Page 94 - The Handbook - Law Firm Networks
P. 94
Law Firm Networks – The Future of the Legal Profession
Joining a network is different for law firms, which are not as leveraged as accounting firms. Participation
will be different depending on the size of the member firms. For example, the ratio of associates to partners
in the United States is 0.64; e.g., a firm with 50 lawyers would have 33 partners and 17 associates. As a firm
grows, the ratio increases so that firms of more than 150 lawyers have a ratio of two associates per partner, or
50 partners and 100 associates.414 What this means is that a medium-size law firm will be better able to
communicate with everyone in their firm about their network membership; with partners paying for dues and
other expenses, more than 50 percent of the firm will be aware of their membership.
In the larger firms of more than 150 attorneys, as the relative number of partners decreases and the number of
associates increases, the difficulty of increasing awareness of the network is compounded. Partners and
associates are not aware of network membership because they are not engaged in network activities.
Participation is delegated to specific individuals. Membership may be only a small line item on the budget.
Successful networks must evaluate the idea of involving more attorneys when creating its programs to
increase awareness and create engagement. Associates will be the partners of the future and should be
provided the opportunity to participate.
Legal networks have not been able to establish a brand or identity. Many lawyers only know that their firm
belongs to “a network” but do not recognize the name when asked. For example, there are 77 networks that
are based in Europe, but outside of the network itself no one is familiar with them. The lack of a brand is
illustrated by the amount of press that legal networks receive when there is an event that should be news
affecting the network. For example, there are large networks like Lex Mundi, World Services Group, and
TerraLex that have very large European memberships. Interestingly, a search at “The Lawyer” magazine415
revealed only 58 references to Lex Mundi over 15 years, even though it has 21,000 attorneys. The same
search for Allen Overy, a small firm in comparison to Lex Mundi, produced more than 8,000 references.
The ultimate success of law firm networks will be determined by how they can position themselves, not
against one another, but from the perspective of clients. Legal networks are in competition today with the
largest law firms, those having 30 or more offices.416 The vereins and Big 4 are beginning to see themselves
as branded networks of independent firms. However, the second-class status of legal networks will not
change unless the leading established networks actually think of themselves as huge organizations with
hundreds of offices and cumulative revenues that by far exceed the largest 10 law firms.417 If they continue to
consider themselves mere extensions of their members, they will not be in a position to compete.
While the agency law for vicarious liability applies to all networks, vicarious liability requires significant
integration of professional services providers to be liable. Accounting firms, even when they go under the
same name, use the same logo, stationary, and manuals, and have to date been able to avoid the liability. Law
firm networks have a lot of room for development under this case law. 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 issue for law firm networks is that members have different 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. Each law firm is somewhat unique
414 The average ratio of associates to partners in law firms nationwide is 0.64, i.e., 64 associates for every 100 partners. The ratio of all lawyers
(including non-equity partners, associates, staff lawyers, etc.) to equity partners is 1.32, and rises to 2.01 in firms with more than 150 lawyers. New
Survey Provides Snapshot of Law Firm Economics Across the U.S., ALTMAN WEIL,
www.altmanweil.com/index.cfm/fa/r.resource_detail/oid/87716caa-56df-4ad9-b375-
9e9366ba6d60/resource/New_Survey_Provides_Snapshot_of_Law_Firm_Economics_Across_US.cfm (last visited Feb. 6,
2016).
415 THE LAWYER, www.thelawyer.com (last visited Feb. 6, 2016).
416 See infra Appendix 2.
417 Id.
83
Joining a network is different for law firms, which are not as leveraged as accounting firms. Participation
will be different depending on the size of the member firms. For example, the ratio of associates to partners
in the United States is 0.64; e.g., a firm with 50 lawyers would have 33 partners and 17 associates. As a firm
grows, the ratio increases so that firms of more than 150 lawyers have a ratio of two associates per partner, or
50 partners and 100 associates.414 What this means is that a medium-size law firm will be better able to
communicate with everyone in their firm about their network membership; with partners paying for dues and
other expenses, more than 50 percent of the firm will be aware of their membership.
In the larger firms of more than 150 attorneys, as the relative number of partners decreases and the number of
associates increases, the difficulty of increasing awareness of the network is compounded. Partners and
associates are not aware of network membership because they are not engaged in network activities.
Participation is delegated to specific individuals. Membership may be only a small line item on the budget.
Successful networks must evaluate the idea of involving more attorneys when creating its programs to
increase awareness and create engagement. Associates will be the partners of the future and should be
provided the opportunity to participate.
Legal networks have not been able to establish a brand or identity. Many lawyers only know that their firm
belongs to “a network” but do not recognize the name when asked. For example, there are 77 networks that
are based in Europe, but outside of the network itself no one is familiar with them. The lack of a brand is
illustrated by the amount of press that legal networks receive when there is an event that should be news
affecting the network. For example, there are large networks like Lex Mundi, World Services Group, and
TerraLex that have very large European memberships. Interestingly, a search at “The Lawyer” magazine415
revealed only 58 references to Lex Mundi over 15 years, even though it has 21,000 attorneys. The same
search for Allen Overy, a small firm in comparison to Lex Mundi, produced more than 8,000 references.
The ultimate success of law firm networks will be determined by how they can position themselves, not
against one another, but from the perspective of clients. Legal networks are in competition today with the
largest law firms, those having 30 or more offices.416 The vereins and Big 4 are beginning to see themselves
as branded networks of independent firms. However, the second-class status of legal networks will not
change unless the leading established networks actually think of themselves as huge organizations with
hundreds of offices and cumulative revenues that by far exceed the largest 10 law firms.417 If they continue to
consider themselves mere extensions of their members, they will not be in a position to compete.
While the agency law for vicarious liability applies to all networks, vicarious liability requires significant
integration of professional services providers to be liable. Accounting firms, even when they go under the
same name, use the same logo, stationary, and manuals, and have to date been able to avoid the liability. Law
firm networks have a lot of room for development under this case law. 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 issue for law firm networks is that members have different 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. Each law firm is somewhat unique
414 The average ratio of associates to partners in law firms nationwide is 0.64, i.e., 64 associates for every 100 partners. The ratio of all lawyers
(including non-equity partners, associates, staff lawyers, etc.) to equity partners is 1.32, and rises to 2.01 in firms with more than 150 lawyers. New
Survey Provides Snapshot of Law Firm Economics Across the U.S., ALTMAN WEIL,
www.altmanweil.com/index.cfm/fa/r.resource_detail/oid/87716caa-56df-4ad9-b375-
9e9366ba6d60/resource/New_Survey_Provides_Snapshot_of_Law_Firm_Economics_Across_US.cfm (last visited Feb. 6,
2016).
415 THE LAWYER, www.thelawyer.com (last visited Feb. 6, 2016).
416 See infra Appendix 2.
417 Id.
83
