Professional Services Disruption Threats* & Opportunities* Stephen J. McGarry Leadership Directory Legal and Accounting Executives Page 61 Professional Services Disruption Lawyers and Accountants Professional Services Disruption Threats* and Opportunities* Stephen J. McGarry President: AILFN BA, MA, JD, and LLM (Taxation) Founder: Lex Mundi World Services Group AILFN LocateLawNetworks.com Requests for Qualifications (RFQ) HG.org LawyersAccountants.com ii Table of Contents I Summary …………………………………………………………………………………………………………………………………. 1 II Professional Services Markets in the 1980s and 1990s …………………………………………………………..... (A) Biglaw, Vereins, and the Big Four (B) Law Firm Networks (C) Accounting Networks and Associations (D) Alternative Legal Services Providers 4 III The Future of Biglaw and Vereins …………….….………………..………………………………………………………… 9 IV Threats to Law Firm Networks by the Big Four***** ………………………………………………………………. 12 V Threats to Accounting Networks and Associations by the Big Four** ………………………………………. 15 VI Collaborative and Cooperative Opportunities for Networks ***** …………..……………………………… Issue: Mutual Lack of Information on the Other Profession Solution: Internal Education and External Promotion of Networks (A) Lawyers and Accountants – Perspectives (B) The Global Professional Services Markets (C) Bridging the Gap – Strategy and Implementation 1. Macro 2. External 3. Internal 4. Websites 5. Database 6. Technology (D) Opportunities for Networks with Biglaw and “Other” Law and Accounting Associations (E) Other Services – ALSPs 19 *Threat Level (1-5 stars) *Opportunity Level VII 12 Conclusions and Predictions ……………………………………………………………………………………………….. 33 Appendix 1 – Global Legal Market – 2000 ………………………..………………………………………………. 35 Appendix 2 – The Big Four and Biglaw Online – Unique Visitors Per Month ………………………. 36 Appendix 3 – Bibliography –017/2018 ……………………………………………………………………………… 37 Appendix 4 – Multidisciplinary Partnerships – Lawyers and Accountants …………………………. 39 Consultants ( Treatise 2002), Stephen J. McGarry CHAPTER 14 – Multidisciplinary Organizations (MDOs), the Competitive Alternative to the Big 5 Appendix 5 - Directory of Law and Accounting Network Executives ………………………………….. 61 Professional Services Disruption I. Summary Over the last several years, there have been many articles written about the Big Four entering the legal profession that evoke a sense of déjà vu.1 Their focus has been on the threat to Biglaw, i.e., the largest law firms based in the largest cities.2 The general consensus is that the Big Four3 will pose a significant threat to Biglaw practices. (Chart4) Add to this the disaggregation of law-related services by alternative legal service providers (ALSPs), and there seems to be every reason for concern regarding the future of the legal profession. This paper will demonstrate why this conclusion is incorrect on a number of levels. The principal reason is that Biglaw markets intersect with the Big Four in the same locations that both have occupied for decades (e.g., London, Paris, Tokyo, Beijing, Mexico City, and New York, among others). Adding more lawyers to these markets has little to no effect on the competitive environment. Meanwhile, the separation between the legal and accounting media means that the Big Four 1 J. Patrice, Twilight Of The Law Firms: The Big 4 Are Poised To Conquer The Legal Landscape, ABOVE THE LAW (Feb. 8, 2018), https://abovethelaw.com/2018/02/twilight-of-the-law-firms-the-big-4-are-poised-to-conquer-the-legal-landscape; Nicholas Bruch, David B. Wilkins & Maria J. Esteban Ferrer, Taking on the World: The Big Four in the Global Legal Market, LAW.COM (Oct. 18, 2017), https://www.law.com/americanlawyer/almID/1202798449576; The Big Four’s Expansion in the Legal Services Market, ALM INTELLIGENCE (Sept. 2017), https://www.alm.com/intelligence/solutions-we-provide/business-of-law-solutions/analyst-reports/elephants-in-the-room-the-big-4s-expansion-inthe-legal-services-market/; Steve Burkholder, Law Firms, Regulators Keep Eye on Big Four Move to Legal Services, BNA (Oct. 17, 2017), https://www.bna.com/law-firms-regulators-n73014471292/; Stephen Poor, Big Four vs. Big Law: The Race to Change Legal Services Delivery, BIG LAW BUSINESS (Oct. 4, 2017), https://biglawbusiness.com/big-four-vs-big-law-the-race-to-change-legal-services-delivery/; Stephen McGarry, The Big Four and the Real threat to the Global Legal Market, LEGAL BUSINESS WORLD (Oct. 7, 2017), https://www.legalbusinessworld.com/singlepost/2017/10/04/The-Big-Four-and-the-Real-Global-Legal-Market; David B. Wilkins & Maria J. Esteban Ferrer, The Rise, Transformation, and Potential Future of the Big 4 Accountancy Networks in the Global Legal Services Market, THE CLS BLUE SKY BLOG (Sept. 26, 2017), http://clsbluesky.law.columbia.edu/2017/09/26/the-rise-transformation-and-potential-future-of-the-big-4-accountancy-networks-in-the-globallegal-services-market/; Debra