Page 52 - The Handbook - Law Firm Networks 2018
P. 52
The Handbook: Law Firm Networks
One alternative is to have an objective standard. In the legal profession this commonly is the number of
attorneys. In some networks this may be the number of partners. In others it could be everyone who is an
attorney. The network must also be able to monitor the dues itself. This is straightforward in the legal
profession, since law firms typically state the number of lawyers on their websites and in many publications.
Another method would be the firm’s annual turnover. For accounting firms, this is the best because they are
used to reporting income to their networks. The income would reflect the ability to pay. The accounting
networks annually report their total cumulative incomes and have the figure for each member.
A referral fee could be another source of revenue. When the referring firms send business to other network
members, they get a small percentage of the total fee. The network would also get a percentage. In the
accounting profession it is permissible for the networks to charge a referral fee. This is not permitted in law
firm networks, as various bar regulations prohibit referral fees.246
Setting the dues will revolve around establishing a budget. For a network to be successful, the dues must be
sufficient to operate it. This will be dependent upon the consensus established by the organizing committee
and with the initial members. It is important that the amount not be set too low, as that will affect the activity
level. On the other hand, dues may be perceived by others as being too high and run the same risk of losing
members.
Periodically, dues must be increased to expand the network and its activities. The key to any increase is
communication, which is part of the overall strategy of keeping members informed. Awareness of network
events, meetings, developments, new projects, seminars, and the many other items discussed in this article
will easily justify such an increase.247 If, however, there has been a lack of communication, a dues increase
will be met with resistance.
Meetings are a source of both revenue and expenses; the key is establishing a strategic balance between
them. The meetings may be “pay as you go,” so that each member absorbs the actual costs plus
administrative fees. This is always the case in Level 1 networks. Networks may encourage participation by
subsidizing meetings from the general dues on the premise that if the registration fee is modest, more
members will attend. As the network matures, meetings may become a profit center.248
Meetings provide tremendous exposure for the hosting firm to other members in the network. Hundreds of
network members will be coming to the host’s city where they will meet the partners and associates. Most
networks will charge a sponsorship fee to the hosting member. The sponsorship fee should be set at a number
that reflects the exposure that the member firm will receive.
246 ABA Section Rule 7.2 – Advertising
(b) A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may
(1) pay the reasonable costs of advertisements or communications permitted by this Rule; (2) pay the usual charges of a legal
service plan or a not-for-profit or qualified lawyer referral service. A qualified lawyer referral service is a lawyer referral
service that has been approved by an appropriate regulatory authority; and (3) pay for a law practice in accordance with Rule
1.17; and(4) refer clients to another lawyer or a non-lawyer professional pursuant to an agreement not otherwise prohibited
under these Rules that provides for the other person to refer clients or customers to the lawyer, if (i) the reciprocal referral
agreement is not exclusive, and (ii) the client is informed of the existence and nature of the agreement.
247 See supra Chapter 2, Law Firm or Network? Market Perceptions and Operations – Table 1.
248 M&A INTERNATIONAL MID-MARKET FORUM, www.mergers.net/index.php?id=m_and_a_mid-market_forum (last visited Feb. 4,
2016).
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One alternative is to have an objective standard. In the legal profession this commonly is the number of
attorneys. In some networks this may be the number of partners. In others it could be everyone who is an
attorney. The network must also be able to monitor the dues itself. This is straightforward in the legal
profession, since law firms typically state the number of lawyers on their websites and in many publications.
Another method would be the firm’s annual turnover. For accounting firms, this is the best because they are
used to reporting income to their networks. The income would reflect the ability to pay. The accounting
networks annually report their total cumulative incomes and have the figure for each member.
A referral fee could be another source of revenue. When the referring firms send business to other network
members, they get a small percentage of the total fee. The network would also get a percentage. In the
accounting profession it is permissible for the networks to charge a referral fee. This is not permitted in law
firm networks, as various bar regulations prohibit referral fees.246
Setting the dues will revolve around establishing a budget. For a network to be successful, the dues must be
sufficient to operate it. This will be dependent upon the consensus established by the organizing committee
and with the initial members. It is important that the amount not be set too low, as that will affect the activity
level. On the other hand, dues may be perceived by others as being too high and run the same risk of losing
members.
Periodically, dues must be increased to expand the network and its activities. The key to any increase is
communication, which is part of the overall strategy of keeping members informed. Awareness of network
events, meetings, developments, new projects, seminars, and the many other items discussed in this article
will easily justify such an increase.247 If, however, there has been a lack of communication, a dues increase
will be met with resistance.
Meetings are a source of both revenue and expenses; the key is establishing a strategic balance between
them. The meetings may be “pay as you go,” so that each member absorbs the actual costs plus
administrative fees. This is always the case in Level 1 networks. Networks may encourage participation by
subsidizing meetings from the general dues on the premise that if the registration fee is modest, more
members will attend. As the network matures, meetings may become a profit center.248
Meetings provide tremendous exposure for the hosting firm to other members in the network. Hundreds of
network members will be coming to the host’s city where they will meet the partners and associates. Most
networks will charge a sponsorship fee to the hosting member. The sponsorship fee should be set at a number
that reflects the exposure that the member firm will receive.
246 ABA Section Rule 7.2 – Advertising
(b) A lawyer shall not give anything of value to a person for recommending the lawyer’s services except that a lawyer may
(1) pay the reasonable costs of advertisements or communications permitted by this Rule; (2) pay the usual charges of a legal
service plan or a not-for-profit or qualified lawyer referral service. A qualified lawyer referral service is a lawyer referral
service that has been approved by an appropriate regulatory authority; and (3) pay for a law practice in accordance with Rule
1.17; and(4) refer clients to another lawyer or a non-lawyer professional pursuant to an agreement not otherwise prohibited
under these Rules that provides for the other person to refer clients or customers to the lawyer, if (i) the reciprocal referral
agreement is not exclusive, and (ii) the client is informed of the existence and nature of the agreement.
247 See supra Chapter 2, Law Firm or Network? Market Perceptions and Operations – Table 1.
248 M&A INTERNATIONAL MID-MARKET FORUM, www.mergers.net/index.php?id=m_and_a_mid-market_forum (last visited Feb. 4,
2016).
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