Nowadays, law firm networks are helping clients obtain legal advice and services across the world. The question is: as the traditional paradigm comes under threat, can they provide a new model for the delivery of legal services globally?
As business transactions become increasingly international, law firm clients require more and more cross-border services. As a result, they have been tapping into the power of legal networks to meet such needs. “Clients find it difficult to access the same depth and breadth of legal expertise in every jurisdiction in which they operate,” explains Michael Siebold, chair of Interlaw. “If their ‘home’ firm is part of a professional network like Interlaw, it gives them access to the same high-quality advice across all geographical markets.”
The numbers speak for themselves.
At present, there are some 200 legal industry networks globally, offering an estimated $250 billion in services each year. Law firms across the world have been joining such networks, if not adopting similar structures as they look to offer a greater breadth of services.
For independent firms, joining a network gives them the platform they need to gain a competitive edge.
“An independent firm joining a law firm network gains the opportunity to compete against larger global firms,” says Caroline Kerr-Martin, marketing and business development manager for Multilaw. “Multilaw can open doors in more than 100 countries, enabling firms not only to serve their existing clients with international needs but also to find new markets without having to go down the more drastic route of a law firm merger.”
“The businesses of the clients are changing and need increased knowledge and insight and the network is a more effective way of really being able to deliver this,” says Antonia Grant, a partner at the Hong Kong office of Lewis Silkin. The UK-based law firm is a member of Ius Laboris, a specialist human resources network.
Grant adds, “Clients can be more sophisticated in their consumption of legal services, gaining access to the best technical advice wherever it may be. This way, small and mid-sized firms with genuine talent and expertise are given the opportunity to compete globally, which has much wider benefits.”
Other members see similar benefits. “Being a member of Meritas has given our law firm a wider exposure to clients in different countries that wish to establish their presence in Indonesia,” says Al Hakim Hanafiah, partner and founding member of Hanafiah Ponggawa & Partners. The Jakarta-headquartered firm has been a member of legal network Meritas for more than 12 years.
He continues, “Some of the industries that are receiving quite a bit of interest from Meritas member firms located in the U.S., Europe and Asia (especially China) are infrastructure, mining, oil & gas and manufacturing.”
Multilaw’s Kerr-Martin also points out that law firms can retain their domestic identity and independence while benefiting from the breadth of a global network for themselves and their clients. Multilaw, for instance, has 9,000 lawyers from about 90 firms around the world.
As she points out, “There are other key benefits such as being able to pitch for cross-border work, which is a significant advantage for member firms. Our firms regularly work together on business development initiatives. For example, a number of our Asia-Pacific firms collaborate with our Latin American firms throughout the region connecting investors to target companies.”
The ability to bid for cross-border work is essential for any law firm looking to expand, and law firm networks recognise how important growth potential is to their member firms. In the past three years, Lex Mundi has undertaken various marketing and business development activities to showcase the services of their Asia-Pacific member firms to clients requiring advice throughout the region.
“Our Asia-Pacific business development strategy has resulted in member firms forging new relationships with foreign and Asia-Pacific MNCs requiring legal services outside of their home country, which would naturally help in their own firm’s growth strategy,” says Carl Anduri, president of Lex Mundi.
QUALITY CONTROL
Consistency is integral to a service provider’s reputation, so quality control is an important factor to consider when choosing a law firm network.
“Our member firms undergo a rigorous selection process to ensure that we maintain the highest standards of service and expertise all around the world. Regular reviews ensure clients have access to the very best advice no matter where they need it. The network operates on a high level of transparency and at most affordable rates – no hidden fee-sharing or ‘commissions’,” says Siebold of Interlaw.
Legal network Meritas recruits members through an invitation-only process. Tanna Moore, its CEO, believes that networks also need to monitor member participation to maintain their quality and to avoid turning into a “directory listing.”
“We run regular checks to make sure our member firms are actively participating. I believe most firms understand that in order to reap the benefits of joining a law firm network, they have to be active members,” says Moore, “We have full time staff that will review a firm’s membership every three years as part our internal processes. This is beneficial for both the member firms and their clients.”
Another way that law firm networks can maintain and even enhance the quality of their services is to support the professional development and training of employees in member firms, according to Anduri of Lex Mundi.
