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Law and Accounting Networks and Associations
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.82 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,83 (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.84
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.85 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.86
Today there are more than 170 legal networks87 and more than 40 accounting networks.88 Their sizes range
from multibillion-dollar global networks, such as the Big 4, to small specialist associations.89 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.
82 CORRESPONDENT BANKS, www.svpco.com/payment_services/check_image_exchange/connect/001591.php.
83 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.
84 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).
85 See infra Chapter 6, Marketing the Network – Creating the Brand.
86 M. Firth, Price Setting and the Value of a Strong Brand Name, 10 INT’L J. OF RES. IN MARKETING 381, 381-386 (1993).
87 See infra Appendix 2.
88 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.
89 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.
13
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.82 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,83 (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.84
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.85 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.86
Today there are more than 170 legal networks87 and more than 40 accounting networks.88 Their sizes range
from multibillion-dollar global networks, such as the Big 4, to small specialist associations.89 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.
82 CORRESPONDENT BANKS, www.svpco.com/payment_services/check_image_exchange/connect/001591.php.
83 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.
84 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).
85 See infra Chapter 6, Marketing the Network – Creating the Brand.
86 M. Firth, Price Setting and the Value of a Strong Brand Name, 10 INT’L J. OF RES. IN MARKETING 381, 381-386 (1993).
87 See infra Appendix 2.
88 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.
89 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.
13
