Page 60 - Professional Services Networks
P. 60
The Handbook: Law Firm Networks
Monitoring referrals is an issue in most legal networks because this is the reason firms join. Networks are not
particularly strong when it comes to defining processes and financial results, according to Freidheim.274 This
does not, however, keep members from asking the network to create these processes.275
Members usually monitor Type 1 referrals. The systems vary from internal monitoring at each firm to
organized network monitoring of referrals. Meritas, a legal network, documents in-bound and out-bound
referrals and contacts the clients to assess satisfaction.276 Accounting firms monitor referrals because they are
routinely part of the team. Several accounting networks have a referral fee as a source of income for the
network.277 These processes are different because there are financial benefits at stake.
Many networks have “success stories”278 on their websites. These would be Types 2, 3, and 4 referrals. Their
success is the subject of hearsay but may not be quantifiable until there is an actual success. The success
stories that reflect Types 3 and 4 referrals are educative because they demonstrate to other members how
they can also benefit from their membership.
There are structural differences between referrals in the legal and accounting professions. While the market
for legal services is many times greater than the market for accounting, audit, and tax services, there are no
dominant firms — no Big 4 — in the legal profession.279 There are approximately 25 firms having more than
1,000 attorneys based primarily in New York, London, Chicago, San Francisco, and a number of other large
cities. None of the firms has any significant market share. However, the firms do have a brand name.
Large law firms in New York, London, Chicago, and a number of other cities account for a very small part of
the legal market. There were only 43,000 attorneys in Am Law 50 in 2006. The two largest networks had as
many attorneys.280 However, they represent a very large amount of the legal services market.281 Because the
average Am Law firm has only five branches, this means that they must refer to local firms. Network
membership is one criteria of quality that the firms use in referring this business.
Unlike the Big 4, however, law firm networks do not represent clients or become involved in the
transactions. Because the member firms are independent, there is no conflict of interest barrier to
representation of competitors. This allows the largest networks to have member firms that cumulatively
represent virtually all of the Fortune 500 companies.282 This means that all of the Fortune 500 corporate
counsel are already familiar with and are using members of the networks like Lex Mundi, TerraLex, WSG,
etc. They may seek existing counsel for recommendations and referrals.283 This means more referrals or
networks members.
Accounting referrals are very different from referrals in legal networks. The accounting networks already
have adopted a common brand. The firms operate in a particular state or region. Few are national, so they do
274 See supra Chapter 4, Organizing a Traditional Law Firm Network – Exhibit 3.
275 For example, TerraLex asks firms to commit to reporting referrals. See Membership Commitments, TERRALEX,
www.terralex.org/publication/pf1a07a3729/terralex-membership-commitments (last visited Feb. 4, 2016). Meritas has a rigorous
system of reporting in-bound and out-bound referrals as well as verification by Meritas itself. It also measures satisfaction by surveys. Each firm has a
ranking. See Firm Evaluation, MERITAS, http://www.meritas.org/FirmEvaluation.aspx (last visited Feb. 4, 2016).
276 Compare Firms, MERITAS, www.meritas.org/firm_compare_firm_link.asp?link=42&fid=67682 (last visited Feb. 4, 2016).
277 See supra Chapter 3, History of Professionals Services Networks – Why Do They Matter?
278 MERITAS, http://www.meritas.org/main.aspx?link=32 (last visited Feb. 4, 2016); Success Stories, WORLD SERVICES GROUP,
www.worldservicesgroup.com/success_stories.asp (last visited Feb. 4, 2016).
279 Program on the Legal Profession, HARVARD LAW SCHOOL, www.law.harvard.edu/programs/plp/pages/statistics.php (last visited
Feb. 4, 2016).
280 See infra Appendix 4.
281 HARVARD LAW SCHOOL, supra note 258.
282 Lex Mundi conducted a survey of members and found that they represented more than 90 percent of all Fortune 500 companies.
283 Unpublished Gallup 1992 and 1993 Survey conducted for Lex Mundi of 5,000 general counsel in 56 countries. The two primary ways for locating
outside counsel were recommendations from other outside counsel and from existing outside counsel.