Cassen Weiss, PwC to Open US Law Firm, a Sign of Increasing Focus on Legal Operations by Big 4 Accounting Firms, ABA JOURNAL (Sept. 21, 2017), http://www.abajournal.com/news/article/pwc_opens_us_legal_arm_a_sign_of_increasing_focus_on_legal_operations_by_bi; Chris Johnson, Do the Big Four Accounting Firms Pose a Big Threat to Big Law? LAW.COM (Sept. 14, 2017), https://www.law.com/sites/almstaff/2017/09/14/do-the-bigfour-accounting-firms-pose-a-big-threat-to-big-law/; Michael Cohn, Big Four Increasingly Competing with Law Firms, ACCOUNTING TODAY (Sept. 14 2017), https://www.accountingtoday.com/news/big-four-accounting-firms-are-increasingly-competing-with-law-firms; David Wilkins & Maria Jose Esteban, The Reemergence of the Big Four in Law, HARVARD CENTER ON THE LEGAL PROFESSION (Jan. 2016) (global legal market is $700 billion), https://thepractice.law.harvard.edu/issue/volume-2-issue-2/; Julius Melnitzer, Accounting Firms in Law: The Long Game, LEXPERT (Sept. 11, 2017), http://www.lexpert.ca/article/the-long-game/?p=&sitecode=Miriam Roze; Miriam Rozen, Brand Rankings Show Law Firm Alternatives' Growing Clout, LAW.COM (Feb. 14, 2018), https://www.law.com/americanlawyer/2018/02/14/brand-rankings-show-law-firm-alternatives-growing-/. 2 List of Largest Law Firms by Revenue, WIKIPEDIA, https://en.wikipedia.org/wiki/List_of_largest_law_firms_by_revenue. 3 Big Four Accounting Firms, WIKIPEDIA, https://en.wikipedia.org/wiki/Big_Four_accounting_firms. 4 Nicholas Bruch & James Mayer, The Big Four’s Expansion in the Legal Services Market, ALM.COM (Sept. 2017), https://www.alm.com/intelligence/solutions-we-provide/business-of-law-solutions/analyst-reports/elephants-in-the-room-the-big-4s-expansion-inthe-legal-services-market/. 1 Professional Services Disruption are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four will require a considerable amount of time and resources on their part. What is actually taking place is the redistribution of legal services everywhere else in the world – except for the United States and the major markets. This leaves indigenous firms to face the brunt of new competition from the Big Four. These are countries in which the Big Four already have a large local presence and are local themselves in every sense. In turn, this will affect law firm networks whose members are among the largest local firms. This paper will discuss:     The changing parameters of competition from a global market point of view New and unexpected competition for the Big Four because of their competitors’ potential local alliances Significant opportunities being created for independent law firms, networks, and allied ALSPs Development in technology that may overwhelm the Big Four as it becomes universally available Networks will themselves become more sophisticated as a result of this technology’s availability. Technology will also be used externally to promote networks and their work. For example, AILFN’s LawyersAccountants.com and Requests for Qualifications (RFQ) already make network members accessible to everyone in minutes by exact expertise — everywhere on earth. These have now been extended to locating independent accounting firms. As the Big Four enter the legal markets, referral patterns will shift. Biglaw firms will refer cases to local law and accounting firms that are network members, as they are not in direct competition with each other. ALSPs (alternative legal services providers) will grow; they are projected to provide $27 billion in law-related services by 2024,6 and their primary competition will be the Big Four. They can easily become an ally of both Biglaw and legal networks. They can easily be factored into LawyersAccountants.com as a source of referrals. The legal profession has nothing to fear if they anticipate these tectonic changes. The future is bright for members of law and accounting networks, as well as associations of independent firms. Paper Structure The paper will provide both a macro overview and micro details of each profession and their respective models for providing professional services. Sections I-V set the stage by analyzing the culture, economic and dynamics of these professions; they also describe the cooperative and collaborative opportunities generated by the disruptions. Section VI defines how, through cooperation and collaboration, legal and accounting networks and associations, Biglaw, and ALSPs can profoundly benefit from this disruption. 5 See discussion at Section III, infra. Legal Process Outsourcing (LPO) Market Worth $27.19 Billion By 2024, GRANDVIEW RESEARCH (Dec. 2016), https://www.grandviewresearch.com/press-release/global-legal-process-outsourcing-lpo-market. 