Globally connected

Thinking about joining an international law firm network? While such a move can bring about more work and new contacts, Scott Neilson hears that knowing the quality of your partners is vital to be assured of success

Searching for a merger partner is usually a long and lonely process, with no guarantees of success.

And exclusive referrals, while avoiding many of the frequent problems of mergers, nevertheless have their own shortcomings.

'Best friend' strategies, meanwhile, do not always convince the clients.

And organically grown offices simply take too long.

No wonder then that international law firm networks, those loosely affiliated and usually non-exclusive referral clubs, are back in the news again.

Last month, London law firms Lewis Silkin and Sacker & Partners joined the existing members of Ius Laboris, in a bid to build some muscle overseas (see [2002] Gazette, 26 September, 6).

While most networks embrace all aspects of commercial law, Ius Laboris is a group of 15 law firms, mostly European, which are specialists in employment and pensions law.

Like all networks, Ius Laboris is built on the free flow of information and referrals between vetted firms across the globe.

It is a simple but potentially effective strategy.

In Lewis Silkin and Sacker & Partners, this fast-growing network, which was launched by five firms in January last year, has picked up two English firms which are rated near the top of their field for employment and pensions law respectively.

Most of Ius Laboris's other members are also leaders in their respective countries.

The fast expansion of Ius Laboris is in part due to the recent boom in employment law across Europe.

For Lewis Silkin and Sacker & Partners, signing up was simply a case of everything to gain.

'Over the last few years, we've worked, with varying degrees of success, in developing bilateral relationships with like-minded firms in other jurisdictions,' explains Lewis Silkin's co-head of employment, Michael Burd.

'But it's not an easy thing to do.

It's hard to keep the momentum of the relationship going, when the meetings are only sporadic.

So, to be approached by a ready- made network of specialist lawyers was a dream come true.'

Mr Burd says that referrals are already beginning to have an impact, and that Ius Laboris's membership will also broaden the firm's training, giving it a more international flavour.

For Sackers partner Peter Docking, Ius Laboris is primarily about forging effective contacts abroad: 'The exchange of know-how is crucial in explaining what's going on in other jurisdictions.'

But Ius Laboris will have to be careful to avoid the problems that typically plague networks, says Hildebrandt International consultant Alan Hodgart.

For example, relationship partners can monopolise referrals.

New members can fail to allocate a budget for running their side of the relationship, particularly for travel costs.

And all members may be guilty of inadequate pooling of resources for IT and marketing, Mr Hodgart says.

What networks should be doing, according to Horwath Consulting director Peter Scott, is strengthening communication infrastructures so knowledge is pooled to a central point.

He says: 'It all comes down to your own strategic objectives.

Before any firm goes into any club, you've got to ask yourself, "What are we trying to achieve? By being a member, are we going to meet our objectives?" Even when you're in, you've got to ask yourself that every year.'

The network also has to be kept cooking, Mr Docking adds.

Partners should not be afraid to market the network to in-house counsel.

Furthermore, industry specialisms should be similar in order to ensure that partners in far-flung offices have come across your client's problems before, he says.

And members need to make sure that their work ethics match.

'But more than anything else,' Mr Scott says, 'the quality of the other members is paramount.

Only by doing a lot of hard work and making a few mistakes that will cost you dearly, will you find out the truth about the quality of the other members in the network.

That's the real issue.

If you're thinking of joining, the one thing you need to ask the network is: "What quality assurance tests do you levy upon prospective members?" If you do that, then the club has got something to sell.'

Ius Laboris seems to have ticked many of these boxes already.

But critics of the non-specialised and full-service networks, for example TAGLaw, Meritas and Lex Mundi say these groups lack specific focus and are going nowhere.

Yet 160-member Lex Mundi is not short on clear policy and standards.

In fact, it has actively chosen to leave England and New York City off its coverage.

'So many of our member firms already have offices in England, mainly London,' explains spokeswoman Kathleen Pope-Sance from the network's Texas headquarters, adding that any English member would therefore not receive many referrals.

'And when it comes to quality, we would rather have a vacancy in a jurisdiction than have it filled by a firm that is not up to par with our standards,' she says.

Regular membership reviews stop existing members from slouching, she says.

'Being a member of a network such as Lex Mundi allows firms to remain independent and keep overhead costs low in relation to the fully integrated global firms.

With the global reach that a network such as this provides, and with its focus on standardising quality and harmonising processes, Lex Mundi members are in a good position to compete with the global firms.'

One of the issues this raises is exclusivity - some networks only have one member per jurisdiction (which includes one per state in the US), others have several; there is also the question of whether firms can refer to non-members.

Like Lex Mundi, 200-member Meritas is non-exclusive in terms of referrals.

London firm Finers Stephens Innocent signed up earlier this year as its English member.

Allowing firms to refer work outside the network 'gives Meritas significant leverage when enforcing service standards', explains its Web site.

The other alternative is to build your own network, as 79-partner City firm Field Fisher Waterhouse did in February when it launched the European Legal Alliance with firms in Scotland, Ireland, Germany and France.

Spanish and Italian members are on the horizon.

It offers clients a single brand, a single multi-jurisdictional bill and a single contact partner.

But what was wrong with joining an existing network?

Partner Mark Abell, who says that talk of merger between the firms is premature, explains: 'Establishing large overseas offices was not viable.

Likewise, making a pan-European merger work can be extremely difficult.

So we built it from scratch.

'But the real problem with joining an existing network was getting the match with our main priorities - technology, corporate and finance...

There's still a lot of work to do but we've been making money out of this from day one.'

Sceptics, meanwhile, should not be too quick to write off the non-niche networks.

The implosion of Andersen punched a hole in the idea of mega-practices striding across the globe unchallenged.

Nowadays, many managing partners are wondering how large a professional services firm can become before meaningful quality control goes out of the window.

Persuading partners to embark on mergers was never easy at the best of times.

Is keeping your allies' liabilities separate from your own about to become fashionable again? Will paranoia mean that small stays beautiful?

Scott Neilson is a freelance journalist