Page 16 - Professional Services Networks
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The Handbook: Law Firm Networks
dollars. However, in a network these costs would be allocated among the full membership. The cost for
future members to gain direct and immediate access to these resources is de minimis.34
Networks do not practice a profession or provide the services that their members provide to their clients.
They operate for the benefit of the members by supporting their operations. The network can combine the
resources of the individual members without risking the loss of their personal identities or financial
independence.
A network is more than a support organization or collaborative framework in which the members can meet
clients’ needs. It is an entity entrusted with a common corporate identity. The network name can represent a
standard that is required of all its members. The network, not the members, owns the logo and brand.35
Membership can create a global corporate identity. The objective of this identity is network participation that
will translate into business for the individual independent members.
Why Do Firms Join?
When asked why they joined, members usually state that they joined for tangible reasons: to receive referrals
from other members, to have reliable firms to which they can refer, to maintain independence, to meet
clients’ needs, to retain existing clients by being able to provide services in other states or countries, and to
obtain new clients in their market who know of the membership. They may also want to exchange
knowledge that can reduce risks in firm operations36 or gain access to other resources.37
They also join for intangible reasons. In today’s world, change is a constant and is accelerating. Therefore,
having access to other members can be important.38 A network helps to reduce the degree of uncertainty by
bringing together a greater number of specialized resources to work on a problem. Network members also
reduce possible losses through burden sharing. Membership is a proactive way to profit from change and at
the same time to conserve resources. Membership can enhance the prestige of the member by being
associated with prestigious firms that the client is already using.
The purpose of a network is to create an organization that can provide for the tangible and intangible
interests of each member. The benefits may be provided by the network itself, by other members within the
framework of the network, or both.
Networks achieve these objectives in a way that is very different from corporate structures in which
executives have command and control.39 Networks emphasize reputations, commitments, and trust of each
34 See infra Chapter 3, History of Professionals Services Networks – Why Do They Matter?
35 See Banco Espirito Santo v. BDO Seidman International, in which the court discussed whether holding the intellectual property of the network was
control of the individual members by the network. Banco Espirito Santo Int’l, Ltd. v. BDO Int’l, B.V., 979 So. 2d 1030, 1031 (Fla. Cir. Ct. 2008). For
discussion of other issues of related ownership rights and control, see infra Chapter 6, Marketing the Network – Creating the Brand.
36 Van Alstyne, supra note 9. “A network both helps to reduce the degree of uncertainty by bringing a greater abundance of more specialized
resources to bear on a problem and it reduces possible loss through burden sharing. Risk is roughly defined as the need to make decisions in the face
of uncertainty. Beyond financial risk, it is variously defined as commercial risk (the chances of falling behind or finding a market niche), technology
risk (the chances of investing in unproven technology or bringing it to market), and strategic risk (misapprehension of strategic concepts or venturing
into unfamiliar markets.” For some practical discussion of the theory, see Sophie Evans, A World of Choice, LEGAL WEEK, May 25, 2006,
www.legalweek.com/legal-week/news/1173253/a-world-of-choice; see also Robert Ankeny, Alliances Provide Formal International
Network, CRAIN’S DETROIT BUSINESS, Sept. 11, 2006, at 12; see also Heather Suite, Leveraging Referral Networks, LEXPERT, June 2013, at 69; see
also Nick Jarrett-Kerr, International Alliances: How They Work, What They Deliver and Whether to Join, JARRETT-KERR, Dec. 5, 2012, www.jarrett-
kerr.com/blog/international-alliances-how-they-work-what-they-deliver-and-whether-to-join/.
37 Van Alstyne, supra note 9: “Network partnerships rely on synergy; together, collaborators earn more by pooling resources than they would earn
acting independently.”
38 Van Alstyne, supra note 9: “Competition and speed requirement are forcing an ever higher degree of local, regional and niche market
responsiveness.” See also T. Peters, LIBERATION MANAGEMENT: NECESSARY DISORGANIZATION FOR THE NANOSECOND NINETIES 834 (1999).