6 2 Professional Services Disruption Today and Tomorrow Setting the Stage: Law7 and Accounting8 - The $1.1 trillion market Potential Projected Market Consolidation, 2018 to 20219 7 Attack of the Bean Counters, THE ECONOMIST (March 19, 2015); https://www.economist.com/news/business/21646741-lawyers-beware-accountants- are-coming-after-your-business-attack-bean-counters; Taking on the World: The Big Four in the Global Legal Market, AMERICAN LAWYER (Oct. 18, 2017), https://www.law.com/americanlawyer/sites/americanlawyer/2017/10/18/taking-on-the-world-the-big-four-in-the-global-legalmarket/?slreturn=20171117172407; Nicholas Bruch, David B. Wilkins & Maria J. Esteban Ferrer, Taking on the World: The Big Four in the Global Legal Market, LAW.COM (Oct. 18, 2017), https://www.law.com/americanlawyer/almID/1202798449576. 8 Global Accounting Market Research Report, IBISWORLD (Sept. 2017), https://www.ibisworld.com/industry-trends/global-industry-reports/businessactivities/accounting-services.html; Auditor Market Share of S&P, AUDIT ANALYTICS (Feb. 27, 2017), http://www.auditanalytics.com/blog/auditormarket-share-of-the-sp-500/; Mike Robinson, The Top 40 Networks & Associations of 2016, ACCOUNTANCY AGE (July 13, 2016), https://www.accountancyage.com/2016/07/13/the-top-40-networks-2016-firms-switching-networks-like-a-game-of-musical-chairs/. 9 Chart adapted from: Steven Martin, 3 Charts Which Illustrate the Future of the Legal Industry, FRESH MINDS (April 13, 2017), http://www.freshminds.net/2017/04/3-charts-illustrate-future-legal-industry/. 3 Professional Services Disruption II. Professional Services Markets in the 1980s and 1990s Law and accounting can be approached from several different perspectives (some examples being ethical, legal, and business, among others). This paper primarily concerns law and accounting as businesses. From this perspective, these services12 relate to the scope and depth of the professional expertise and experience of their attorneys and accountants. They also both concern the organizations providing support structures in the provision of services. A shift or change in law or accounting practices, such as entering the geographical areas and practice markets of the other profession, will ripple or even create a tsunami capable of traveling across the world. New market penetration by one profession increases pressure on the others to maintain the status quo. It is a zero-sum game. Most would prefer to defend the status quo. There are others who seek to exploit them to create new opportunities. Today, both are simultaneously happening in the legal and accounting professions. Who will win? How did we get here? (A) Biglaw, Vereins, and the Big Four The legal market reconfiguration began in the 1980s with globalization.13 The largest U.S. and U.K. firms were quickly expanding outside of their markets with branch offices. Their considerable revenues and size accelerated their capacity to expand. Law firm networks, composed of local firms, were rapidly being established and growing to address these competitive changes.14 In those years, Biglaw was seen as a threat to the local firms. Today, they remain as such in regard to the largest local firms (see table), given their financial size and — in particular — brand recognition. The Big Five15 emerged from the shadows at the end of the 1990s in the legal market. The higher fees were too large a temptation. They need to take advantage of their global network. They saw themselves as a natural fit for the legal profession. As a result of their auditing practices, they had been global for decades. This was different from Biglaw which had to invest in new offices. The only impediments to this extension of services were bar associations and ethical regulations.16 The debate lasted for several years until Enron and Sarbanes Oxley seemingly ended this expansion.17 This set off a firestorm in the legal profession to maintain the status quo. This intrusion caused commissions to be established, articles written, and committees created. While global, the storm was essentially concentrated in the United States because of strict ethics codes prohibiting the sharing of fees with nonlawyers. Soon after, however, it spread to other nations. It was not the debate that seemly eliminated the 12 Accounting, WIKIPEDIA, https://en.wikipedia.org/wiki/Accounting. Stephen McGarry, Multidisciplinary Practices, Lawyers, Accountants and Consultants, ALM (2002). 14 Stephen McGarry, The Handbook – Law Firm Networks, AILFN (2018) (see chapter 1). 15 The Big Five included Arthur Anderson, which ceased to exist in September 2002 as a result of the Enron scandal. 