International law firm networks and associations

An international law firm network (or association) is a membership organisation consisting of independent law firms that are informally linked to one another with the main purpose of serving one another's clients in jurisdictions where the individual firms are not permitted to practice or do not have their own physical offices.

Management Structure

The typical international network or association will be run on a day to day basis by an administrative / marketing office called a Secretariat. These bodies are commonly located in one of the world's major commercial centres in Europe or North America and do not practice law. An Executive Director will usually manage the staff at the Secretariat under the guidelines set out by a Board consisting of Directors drawn from the network's founding firm(s) or other long-standing member firms. Most networks also have Area Representatives who together with the Executive Director form some sort of Management Board.

Membership

Although there are no hard and fast rules, law firm networks and associations tend to consist of small to medium sized independent law firms, or at least law firms that are focused on one particular geographic marketplace. Networks and associations often offer their member firms 'territorial exclusivity', meaning that another firm can not be admitted on their patch. Such an arrangement ensures maximum referral opportunities and minimal conflicts of interest.

As networks and associations are membership organisations, firms are free to leave the organisation by not renewing their membership at the end of the year. By the same token, networks are often able to terminate the membership of any member firm that is involved in malpractice or unable to meet the service standards expected.

Networks and associations will tend to have a presence in more cities and countries than even the largest international law firms such as Clifford Chance. Some businesses with international operations will still prefer to use international law firms rather than international networks as they perceive that service and quality will be consistent. Some observers would disagree with the this point of view, arguing that quality is variable across international law firms, and that better, more personal service and lower charge out rates can be expected from independent law firms that do not have to bear the cost of offices in multiple countries. Although independent firms belonging to international networks and associations do cooperate more closely together on cross-border transactions than in the past, the general opinion seems to be that they tend not to be able to compete with the larger international firms for work at the top end of the scale that requires input from a large number of countries. Possible exceptions to such rule would include the "niche" law firm networks, such as the International Litigation Network, which requires member law firms to have a demonstrated level of experience in the network's area of specialization.

Some law firm networks are now opening the membership up to accounting firms, and accounting networks are doing likewise with law counterparts. Some commentators would agree that bringing together a group of lawyers and accountants to create a multidisciplinary association ultimately benefits clients as they often need a wide range of professional services advisors when involved in large transactions e.g. when incorporating a new business or in litigation matters, when for lawyers, the litigation support services of accountants can be very valuable. Bringing the lawyers and accountants together does not create a multidisciplinary practice (MDPs) all firms are separate, independent legal entities. MDPs are not permitted in the majority of jurisdictions around the world, with a number of exceptions such as Germany and Uruguay.

Functions

Retaining firm independence

Joining an international network or association is a route increasingly being taken by firms that are seeking to extend their client service capabilities to new marketplaces, yet retain their independence, rather than be swallowed up in a merger with a larger professional firm. Becoming part of a network can be an effective way to achieve both objectives, create economies of scale, and pool resources.

Client retention

As their clients grow and move into new, foreign territories, small and mid-sized firms need easy access to contacts in cities and countries they can rely on, where they can’t necessarily justify the risk (or cost) of opening their own offices. Rather than lose the client to a larger, international law firm, international networks and associations allow small and mid-sized firms to refer their client to a similar sized network member firm in another jurisdiction.

Many local law firms find that sourcing reliable, English-speaking lawyers in foreign jurisdictions can be problematical and something of a lottery. Many independent firms believe that being part of an international law firm network minimises this risk and provides clients with reassurance that they will receive similar levels of service from any firm in the network.

Practice development

Many observers would agree that the leading international law firm networks and associations have developed beyond all recognition since the 1970s when most were perceived as clubs, rather than the serious, commercially-driven, globally branded organisations that most of them have evolved into today. As business has become increasingly global, a large number of independent law firms are seeing networks and associations as an important way to develop their international practices and to attract larger clients operating on a multi-jurisdictional basis.

The kudos of exclusivity

Many networks, though certainly not all, offer their member firms exclusivity, meaning that the firm has contractual rights over its own geographic territory for client development and inward referral purposes. As the exclusive law firm member in a particular city or country, many independent law firms view this as valuable endorsement that gives them marketing clout when pitching for work with larger, more internationally-focused clients, and when trying to position the firm as a more attractive employer, particularly in countries where legal talent tends to be more scarce.

International branding

Membership of an international network or association of law firms commonly gives the member firm the legal right to promote its affiliation in its territory through use of the network’s international logo.

It is in both parties’ interests that the logo is displayed prominently wherever and whenever possible – with each organisation’s brand lending force to the other’s. Use of the brand is encouraged, but not usually required, and would typically be implemented across firm stationary, marketing brochures and the firm’s website, ensuring that all touch points with existing and prospective clients are covered.

Although some member firms prefer not to adopt a network’s umbrella brand so as not to deflect business from existing non-network introducers of work, the growing need for firms to project a more international image means that access to a global brand is viewed as an increasingly important membership benefit.

Open discussion in a non-competitive environment

Networks and associations generally consist of non-competing independent firms and therefore provide their members with the opportunity to openly discuss issues affecting their firm.