This article reflects the highlights of a panel session run by the IBA Law Firm Management Committee’s Business Development Working Group, at the IBA Annual Conference in Washington DC, exploring the benefits of international alliances and networks, looking at the good, the bad and the ugly.
The panel consisted of a range of industry experts, including:-
Moderator: Melissa Davis co-chair of the IBA LFMC Business Development Working Group, of MD Communications, specialising in PR and marketing for the legal industry.
Panellists: Dimitry Afanasiev, Chairman of Egorov Puginsky Avanasiev & Partners (“EPAM”), a leading Russian law firm which has merged with a number of firms across the CIS region. http://epam.ru/eng
Bryan Bourke, Managing Partner of William Fry, one of Ireland’s leading commercial law firms. www.williamfry.com
James Hickey, Chief Executive of Alliott Group, an international alliance of mid-market law and accountancy firms with member firms in 65 countries. James previously worked with another alliance, and has been involved in the industry for over 20 years. www.alliottgroup.net
Nankunda Katangaza, Director of Hook Tangaza International and former head of the International Department of the Law Society of England and Wales. Nankunda is an accomplished speaker and is very experienced in the development of legal systems, outlooks and opportunities in different parts of the world – including, and in particular, in Africa and Asia. www.hooktangaza.com
Paul Marmor, co-chair of the IBA LFMC Business Development Working Group and Head of Litigation at Sherrards Solicitors LLP. www.sherrards.com
Jim Neath, Former Head of Global Litigation at BP, based in Houston, Texas. Jim has plenty of experience of engaging law firms from the perspective of a buyer.
Each member of the panel gave their views on the broad benefits and advantages for a law firm of being involved in an alliance or network, as well as exploring some of the pitfalls and concerns.
Dmitry Afanasiev explained, and the panel agreed, that being part of an alliance or network is rather like the difference between being in a fixed, long-term relationship such as marriage and dating. Nevertheless, as he said: “It is important to be able to use other law firms and not just be restricted to using an alliance member. The important point is to deliver quality to the client, to make sure that the client is best served in all the circumstances. This is like looking at a local restaurant versus a chain restaurant: the chain restaurant may be safer and more predictable, but the reality is that the best restaurant in town is always the local one!”
Dmitry added: “To be competitive, members of a network need to demonstrate five things: high academic knowledge, international standards, local access, a commercial approach and sound judgment.
“Networks need to add value to each firm member through knowledge management, shared marketing and other features that the global firms have.
James Hickey commented: “Certainly, one size does not fit all. Not all alliances and networks are the same, and firms should find the group that best fits their size, needs and profile, as well as their culture. Groups can focus on many different things, including: size of firm, practice areas, sharing of technical knowledge or business generation. It is also true that some groups may just consist of lawyers, and others may be multi-disciplinary groups including accountants, where the two professions can bounce off each other very successfully, especially taking into account the growing view that lawyers can learn from the innovative approach of the accountancy profession.
“Joining a network is just the start: joining a group should (ideally) be a firm-wide decision, and when the firm has joined, the firm as a whole should look to participate. The more people within the firm that can talk to their clients about the value of membership, the more value the firm and the group will get. Being part of a network should be an add-on to existing marketing and business development efforts. Being a member of an alliance or network should not get in the way of any existing contacts that a firm has. Most groups do not have exclusive referral agreements.
“Some firms do have a concern about losing business by promoting their membership, but in practice when firms evaluate their competitors they will find that many of their competitors, or the firms that they are doing business with overseas, are already members of one group or another. It is important that a firm gets involved in a network or alliance for the right reasons. Firms should identify what they are looking to get out of their membership, and then regularly evaluate the return both in terms of revenue and of time invested.”
Nankunda Katangaza’s key message is:
- “Be strategic: identify your need or gap in your service provision, and decide whether joining a network is the best way to address it. This could be simply to increase your profile or to build technical capacity or find new sources of referrals.
- “Do your research: do you need a specialist network, a region-specific one or a more general one? Identify the appropriate group, and whether you meet the criteria for joining.
- “Make it work! Echoing what James has said, now that you’ve joined you have a platform, but you have to engage and participate in order to achieve your objectives.”
Melissa Davis commented that “There may be very informal and relaxed relationships comprising of best-friend relationships or friends with a small group of firms, on a case by case basis.”
As Melissa observed, “There may be global networks who share common branding and profits, or firms who simply come together with a common identity in mind. There may be groupings of independent firms, working together with some level of cohesion, looking to generate work for each of the member firms.
