International alliances are a logical step for practices focused on expansion – but without careful planning they can soon turn sour, warns Colin Carmichael. Colin Carmichael is a partner with The Organisation Consulting Partnership and was a consultancy partner with a Big Five accountancy firm.
Linklaters & Alliance is further evidence that we are in the age of the international law firm. But the work is only just beginning for Terence Kyle, Marc Bartel and their colleagues.
There are many pluses in the Linklaters & Alliance approach. These include commitment to profit sharing and, eventually, to full merger, as well as the creation of a full-time executive team and integrated practice groups. But this may not be enough. The lesson of other networks, including both legal and accountancy firms, is that initial enthusiasm can turn to disillusionment.
The biggest risk facing an international professional services organisation is that it does not develop any synergies and becomes no more than a list of countries on a letterhead. The Big Five accountancy firms need global networks to be credible in their marketplace, but in practice have not gained significant advantages from these networks, in the face of the self-interest of individual partners, local practice groups and local firms.
The strongest motivator among partners in professional firms is the short-term need to keep themselves and their staff chargeable and to protect their own clients. In the worst case, few partners take the international organisation seriously and try to make it work. As a result, levels of referrals remain low and partners become critical and disillusioned.
The international network must deliver fees to partners, or risk being seen as a cost – a source of endless non-chargeable meetings which achieve nothing. If this happens, international integration will remain a low priority for most partners.
In order to create a strongly integrated international firm, seven priorities need to be addressed:
Drive up quality as soon as possible so that all integrated practices are working to the same standards and can deliver consistently. International clients will expect nothing less.
Communicate the purpose and benefits of the network to all partners. Do not believe that the majority will share their managing partner's vision. You need most partners' personal commitment and will have to work hard to obtain it.
Create a single brand name as soon as possible and build a marketing campaign behind it. This increases client awareness and shows sincerity over breaking down local interests to create a genuinely international firm.
Measure partner involvement in cross-border fee earning and practice development and reward this. Partners in internationally-biased work areas are the people who will determine the success of the network and need to have incentives.
Manage the expectations of each member firm's managing partner to keep them aligned to a common vision and objectives. This will help to prevent firms from sitting back and expecting an inward flow of referred work for little or no effort.
Increase local firm profitability and partner earnings and sort out office overlaps in particular jurisdictions. This will avoid sources of future conflict.
Create mechanisms to share knowledge and experience between countries. This will allow rapid response to clients and easier integration of cross-border matters.
As legal practices become increasingly international the attractions of networked organisations will continue to grow. But these networks will require a major investment of senior management time and there are likely to be more failures than successes, unless the above priorities are successfully addressed.