Page 153 - MASTER COPY LEADERS BOOK 9editedJKK (24)_Neat
P. 153
Leaders in Legal Business
revenues that by far exceed the largest 10 law firms.4 If they continue to consider themselves mere extensions of
their members, they will not be in a position to compete.
One issue for law firm networks is that members have multifarious interests. Accounting network
members are more homogenous because their functions of audit, tax, and financial consulting are spread
throughout each member firm. Accounting network members tend to have similar clients seeking similar services.
On the other hand, law has few major functions but hundreds of subgroups and niches within each subgroup. For
example, if a business hires an employer then fires the employee for misconduct, the overarching principles of
contract law and tort law apply. However, because the contract arose between a corporation and an individual and
the employee was terminated for misconduct, a business lawyer as well as a labor/employment lawyer would be
recommended. In addition to niche practice areas, each law firm is somewhat unique because its specialty reflects
the locations in which it operates. Because priorities are different, it can be difficult to get a consensus.
At the outset, another issue facing networks is vicarious liability, a legal theory of recovery that potentially
imputes liability for certain acts by a member of a group to the entire group. Under agency law, vicarious liability
applies to all networks, but vicarious liability requires significant integration of professional services providers to
be liable. Accounting firms who use the same name, the same logo, the same stationary, and even the same
manuals have avoided and been absolved of liability to date. Under the same principles, law firm networks have
a lot of room for development under this case law because membership in a network does not require the use of
the same trademark or materials. Additionally, it is not likely that many law firms would refer to themselves as
“Jones, Smith & Jones TerraLex” or “TerraLex Brazil.” Until this happens, law firms are not limited in the amount
of branding they can undertake to compete with the 20 largest firms.
The ability of a law firm to recognize a need for a global presence can directly contribute the success of
a law firm network. Globalization is not just about how clients of firms do business but also the uniformity in
conducting business. On one side, global competition makes life more difficult for the client. On the other side,
clients presented with global opportunities need their advisors’ assistance in guiding them in this direction.
Network membership is the best vehicle for this. Firms do not have to merge to provide this assistance, and
different cultures and business environments can be accommodated.
It is also very important to note that the success of a law firm network is not always associated with
becoming increasingly complex in its structure and accelerating activities. Meeting the expectations of the
members is also the objective. However, this does not mean that any network, aside from Level 1 clubs, should
be complacent. Legal networks can develop and mature if more information is available for their members. Each
network must position itself with its members in a way that always anticipates members’ needs.
Predictions:
1. Law firm networks will become mainstream models for global legal services. The models will be
adopted by large law firms in order to grow and manage their global businesses. This convergence
will enhance the status of the traditional leading networks, founded in the 1990s, which will be
recognized as leaders. When this occurs by 2020, the competitive landscape will change.
2. Law firms will increasingly brand themselves as members of a network in the same way
accounting firms currently do. This will be done with printed and online materials. The Big 10,
15, or 20 network brands will emerge in the market from this increased presence.
3. Networks will become increasingly sophisticated in the use of technology to create networking
opportunities. The costs of dues will increase dramatically for smaller networks to compete with
the large firm networks (in Prediction 1 above) and with the large first-mover networks.
4 Id.
146
revenues that by far exceed the largest 10 law firms.4 If they continue to consider themselves mere extensions of
their members, they will not be in a position to compete.
One issue for law firm networks is that members have multifarious interests. Accounting network
members are more homogenous because their functions of audit, tax, and financial consulting are spread
throughout each member firm. Accounting network members tend to have similar clients seeking similar services.
On the other hand, law has few major functions but hundreds of subgroups and niches within each subgroup. For
example, if a business hires an employer then fires the employee for misconduct, the overarching principles of
contract law and tort law apply. However, because the contract arose between a corporation and an individual and
the employee was terminated for misconduct, a business lawyer as well as a labor/employment lawyer would be
recommended. In addition to niche practice areas, each law firm is somewhat unique because its specialty reflects
the locations in which it operates. Because priorities are different, it can be difficult to get a consensus.
At the outset, another issue facing networks is vicarious liability, a legal theory of recovery that potentially
imputes liability for certain acts by a member of a group to the entire group. Under agency law, vicarious liability
applies to all networks, but vicarious liability requires significant integration of professional services providers to
be liable. Accounting firms who use the same name, the same logo, the same stationary, and even the same
manuals have avoided and been absolved of liability to date. Under the same principles, law firm networks have
a lot of room for development under this case law because membership in a network does not require the use of
the same trademark or materials. Additionally, it is not likely that many law firms would refer to themselves as
“Jones, Smith & Jones TerraLex” or “TerraLex Brazil.” Until this happens, law firms are not limited in the amount
of branding they can undertake to compete with the 20 largest firms.
The ability of a law firm to recognize a need for a global presence can directly contribute the success of
a law firm network. Globalization is not just about how clients of firms do business but also the uniformity in
conducting business. On one side, global competition makes life more difficult for the client. On the other side,
clients presented with global opportunities need their advisors’ assistance in guiding them in this direction.
Network membership is the best vehicle for this. Firms do not have to merge to provide this assistance, and
different cultures and business environments can be accommodated.
It is also very important to note that the success of a law firm network is not always associated with
becoming increasingly complex in its structure and accelerating activities. Meeting the expectations of the
members is also the objective. However, this does not mean that any network, aside from Level 1 clubs, should
be complacent. Legal networks can develop and mature if more information is available for their members. Each
network must position itself with its members in a way that always anticipates members’ needs.
Predictions:
1. Law firm networks will become mainstream models for global legal services. The models will be
adopted by large law firms in order to grow and manage their global businesses. This convergence
will enhance the status of the traditional leading networks, founded in the 1990s, which will be
recognized as leaders. When this occurs by 2020, the competitive landscape will change.
2. Law firms will increasingly brand themselves as members of a network in the same way
accounting firms currently do. This will be done with printed and online materials. The Big 10,
15, or 20 network brands will emerge in the market from this increased presence.
3. Networks will become increasingly sophisticated in the use of technology to create networking
opportunities. The costs of dues will increase dramatically for smaller networks to compete with
the large firm networks (in Prediction 1 above) and with the large first-mover networks.
4 Id.
146