“Often firms will receive an element of exclusivity, in terms of being given a territory, which may consist of a city or particular region relating to their marketplace or jurisdiction, and this, too, will vary from alliance to alliance.”
Paul Marmor set out some of the tangible benefits of an alliance, which gives the ability for a firm to:-
- “generate and receive work referrals; and
- “perhaps just as importantly, place work with peace of mind – because, at the end of the day, a law firm relies on its black-book of contacts, making sure that its clients are properly looked-after, wherever they need assistance.
“Alliances can also be a very useful defensive tool to protect client relationships, so that clients do not defect to larger firms with more developed international structures. It is also a useful device to attract clients away from firms who cannot offer the international connectivity.
Paul also noted that a key part of being in an alliance is that “It can assist in recruiting, and retaining, legal staff, particularly at the more junior end, with the prospect of international work and perhaps participating in a foreign exchange internship programme within the alliance.” As Paul says, ”This can work wonders for a mid-tier law firm competing with the top tier global operations, in terms of being able to offer staff international travel and placements.”
With regard to developing a firm’s credibility, the panel had mixed views: Bryan Bourke felt that “An alliance had less importance and, as Dmitry observed, it comes down to the quality of relationships.”
Melissa’s observation was that “Being part of an alliance should be part of an holistic approach to business development, and it should be seen as just one element of a firm’s marketing development.”
Coming from the angle of the buyer of legal services, as an in-house counsel, Jim Neath had strong views as to whether or not being in an alliance was relevant. Above all else, Jim said that “A buyer needs to know that law firms can do the job and are going to deliver quality,” but he also went on to explain that:
- “Rapid globalization in the legal services market is rewarding law firm networks/alliances that are capable of supplying consistent value across borders.
- “Corporate clients (buyers) are looking to capitalize on legal market innovations that can deliver better overall value than large, high priced international law firms.
- “Law firm networks/alliances must assure corporate buyers that they can deliver: (a) consistent quality legal services across regions; (b) streamlined, single point communication and coordination; and (c) commercial convenience in pricing, invoicing and payment flow.”
The world of alliances and networks is not all rosy, and Paul explained – speaking with his litigation hat on – that “Firms do have to be careful about shared exposure and liability, especially where they are looking at very close ties with common identity, common procedures and common branding. There is case law in different parts of the world, and the overall position is complicated, so this needs to be kept in mind if a group is effectively turning into an international firm or quasi-firm.
“The overarching view is that, where a firm is a member of an alliance but retains its individual identity and branding, and there are not common processes and protocols, then that will help to minimise the possibility of exposure.”
Paul explained that “Alliances and networks can be structured in so many different ways, from informal beginnings with a few firms controlling the operation, or one individual looking to run an alliance as a personal business, to much more structured groups which either inhabit the mid-tier, mid-market or top-tier space, which will be formally run with an independent secretariat paid for by the members, on a not-for-profit basis.”
Paul: “It is essential to find an alliance or network which is properly run.”
Nankunda suggested that for firms from smaller jurisdictions or less developed legal services markets, joining a network could be a useful means of building relationships beyond their borders. These relationships can enhance the profile of member firms and provide them with opportunities for sharing services such as joint marketing initiatives and perhaps a means of developing expertise and building capacity.
Bryan Bourke put the case against alliances and networks, making it clear that:-
- “In smaller markets, as well as some emerging markets, sometimes joining a network may be perceived to limit opportunities to work with other firms, particularly where the network association is seen to be very strong;
- “indeed, some firms may want to go out of their way to demonstrate to the market-place that they remain autonomous and independent with no affiliation to any alliance or network;
- “the key point really is to make sure that, when you are referring work to other firms, you always do what is best for your client and get them the very best people;
- “in a specialist area, for instance, where the market is rapidly changing, such as the tax market, for those firms which otherwise might not seek to join a formal network or alliance on a broader basis, joining a narrower alliance may still be a useful sector-specific step.”
Melissa Davis observed one point that the panel agreed on universally, which is that, as James had remarked, one size certainly does not fit all, and perhaps the benefits (or otherwise) of joining an alliance or network will vary from firm to firm. Another point on which the whole panel were also agreed is that, as the world becomes a smaller place, both logistically and electronically, alliances and networks are going to become ever-increasingly important, and hopefully by attending the panel or reading the subsequent article the audience will get more of a sense of how alliances can work in practice.