16 American Bar Association Rule 5.4: Professional Independence of a Lawyer, available at https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_inde pendence_of_a_lawyer.html. 17 American Bar Association, Commission on Multidisciplinary Practice, available at https://www.americanbar.org/groups/professional_responsibility/commission_multidisciplinary_practice/febmdp.html. 13 4 Professional Services Disruption expansion but Enron and Sarbanes Oxley.21 While not exactly sub rasa, the expansion continued in countries which did not have the same ethical restrictions as the United States. This left Biglaw to continue their own global expansion. This effort did not last long. Reality struck Biglaw when their international expansion hit a wall during the worldwide recession in 2008. Managing dozens of their own offices was no longer financially practical in a recession, and so they consolidated offices in key commercial centers. If a branch was outside of a commercial center, they kept it only if another Biglaw firms did not have an office in that location.27 Other also restructured the firms into vereins, a network or type of club or association under Swiss law; this allowed them to reduce financial risk, because each member firm remained independent. The result is today Biglaw is competitively squeezed between vereins and the Big Four. What was the actual reality in the late 1990s? The legal media was abuzz with the dire implications (much as the media are today). Global practice charts illustrated issues and compared income among firms to show different aspects of the market. They focused on the micro aspect rather than the macro economics. The fact is the relative market share for the Big Five firms never exceeded 0.4% of the total legal market which remains the same today. The contrast between size and markets (or countries) is illustrated by the opposite two charts. While the size of individual law firms is similar to the Big Four, the Big Four legal practices are, on average, located in more than twice the number of countries. Financially, each of the largest firms or vereins has revenues exceeding the combined total of $2 billion of legal services provided by the Big Four.30 The risk to Biglaw is illustrated by the sheer size of the Big Four’s legal coverage. Biglaw is confined to the same exact 30 locations (Paris, London, Frankfurt, Beijing, Rio de Janeiro, etc.) in which the Big Four have their largest office. The risk for Biglaw is that their market footprint is smaller than vereins and the Big Four, as illustrated by the charts below. As financially-interconnected firms, their growth continues to be limited. Additionally, they are not able to combine resources with accounting networks and associations as a result of their structures. 21 Big Four Accounting Firms, WIKIPEDIA, https://en.wikipedia.org/wiki/Big_Four_accounting_firms; Enron, WIKIPEDIA, https://en.wikipedia.org/wiki/Enron. 27 Supra note 11. 30 David Wilkins & Maria Jose Esteban, The Reemergence of the Big Four in Law, HARVARD CENTER ON THE LEGAL PROFESSION (Jan. 2016) (global legal market is $700 billion), https://thepractice.law.harvard.edu/issue/volume-2-issue-2/. 5 Professional Services Disruption (B) Law Firm Networks While this was developing, more than 150 legal networks were almost silently created in response. The 30 largest networks have 300,000 attorneys in 4,000 firms. The three largest networks have more attorneys than the 20 largest law firms combined. Up until now, everyone has all but ignored law firm networks. They are composed of local firms in small jurisdictions.31 However, in their markets, they may be the largest firms by size, surpassing both Biglaw and the Big Four. Despite this, they lack recognition and are largely ignored in the legal media.32 Gradually, networks developed substantial resources. Many have multimillion-dollar budgets. Their staffs have grown. As the global market grew, their local members firms gained access to the same resources as Biglaw. In combination with the largest local firms, they are many times larger than foreign offices; this is because of the proliferation of technology. There attorneys 31 Stephen McGarry, The Handbook: Law Firm Networks, AILFN (2018), In The Lawyer over the last 20 years Clifford Chance was referred to10261 times and Lex Mundi 105. Lex Mundi members have 10 times the number of lawyers, found in 600 offices, who provide an estimated $10 billion of services annually to clients/ 32 6 Professional Services Disruption can provide exactly the same services as the largest firms in the economic centers. Their advantage is they are local. This resulted from three factors: First, there is now universal legal education via which students from all countries can achieve LLMs abroad. Secondly, organizations like the International Bar Association (IBA) and the American Bar Association (ABA) have contributed to educating the global profession. Lastly, and perhaps most importantly, they are involved as local counsel on most matters with Biglaw. How can one subjectively evaluate a legal network and their members? There are three ways: 1. Size is an indirect