.harvard.edu/programs/plp/pages/statistics.php#sotflf (last visited Jan. 30, 2016).
105 C. Silver, Globalization and the U.S. Legal Market in Legal Services – Shifting Identities, 31 L & POLY IN INT’L BUS. 1127-29
(2000); Rachel Baskerville & David Hat, Globalization of Professional Accounting: The Big 8 Entering New Zealand, (University of
Exeter, Dept. of Accounting, Working Paper, 2006), available at http://hdl.handle.net/10036/29637; see also H. A. Perera et. al,
Globalization and the Major Accounting Firms, 13 AUSTRALIAN ACCOUNT. REV., 27, 27-37 (2003).
106 See infra Chapter 6, Marketing the Network – Creating the Brand.
107 M. Firth, Price Setting and the Value of a Strong Brand Name, 10 INT’L J. OF RES. IN MARKETING 381, 381-386 (1993).
108 See infra Appendix 2.
109 Philip Smith, Top 40 Networks 2015: The Survey, ACCOUNTANCY AGE, July 9, 2012, www.accountancyage.com/aa/analysis/1776670/top-35-
networks-2013-the-survey.
110 Networks and associations of accounting firms are unusually ranked by the cumulative revenues of all of their members. They can be ranked by
total staff, professionals, and partners.
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Chapter 3 – History of Networks– Why Does They Matter?
Networks of professional services firms date to the 19th century with correspondent banks. In order to secure
assets, banks established networks and internal regulations for the transfer of funds. These networks were the
first organizations that operated independently of the members. The network established a set of common
standards with an organization that applied these standards for the benefit of members and clients.103 The
correspondent banking system also represented the first form of a global structure that prevails today.
In the last 25 years, the trend toward networks has been accelerated by a number of factors including (1)
globalization,104 (2) competition, (3) client regulations, and (4) the need for access to information. It is
simply impossible for a single professional services firm to be in every market where their clients require
services.105 Network membership addresses each of these environmental factors. As an alternative structure,
members can have access to offices in every city in the world. They can compete against the much larger
entities and address the myriad of new regulations affecting their clients. Access to information is essentially
unlimited.
The networks themselves are a reflection of the professions in which they are found. In professional services,
the principal of client-driven networks was first applied to accounting firms and later was extended to the
legal profession. The accounting networks reflect the clients’ needs for audit services in many different states
and countries. The legal networks reflect the fact that large law firms with offices in other states or countries
sought to seduce the clients of local firms by offering their more extensive services. The members need a
network to be able to offer the same level of services. An organized and well-managed network is the best
option for independent firms.
Networks are, however, more than organized structures in which members can service clients. They are
entities separate and distinct from the members. In this sense networks can establish a recognizable internal
and external brand for their members.106 Internal branding of a network instills confidence in it and its
members. Externally branding a network can increase the actual price of its services by distinguishing its
brand from those of its competitors.107
Today there are more than 170 legal networks108 and more than 40 accounting networks.109 Their sizes range
from multibillion-dollar global networks, such as the Big 4, to small specialist associations.110 Both face
similar issues. Each must translate a model into concrete results for members and their clients. To see how
this is done, it is necessary to look at the different levels of development of individual networks.
103 CORRESPONDENT BANKS, www.svpco.com/payment_services/check_image_exchange/connect/001591.php (last visited Jan. 30,
2016).
104 Harvard Law School Center on the Legal Profession reported in the Am Law Global 100 that U.S. law firms had 10 percent of
their lawyers based outside of the U.S., as compared to 26 percent of the non-U.S. firms. The U.S. firms averaged five offices.
HARVARD LAW SCHOOL, www.law.harvard.edu/programs/plp/pages/statistics.php#sotflf (last visited Jan. 30, 2016).
105 C. Silver, Globalization and the U.S. Legal Market in Legal Services – Shifting Identities, 31 L & POLY IN INT’L BUS. 1127-29
(2000); Rachel Baskerville & David Hat, Globalization of Professional Accounting: The Big 8 Entering New Zealand, (University of
Exeter, Dept. of Accounting, Working Paper, 2006), available at http://hdl.handle.net/10036/29637; see also H. A. Perera et. al,
Globalization and the Major Accounting Firms, 13 AUSTRALIAN ACCOUNT. REV., 27, 27-37 (2003).
106 See infra Chapter 6, Marketing the Network – Creating the Brand.
107 M. Firth, Price Setting and the Value of a Strong Brand Name, 10 INT’L J. OF RES. IN MARKETING 381, 381-386 (1993).
108 See infra Appendix 2.
109 Philip Smith, Top 40 Networks 2015: The Survey, ACCOUNTANCY AGE, July 9, 2012, www.accountancyage.com/aa/analysis/1776670/top-35-
networks-2013-the-survey.
110 Networks and associations of accounting firms are unusually ranked by the cumulative revenues of all of their members. They can be ranked by
total staff, professionals, and partners.
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