“Lex Mundi provides a wide variety of training programs, including week-long intensive training programmes offered through the Lex Mundi Institute. The institute also collaborates with the University of Cambridge’s Judge Business School to present an intensive five-day programme to enable partners to have a deeper understanding of the business concepts driving their clients. Lex Mundi also works with the member firms to enhance their project management skills and to enhance their knowledge management capabilities,” he says.
As with any business environment, competition is a concern. As Adam Cooke, executive director of Multilaw, explains, “We are typically competing with global law firms who have huge business development and marketing teams for work and have to do so with much less resources than the global firms are able to draw on. On the plus side, our leanness means we are often very competitive when it comes to the pricing of our legal service. We also face competition from the other networks when seeking members in certain jurisdictions.”
THE TECHNOLOGY FACTOR
But challenges remain, especially at a time when the world – and the legal industry by extension – is in a state of flux.
Moore notes that the emergence of legal technology as well as the reluctance of cautious law firms to embrace it quickly and fully can be a problem.
Other networks agree. “Law firms that are members of networks will be challenged by the advantages of scale enjoyed by international business law firms, the increasing importance of technology in meeting client demand for value, and the growing client demand for improvements in client service. Networks cannot be passive in the face of these challenges or they will become irrelevant to their member firms,” cautions Anduri.
But if utilised properly, Siebold believes the concept of “a virtual global law firm” that allows clients to immediately access high-quality legal advice in any jurisdiction, is within grasp, thanks to technology. But it requires a strategic plan that is backed by the necessary investment and supported by dynamic member firms.
“Technology and its rapid march will be key. The networks that thrive will be those that fully embrace the connectivity that technology can bring and make best use of it – something that perhaps law firms are not known for. A higher degree of connectivity will ultimately bring more collaboration and cooperation that will result in more efficiencies and value for clients, attracting more business to the network,” says Grant of Lewis Silkin.
Cooke believes some of the top legal networks have already wisely placed technology high on their agenda.
“Bespoke technology will be a priority, not only to drive better engagement and communication among members but also to provide clients with solutions such as client extranet platforms, project management software and AI innovations,” he says. “Global law firms have set the benchmark, and if networks want to compete effectively with them, they need to match them in this area.”
A NEW INDUSTRY MODEL?
Opinions on whether law firm networks could evolve into the new mainstream model of legal services remain divided. Some interviewees are a little more cautious in stating whether networks could replace the traditional global firm structures completely.
“I don’t think law firm networks will displace global law firms completely, as I believe there is a space for everyone. Global law firms will continue to serve top-end customers with billion-dollar deals that feel more comfortable dealing with a single entity that has a strong brand name. But law firm networks will be taking up a big chunk of the lower to mid-range multi-jurisdictional work,” says Moore.Some like Interlaw’s Siebold are confident that networks can create “a responsive, dynamic and quality alternative to the somewhat staid and flabby corporate law firm model” by investing in technology, its lawyers and its profile. He also cites the structure of law firm networks as a reason why they provide a sustainable model for the way forward.
“It is about taking the necessary steps to become the kind of legal partner that today’s multinational client is seeking. These clients want the reassurance of consistent high-quality legal advice in every jurisdiction in which they operate, and networks are most definitely the answer,” says Siebold.
He adds, “This breadth and depth of expertise is just too unwieldy to co-ordinate under a single corporate entity. That’s why international law firm brands are now turning their attentions to the network model, albeit with a self-serving approach, rather than one where the client takes centre stage.”
Others like Grant draw from her firm’s membership experience as to why law firm networks make sense as a model.
“Networks have significant potential, and that’s because they work for both the firm and client. The law firms can really structure themselves to provide technical ability and focus. It allows firms to work in a more nuanced way, easily gaining the insight and cultural sensitivity, which is all important in the HR field and plugging in knowledge to ensure that all areas are covered,” she says.
Cooke believes that legal networks are already mainstream, and it’s not just independent law firms that have realised this. He pointed to how a major player like Dentons – the world’s largest law firm – have launched its Nextlaw Global Referral Network in order to compete with the coverage offered by more extensive international networks.
As Cooke declares, “Global law firms have consistently failed in their promise to become truly global. Their model is just not sustainable above 50 or so countries. But there are another 130 or so countries where international clients want to do business, and it is only the networks that can offer this coverage. Networks are the future.”
One thing, however, is clear. Not only have legal networks proven that they are needed, they are also here to stay and will keep growing.
“In order to serve clients, all firms with a substantial clientele need to have broad international reach and will therefore become part of a network,” says Anduri. “We think that the number of networks will continue to grow.”