measure of the reflection of member firms and their number. In this regard, the largest networks’ footprints are equal to any of the Big Four. Statistically, the number of ranked members of any country’s law networks is far larger in terms of the number Biglaw or the Big Four. However, this fact is not common knowledge, because network members are in smaller countries and receive very little media attention. This is contrasted by the Big Four, which are also in small jurisdictions but are recognized by their presence in the largest countries. When a Big Four member opens a legal office in the smallest country, it is big news. 2. Network firms are local and of the highest quality, but they are not perceived as such. This difference is dramatically illustrated by the number of directories published annually, in which more than 95 percent of these firms are the highest ranked. These are the same firms that are members of networks but are not recognized as members in rankings.33 3. Despite high rankings in practice areas, the common perception is that the global firms have more experience and are of higher quality. This perception is created by the legal media, whose offices are in New York and London. The combination of these factors reduce the perceived importance of law firm network members in their countries. They should be measured by the scope of their practices and the quality of their services. 33 See Chambers and Partners, the Legal 500, and IFLR 1000. 7 Professional Services Disruption (C) Accounting Networks and Associations The market forces creating disruption in the legal 34 profession are simultaneously creating opportunities in the accounting profession. When the Big Four expands to legal services, it shifts the referral pattern from the Big Four to other accounting firms which are not competitors of law firms. The history of accounting networks and associations was different from legal networks. While they were created for similar reasons as law firm networks, i.e. to provide an alternative, the difference was that their consolidation began much earlier. As a result they used the same network model, unlike Biglaw which used the firm model. The competition is and always has been head-on, since a continuous consolidation has taken place over decades.36 The market has become complacent given the very large difference between the Big Four and the networks/associations. As only a limited number of accounting firms can be network members, this has pushed the continuing need for the development of new networks.37 However, there may be an effective limit on the number that can be created. This has raised two questions: Can the association/network members sustain this new competition for the best clients? Can any network or association by itself compete with the Big Four? What opens the Big Four to a challenge by other networks and associations is technology. It can change the equilibrium without the investment level required to create the Big Four. (D) Alternative Legal Services Providers (ALSPs) New players emerged much later with legal process outsourcing (LPO) services.39 To a large extent, they were document management services. This has given way to new groups of services renamed “alternative legal services providers.” The range of services has greatly expanded. At first, the charge was led by independent 34 John Gould & Michael Stacey, Are Accountants Disrupting the Legal Services Market? ECONOMIA (Jan. 14, 2016), http://economia.icaew.com/opinion/january-2016/are-accountants-disrupting-the-legal-services-market. 36 Big Four Accounting Firms, WIKIPEDIA, https://en.wikipedia.org/wiki/Big_Four_accounting_firms. 37 Charles W. Wootton, Carel M. Wolk, & Carol Normand, An Historical Perspective on Mergers and Acquisitions by Major US Accounting Firms, SAGE JOURNALS (May 1, 2003), http://journals.sagepub.com/doi/10.1177/103237320300800103. 39 Legal Process Outsourcing, WIKIPEDIA, https://en.wikipedia.org/wiki/Legal_outsourcing. 8 Professional Services Disruption companies, but now those services are being provided by the Big Four.40 This expands the Big Four from audit and accounting to legal services and management services. Section summary: Legal and accounting services are inter-related, but they provide different components of professional services. From an accounting perspective, legal services are simply another service they can offer clients41. This also applies to ALSPs. From the law firm perspective, legal practice is unique. As a result of an extensive list of ethical rules, some would argue it is more professional. Other would argue law is a business subject to what the client wishes to purchase. In a world of professional services convergence and disaggregation, both views have their merits. The result is disruption. 