Page 45 - The Handbook - Legal and Accounting Networks 81
P. 45
Law and Accounting Networks and Associations
collective productivity, however, groups concern themselves with identity maintenance
where recognition, fear of shame, and peer pressure play a role. (Author’s Note: This is
very different from hierarchical arrangements because the members have their own self-
identities.)
Governance strategy must assure communications, be consistent with long-term objectives,
and offer collective solutions for global problems. Consensus building is a key part. Shared
control in network organizations leads to more consensus management which tends to
increase “buy-in” among employees affected by new decisions. Participatory involvement
of committees and line management in the process of setting strategy increases group
member acceptance of and responsibility for final recommendations.203 The upside is
higher levels of commitment to the network. Sharing control almost always involves
investment inefficiencies.204
As the network evolves into business with both formal and informal internal structures, it will adopt and modify
governance structures. The success of the structure and management will determine the success of the network.
They will effectively set the natural limits for growth and development.
Governance – Applications to Professional Services Network. The significance of governance issues will vary
by the level of network and type of member firms. They will also vary by the size of the network, i.e., the
number of members, and the geographic coverage of the membership. This section will focus on Level 2 and
3 networks since Level 4 networks often have corporate type structures and corporate authority to command
and control their members.
Level 1 networks are almost too informal to have governance issues. The simplest networks are without staff
and have few organized activities. Dues structures, if they exist, cover essential costs. An informal association
is created by a group of “best friends.” There is no organization other than the relationship between these
friends. The contact among the members is usually at an annual get-together and/or by way of referrals. There
is little knowledge of the association of the members. A staff person at one of the firms usually administers the
network. The governance issues are simply related to the personalities of those involved. Since the network is
not organized, there are no real costs associated with a malfunction of the governing process.
Governance issues are first found in Level 2 networks. As seen in Table 1, the size of the budget and scope of
the activities are going to create governance issues. In addition, since a number of Level 2 networks are
international, there are some additional issues involving culture and business practices. For example, different
cultures have different attitudes toward payment of fees. While timely payment of dues is expected, it is not
uncommon to have members from different regions perennially pay late under network standards. This creates
a conflict between the governing body and the members.
Because Level 2 networks are commonly composed of comparatively small firms, the firms have a lot in
common. There is a general consensus on the purposes, goals, and objectives of the network. The scope of the
activity is defined and restricted by the amount of funds available. The combination of these factors makes
governance of Level 2 networks relatively straightforward.
The directors have a more hands-on role in Level 2 networks. They may be responsible for recruiting new
members.205 There may also be a finance committee, website committee, marketing committee, and others.
203 Van Alstyne, supra note 9, citing R. Howard, The CEO as Organizational Architect: An Interview with Xerox's Paul Allaire, HARV. BUS. REV.
(Sept.-Oct. 1992); see also T. PETERS, LIBERATION MANAGEMENT: NECESSARY DISORGANIZATION FOR THE NANOSECOND NINETIES 834 (1992).
204 Van Alstyne, supra note 9, citing S. J. Grossman & O. D. Hart, The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,
94 J. OF POL. ECON. 691, 719 (1986).
205 Membership, LAWYERS ASSOCIATED WORLDWIDE, www.lawyersworldwide.com/join_law/membership_criteria/.
33
collective productivity, however, groups concern themselves with identity maintenance
where recognition, fear of shame, and peer pressure play a role. (Author’s Note: This is
very different from hierarchical arrangements because the members have their own self-
identities.)
Governance strategy must assure communications, be consistent with long-term objectives,
and offer collective solutions for global problems. Consensus building is a key part. Shared
control in network organizations leads to more consensus management which tends to
increase “buy-in” among employees affected by new decisions. Participatory involvement
of committees and line management in the process of setting strategy increases group
member acceptance of and responsibility for final recommendations.203 The upside is
higher levels of commitment to the network. Sharing control almost always involves
investment inefficiencies.204
As the network evolves into business with both formal and informal internal structures, it will adopt and modify
governance structures. The success of the structure and management will determine the success of the network.
They will effectively set the natural limits for growth and development.
Governance – Applications to Professional Services Network. The significance of governance issues will vary
by the level of network and type of member firms. They will also vary by the size of the network, i.e., the
number of members, and the geographic coverage of the membership. This section will focus on Level 2 and
3 networks since Level 4 networks often have corporate type structures and corporate authority to command
and control their members.
Level 1 networks are almost too informal to have governance issues. The simplest networks are without staff
and have few organized activities. Dues structures, if they exist, cover essential costs. An informal association
is created by a group of “best friends.” There is no organization other than the relationship between these
friends. The contact among the members is usually at an annual get-together and/or by way of referrals. There
is little knowledge of the association of the members. A staff person at one of the firms usually administers the
network. The governance issues are simply related to the personalities of those involved. Since the network is
not organized, there are no real costs associated with a malfunction of the governing process.
Governance issues are first found in Level 2 networks. As seen in Table 1, the size of the budget and scope of
the activities are going to create governance issues. In addition, since a number of Level 2 networks are
international, there are some additional issues involving culture and business practices. For example, different
cultures have different attitudes toward payment of fees. While timely payment of dues is expected, it is not
uncommon to have members from different regions perennially pay late under network standards. This creates
a conflict between the governing body and the members.
Because Level 2 networks are commonly composed of comparatively small firms, the firms have a lot in
common. There is a general consensus on the purposes, goals, and objectives of the network. The scope of the
activity is defined and restricted by the amount of funds available. The combination of these factors makes
governance of Level 2 networks relatively straightforward.
The directors have a more hands-on role in Level 2 networks. They may be responsible for recruiting new
members.205 There may also be a finance committee, website committee, marketing committee, and others.
203 Van Alstyne, supra note 9, citing R. Howard, The CEO as Organizational Architect: An Interview with Xerox's Paul Allaire, HARV. BUS. REV.
(Sept.-Oct. 1992); see also T. PETERS, LIBERATION MANAGEMENT: NECESSARY DISORGANIZATION FOR THE NANOSECOND NINETIES 834 (1992).
204 Van Alstyne, supra note 9, citing S. J. Grossman & O. D. Hart, The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,
94 J. OF POL. ECON. 691, 719 (1986).
205 Membership, LAWYERS ASSOCIATED WORLDWIDE, www.lawyersworldwide.com/join_law/membership_criteria/.
33