39 Command and Conquer, WIKIPEDIA, http://en.wikipedia.org/wiki/Command_and_control (last visited Jan. 27, 2016).
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dollars. However, in a network these costs would be allocated among the full membership. The cost for
future members to gain direct and immediate access to these resources is de minimis.34
Networks do not practice a profession or provide the services that their members provide to their clients.
They operate for the benefit of the members by supporting their operations. The network can combine the
resources of the individual members without risking the loss of their personal identities or financial
independence.
A network is more than a support organization or collaborative framework in which the members can meet
clients’ needs. It is an entity entrusted with a common corporate identity. The network name can represent a
standard that is required of all its members. The network, not the members, owns the logo and brand.35
Membership can create a global corporate identity. The objective of this identity is network participation that
will translate into business for the individual independent members.
Why Do Firms Join?
When asked why they joined, members usually state that they joined for tangible reasons: to receive referrals
from other members, to have reliable firms to which they can refer, to maintain independence, to meet
clients’ needs, to retain existing clients by being able to provide services in other states or countries, and to
obtain new clients in their market who know of the membership. They may also want to exchange
knowledge that can reduce risks in firm operations36 or gain access to other resources.37
They also join for intangible reasons. In today’s world, change is a constant and is accelerating. Therefore,
having access to other members can be important.38 A network helps to reduce the degree of uncertainty by
bringing together a greater number of specialized resources to work on a problem. Network members also
reduce possible losses through burden sharing. Membership is a proactive way to profit from change and at
the same time to conserve resources. Membership can enhance the prestige of the member by being
associated with prestigious firms that the client is already using.
The purpose of a network is to create an organization that can provide for the tangible and intangible
interests of each member. The benefits may be provided by the network itself, by other members within the
framework of the network, or both.
Networks achieve these objectives in a way that is very different from corporate structures in which
executives have command and control.39 Networks emphasize reputations, commitments, and trust of each
34 See infra Chapter 3, History of Professionals Services Networks – Why Do They Matter?
35 See Banco Espirito Santo v. BDO Seidman International, in which the court discussed whether holding the intellectual property of the network was
control of the individual members by the network. Banco Espirito Santo Int’l, Ltd. v. BDO Int’l, B.V., 979 So. 2d 1030, 1031 (Fla. Cir. Ct. 2008). For
discussion of other issues of related ownership rights and control, see infra Chapter 6, Marketing the Network – Creating the Brand.
36 Van Alstyne, supra note 9. “A network both helps to reduce the degree of uncertainty by bringing a greater abundance of more specialized
resources to bear on a problem and it reduces possible loss through burden sharing. Risk is roughly defined as the need to make decisions in the face
of uncertainty. Beyond financial risk, it is variously defined as commercial risk (the chances of falling behind or finding a market niche), technology
risk (the chances of investing in unproven technology or bringing it to market), and strategic risk (misapprehension of strategic concepts or venturing
into unfamiliar markets.” For some practical discussion of the theory, see Sophie Evans, A World of Choice, LEGAL WEEK, May 25, 2006,
www.legalweek.com/legal-week/news/1173253/a-world-of-choice; see also Robert Ankeny, Alliances Provide Formal International
Network, CRAIN’S DETROIT BUSINESS, Sept. 11, 2006, at 12; see also Heather Suite, Leveraging Referral Networks, LEXPERT, June 2013, at 69; see
also Nick Jarrett-Kerr, International Alliances: How They Work, What They Deliver and Whether to Join, JARRETT-KERR, Dec. 5, 2012, www.jarrett-
kerr.com/blog/international-alliances-how-they-work-what-they-deliver-and-whether-to-join/.
37 Van Alstyne, supra note 9: “Network partnerships rely on synergy; together, collaborators earn more by pooling resources than they would earn
acting independently.”
38 Van Alstyne, supra note 9: “Competition and speed requirement are forcing an ever higher degree of local, regional and niche market
responsiveness.” See also T. Peters, LIBERATION MANAGEMENT: NECESSARY DISORGANIZATION FOR THE NANOSECOND NINETIES 834 (1999).
39 Command and Conquer, WIKIPEDIA, http://en.wikipedia.org/wiki/Command_and_control (last visited Jan. 27, 2016).
-4-
