13 September 2010 | By James Swift
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With consolidated behemoths threatening the very existence of mid-sized law firms, joining a network can not only ensure the survival of a firm, but can offer the client an increased range of specific expertise and more competitive rates. At least, that’s the theory.
For years lawyers have prophesised that a few global law firms will come to dominate the legal market’s landscape. If that is to be the case, for those firms that fail to rank among the giants referral networks and relationships will be key.
Even now law firm network members insist that the economic downturn, and the resulting penny-pinching by clients, has validated the cheaper network model.
Spanish firm Garrigues’ Club de Abogados was one of the first international law firm networks, created in 1966, when Spain was isolated from the international community under the Franco regime.
That group eventually disbanded, as have a number of networks since - most notably the ill-fated multidisciplinary partnerships that fell with Arthur Andersen and Enron - but the model is as strong as ever.
What follows are profiles of three of the most prominent networks.
Meritas was created in Minneapolis, Minnesota in April 1990 by Leon Steinberg, who had gone through a bad referral experience not long before. Steinberg referred a client to a firm recommended by a colleague, whose only connection with the firm was that he had a university friend practising there.
The work was passed on to this unknown university friend and the deal went through, but according to the client the service was woefully inadequate and so Steinberg got it in the ear.
Frustrated, Steinberg set about devising ways to select the best firms in regional markets and put in place processes to continually evaluate their performance. This constant appraisal and quality control became the hallmark of Meritas. Steinberg is no longer with Meritas, but his rigorous standards of quality remain.
“What distinguishes Meritas is [our approach to] quality,” says Jean-Paul Bignon, name partner at Bignon Lebray & Associés and president of Meritas since spring 2009. “So when we send work to a firm we ask the client to give feedback, which gives rise to public grades, and these grades are available to all members of Meritas and our clients.”
The feedback form given to clients is simple and comprises five questions where a client can give the firm that performed the work a mark out of five, with questions as to whether the job was done well, efficiently and at a good price.
If a member firm receives consistently bad grades it is referred to the Meritas member relationship committee, which decides the ailing firm’s fate.
“Peer pressure is the best way to keep the quality level up,” adds Bignon.
Meritas is made up of around 7,000 lawyers in 170 firms across 17 countries. The organisation’s largest group of firms is still in the US though, where firms are chosen by market, as opposed to in Europe and the rest of the world, where Meritas picks firms by jurisdiction. This means there can be multiple Meritas firms in a single US state.
The law firms that make up Meritas are mid-sized, or as Bignon prefers to label them, “human-sized”.
“In some markets this can mean a firm with 20 lawyers and in others one with 180,” he explains. “But firms with a more human size know each other better and are closer to clients. Because of this Meritas is probably one of the best networks at providing an alternative to global law firms.”
Another quality of Meritas firms that makes them an attractive alternative to global firms is the price. Bignon says some of his clients tell him that using Meritas is up to 25 per cent cheaper than a top international firm.
Meritas is now looking to expand its coverage in Africa, starting with South Africa, where it is looking for another member firm after the last one defected to join the Eversheds network.
“We have 22,000 lawyers in 160 member firms across 100 countries,” says Carl Anduri, president of Lex Mundi, “which probably makes us the largest organisation - but what sets us apart is quality.”
Lex Mundi is, by a wide margin, the most well-known law firm network, and looking through its roster of member firms it is difficult to argue with Anduri’s argument about quality. The organisation consistently recruits the top independent firms in each jurisdiction: in Italy, Chiomenti Studio Legale; in Spain, Uría Menéndez; in Ireland, Arthur Cox; and in France, Gide Loyrette Nouel, to name but a few.
The UK and New York are open jurisdictions for Lex Mundi, where the organisation does not seek member firms, although many of its existing members have offices there, filling the void. The network has a set of protocols on how firms work together for a common client, with the aim of avoiding disagreements later on regarding how the deal will be managed, who will be leading etc.
Lex Mundi was founded in 1989, partly by Steve McGarry, who would later go on to establish rival network World Services Group (WSG). As one of the older networks, things tend to be pretty settled in terms of membership.
“Lex Mundi is a fairly mature network,” says Anduri, “but we do take on firms here and there - we’re looking at member firms for Serbia and Nigeria at the moment – and membership isn’t permanent.
We review one-eighth of [our] firms every year and will look at replacing them if they’re not the top firm in their market anymore.
“But the big changes recently have involved what we do to support our member firms.”
One of the things Anduri is most proud of is Lex Mundi’s professional development function, which helps to develop best practice in member firms and provides training materials.
“One of the best things we’ve done is the Lex Mundi Institute, which is for senior associates and junior partners, and intended to better equip them to work with multinationals and for new partners,” says Anduri.
Another arm of Lex Mundi that goes beyond the typical law firm network offering is its pro bono work, which provides support for social entrepreneurs (people who start up businesses to advance social goals) around the world. Lex Mundi has been involved in around 580 projects of this kind. One saw US firm Alston & Bird use its burgeoning energy practice to help on a project setting up solar panels in schools in rural Africa.
World Services Group
WSG stands apart from Lex Mundi and Meritas as a multidisciplinary network encompassing law firms, accounting firms, insurance firms and investment banking advisers.
WSG was launched in October 2002 by McGarry who, as mentioned above, some years before also launched Lex Mundi. McGarry sourced and recruited all Lex Mundi’s original members and even came up with the organisation’s name after phoning a professor at Harvard University to get the Latin translation of ’world law’. This was in 1987 (although Lex Mundi officially launched two years later) and there was no Google back then.
But as technology advanced, McGarry - a self-confessed technophile - became more ambitious in his plans for what a professional services network could be. He wanted to expand Lex Mundi into a multidisciplinary organisation and use the internet to make associations more interactive. He pitched his idea to the board, but found little support.
“The idea I had for WSG, which I also presented to Lex Mundi, was that of a multidisciplinary network, which I believed would increase referrals and access to expertise,” says WSG president McGarry. “I’m a big technology person and thought things were changing because of the internet.
“I wanted to take the scope of representation at firms beyond just one or several contact persons at each firm so that everybody could participate, and so that searches were not only based on geographic location, but also individual expertise. Each lawyer’s expertise and experience goes beyond their jurisdiction.
“If we could capture this expertise using the internet it could increase participation levels in the network as well as access to resources beyond a certain location.”
His answer was to create WSG, a multidisciplinary network with social networking-style profile pages for members, similar to what you might see on MySpace.
“Within the group there’s transparency,” says McGarry. “If I want to know everyone who has IBM in their profile I can look it up, see who was the in-house counsel there and call them and ask about that. In other networks there’s no transparency - you just pick a location and a person.”
WSG has around 12,000 member profiles online and a law firm membership of 135, covering 142 jurisdictions. Total membership at the firm is 159, meaning that law firms make up the vast majority of the membership, but McGarry is fastidious about the firms he chooses to join the network, corresponding for up to two years before admitting them.
“Ninety per cent of our firms are among the top five largest in their jurisdiction,” says McGarry. “A typical WSG firm in the US is 150 years old, but it might be younger in Central and Eastern Europe. They’re usually full-service or commercial law firms and we look for those that have a particular reputation in their country, like a Garrigues in Spain or a Shepherd & Wedderburn in Scotland - [firms that], if you asked a taxi driver to take you there, you wouldn’t have to tell them the address.”