Page 168 - Professional Services Networks
P. 168
The Handbook - Law Firm Networks
Sometimes they want to be evaluated as network. This is the case for vicarious liability and conflict of
interest cases in which it is asserted that law firm rules do not apply.
Why Does It Matter? Ethics and Brand Marketing
From a client’s point of view, it should not matter whether a verein is just an esoteric German name for a
network or a law firm. Clients are interested in high-quality and cost-effective services. They are
interested in a timely response. However, clients, like any consumer of services or products, do look
toward brands. If the fine print is different from the large print, this may present an issue.
Ethics
All professions are built on an ethical foundation that relates to their profession. The legal profession’s
ethical standards have been created over centuries to protect clients. The verein/network structure is based
upon independent firms operating under a brand name. This is very favorable to law firm members in a
variety of ways. It may avoid conflicts of interest by providing the argument that the firms are
independent. This affects the client’s reliance on a lawyer’s professional independence. Having common
fiscal interests among partners assures ethical compliance. Ethics also prohibit sharing of fees when a
firm is not part of the client matter. Technically, sharing of expenses could be sharing revenues between
independent firms. However, self-characterization as a network/verein avoids this.
Even if these issues can be avoided, the problem arises when organic growth gives way to what has been
characterized as “Pac-Man” member recruitment. 436 While most vereins have been very thorough in their
expansion, Dentons is different. In just a bit more than three years (as they were registered in March of
2013437), Dentons has added many thousands of lawyers. Four thousand (4,000) of their 8,000 lawyers
come from a single firm in China that until very recently was largely a network of independent offices.438
As a network/verein, they do not have to integrate an entire firm but can select particular contacts. This is
no different than a law firm network.
On the positive side, if a network/verein is dissatisfied with a member, it is much easier to eject them
because they are not as entangled fiscally or operationally. Law firms do not have this luxury; networks
do. This can work in favor of clients because it ensures a level of quality.
Brand Marketing
Networks are brands. In accounting, the Big 4 proudly proclaim: “'Deloitte’ is the brand under which tens
of thousands of dedicated professionals in independent firms throughout the world collaborate…” They
are evaluated as such. This is not the case in the legal profession.
Being characterized as a law firm allows vereins to be evaluated in the media along with traditional
partnerships. Recruiting new independent members becomes characterized as mergers, which seems more
impressive than adding a new member. When a traditional network gets a new members, even though it
may have many hundreds of lawyers, this is not newsworthy.
Law firms are at a disadvantage when expanding internationally because they must grow organically or
truly merge. Calling something a merger does not make it so when the “merged” firm only adopts the
436 Joanne Harris, The Known Unknowns in Dentons’ Game, THE LAWYER, April 18, 2016, http://www.thelawyer.com/issues/18-april-2016/the-
known-unknowns-in-dentons-game/.
437 WIKIPEDIA, DENTONS, available at https://en.wikipedia.org/wiki/Dentons (last visited July 16, 2016).
438 In 2008 I recruited Dacheng for World Services Group and I work with them through 2014. I am familiar with their structure during this time.
156
Sometimes they want to be evaluated as network. This is the case for vicarious liability and conflict of
interest cases in which it is asserted that law firm rules do not apply.
Why Does It Matter? Ethics and Brand Marketing
From a client’s point of view, it should not matter whether a verein is just an esoteric German name for a
network or a law firm. Clients are interested in high-quality and cost-effective services. They are
interested in a timely response. However, clients, like any consumer of services or products, do look
toward brands. If the fine print is different from the large print, this may present an issue.
Ethics
All professions are built on an ethical foundation that relates to their profession. The legal profession’s
ethical standards have been created over centuries to protect clients. The verein/network structure is based
upon independent firms operating under a brand name. This is very favorable to law firm members in a
variety of ways. It may avoid conflicts of interest by providing the argument that the firms are
independent. This affects the client’s reliance on a lawyer’s professional independence. Having common
fiscal interests among partners assures ethical compliance. Ethics also prohibit sharing of fees when a
firm is not part of the client matter. Technically, sharing of expenses could be sharing revenues between
independent firms. However, self-characterization as a network/verein avoids this.
Even if these issues can be avoided, the problem arises when organic growth gives way to what has been
characterized as “Pac-Man” member recruitment. 436 While most vereins have been very thorough in their
expansion, Dentons is different. In just a bit more than three years (as they were registered in March of
2013437), Dentons has added many thousands of lawyers. Four thousand (4,000) of their 8,000 lawyers
come from a single firm in China that until very recently was largely a network of independent offices.438
As a network/verein, they do not have to integrate an entire firm but can select particular contacts. This is
no different than a law firm network.
On the positive side, if a network/verein is dissatisfied with a member, it is much easier to eject them
because they are not as entangled fiscally or operationally. Law firms do not have this luxury; networks
do. This can work in favor of clients because it ensures a level of quality.
Brand Marketing
Networks are brands. In accounting, the Big 4 proudly proclaim: “'Deloitte’ is the brand under which tens
of thousands of dedicated professionals in independent firms throughout the world collaborate…” They
are evaluated as such. This is not the case in the legal profession.
Being characterized as a law firm allows vereins to be evaluated in the media along with traditional
partnerships. Recruiting new independent members becomes characterized as mergers, which seems more
impressive than adding a new member. When a traditional network gets a new members, even though it
may have many hundreds of lawyers, this is not newsworthy.
Law firms are at a disadvantage when expanding internationally because they must grow organically or
truly merge. Calling something a merger does not make it so when the “merged” firm only adopts the
436 Joanne Harris, The Known Unknowns in Dentons’ Game, THE LAWYER, April 18, 2016, http://www.thelawyer.com/issues/18-april-2016/the-
known-unknowns-in-dentons-game/.
437 WIKIPEDIA, DENTONS, available at https://en.wikipedia.org/wiki/Dentons (last visited July 16, 2016).
438 In 2008 I recruited Dacheng for World Services Group and I work with them through 2014. I am familiar with their structure during this time.
156