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Monitoring referrals is an issue in most legal networks because this is the reason firms join. Networks are not
particularly strong when it comes to defining processes and financial results, according to Freidheim.274 This
does not, however, keep members from asking the network to create these processes.275
Members usually monitor Type 1 referrals. The systems vary from internal monitoring at each firm to
organized network monitoring of referrals. Meritas, a legal network, documents in-bound and out-bound
referrals and contacts the clients to assess satisfaction.276 Accounting firms monitor referrals because they are
routinely part of the team. Several accounting networks have a referral fee as a source of income for the
network.277 These processes are different because there are financial benefits at stake.
Many networks have “success stories”278 on their websites. These would be Types 2, 3, and 4 referrals. Their
success is the subject of hearsay but may not be quantifiable until there is an actual success. The success
stories that reflect Types 3 and 4 referrals are educative because they demonstrate to other members how
they can also benefit from their membership.
There are structural differences between referrals in the legal and accounting professions. While the market
for legal services is many times greater than the market for accounting, audit, and tax services, there are no
dominant firms — no Big 4 — in the legal profession.279 There are approximately 25 firms having more than
1,000 attorneys based primarily in New York, London, Chicago, San Francisco, and a number of other large
cities. None of the firms has any significant market share. However, the firms do have a brand name.
Large law firms in New York, London, Chicago, and a number of other cities account for a very small part of
the legal market. There were only 43,000 attorneys in Am Law 50 in 2006. The two largest networks had as
many attorneys.280 However, they represent a very large amount of the legal services market.281 Because the
average Am Law firm has only five branches, this means that they must refer to local firms. Network
membership is one criteria of quality that the firms use in referring this business.
Unlike the Big 4, however, law firm networks do not represent clients or become involved in the
transactions. Because the member firms are independent, there is no conflict of interest barrier to
representation of competitors. This allows the largest networks to have member firms that cumulatively
represent virtually all of the Fortune 500 companies.282 This means that all of the Fortune 500 corporate
counsel are already familiar with and are using members of the networks like Lex Mundi, TerraLex, WSG,
etc. They may seek existing counsel for recommendations and referrals.283 This means more referrals or
networks members.
Accounting referrals are very different from referrals in legal networks. The accounting networks already
have adopted a common brand. The firms operate in a particular state or region. Few are national, so they do
274 See supra Chapter 4, Organizing a Traditional Law Firm Network – Exhibit 3.
275 For example, TerraLex asks firms to commit to reporting referrals. See Membership Commitments, TERRALEX,
www.terralex.org/publication/pf1a07a3729/terralex-membership-commitments (last visited Feb. 4, 2016). Meritas has a rigorous
system of reporting in-bound and out-bound referrals as well as verification by Meritas itself. It also measures satisfaction by surveys. Each firm has a
ranking. See Firm Evaluation, MERITAS, http://www.meritas.org/FirmEvaluation.aspx (last visited Feb. 4, 2016).
276 Compare Firms, MERITAS, www.meritas.org/firm_compare_firm_link.asp?link=42&fid=67682 (last visited Feb. 4, 2016).
277 See supra Chapter 3, History of Professionals Services Networks – Why Do They Matter?
278 MERITAS, http://www.meritas.org/main.aspx?link=32 (last visited Feb. 4, 2016); Success Stories, WORLD SERVICES GROUP,
www.worldservicesgroup.com/success_stories.asp (last visited Feb. 4, 2016).
279 Program on the Legal Profession, HARVARD LAW SCHOOL, www.law.harvard.edu/programs/plp/pages/statistics.php (last visited
Feb. 4, 2016).
280 See infra Appendix 4.
281 HARVARD LAW SCHOOL, supra note 258.
282 Lex Mundi conducted a survey of members and found that they represented more than 90 percent of all Fortune 500 companies.
283 Unpublished Gallup 1992 and 1993 Survey conducted for Lex Mundi of 5,000 general counsel in 56 countries. The two primary ways for locating
outside counsel were recommendations from other outside counsel and from existing outside counsel.
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