40 Neil Rose, Growth of Alternative Providers – Especially Big 4 – Could Push Law Firms into ‘Contractor’ Role, LEGAL FUTUREs (Feb. 1, 2017), https://www.legalfutures.co.uk/latest-news/growth-alternative-providers-especially-big-4-push-law-firms-contractor-role; David Curle, Alternative Legal Service Providers: Changing Buyer Perception, THOMSON REUTERS LEGAL (May 2, 2017), https://blogs.thomsonreuters.com/answerson/alternative-legal-service-providers-buyer-perception/; Mark A. Cohen, Legal Delivery at the Speed of Business -- and Why It Matters, FORBES (June 25, 2018), https://www.forbes.com/sites/markcohen1/2018/06/25/legal-delivery-at-the-speed-ofbusiness-and-why-it-matters/. 41 9 Professional Services Disruption III. The Future of Biglaw and Vereins Biglaw has a bright future in the medium term, despite external market pressures. The primary threats, however, come from existing law firm competitors in particular the vereins because they have adopted the network model. The threat do not come from the Big Four accounting firms. There are eight reasons. 1. Biglaw has a substantial legal presence in 30 countries more significant than those occupied by the Big Four.42 Any increase in the Big Four’s footprint represents only marginal growth in competition in those countries. (Chart 43) 2. The largest law firms have substantial brand recognition44 and are known for particular practices as a result of Chambers and Partners or Legal 500 rankings. 3. The Big Four are not ranked in these directories, examples being Chambers and Partners and the Legal 500. Entry would require a substantial shift in recognition by directories. It would also require the directories to make evaluations for which they are not prepared and in which they have no financial interest. 4. Biglaw has had decades to develop practices in dozens of areas.45 The Big Four are not recognized in these practices. They have concentrated on tax, finance, M&A, labor, and immigration.46 5. Unlike accounting, there are hundreds of other practice areas. It will take substantial time and resources to develop these practices. 6. General counsel started their careers comes in Biglaw and law firms. It will take years to change this cultural preference. 7. In terms of internal business operations, the legal and financial services departments are separate and protected functions. This internal corporate barrier can actually limit the migration of legal services to accounting. 42 PWC has 49 partner level attorneys in all of the UK. This is a tiny amount compared to law firms. Michael Kapoor, Big 4 Firms Plot Moves Into Global Niche Legal Markets, July 4, 2018 https://biglawbusiness.com/big-4-firms-plot-moves-into-global-niche-legal-markets/ 43 Acritas, Steve Blundell, Market analysis 44 Acritas, Global Elite Ranking, http://www.acritas.com/global-elite-law-firm-brand-index-2016 45 See articles Appendix id 46 The Big Four’s Expansion in the Legal Services Market, ALM INTELLIGENCE (Sept. 2017), https://www.alm.com/intelligence/solutions-weprovide/business-of-law-solutions/analyst-reports/elephants-in-the-room-the-big-4s-expansion-in-the-legal-services-market/. 10 Professional Services Disruption 8. Biglaw can hire at the same levels or higher as the Big Four. This is reflected by the starting income of new attorneys in major markets.47 In the longer term, there is a Big Four threat to Biglaw at the marketing, administrative, and operations levels concerning branding, social media, and operation efficiencies. Size Size can be measured by the number of lawyers, gross revenue, profit margin and number of offices. The largest firm’s market share is essentially fixed at less than 0.5 percent of the global market.48 Doubling in size will not significantly affect that percentage. As each grows, the competition will increase and additional costs will be incurred. This is illustrated on the concentration chart as the largest firms remaining at the lowest level. The number of offices and the profit per lawyer are related. However, because the highlight firms are vereins in which each member is financially independent, it is not possible to do a comparison. The firms in the largest jurisdictions are likely to have similar profit per lawyer as the non-vereins. This would be comparable to the Big Four legal where each firm is independent so profits per partner will vary depending on the country. Brand The Big Four are already consolidated organizations at the top of their market development. The largest law firms cannot achieve this without substantial consolidation of their markets. Is a 20,000-person firm possible? Yes, a verein could grow to this size, but even then, it would be smaller than the largest legal networks.49 47id 48 List of largest law firms by revenue, https://en.wikipedia.org/wiki/List_of_largest_law_firms_by_revenue Steven Martin, 3 Charts Which Illustrate the Future of the Legal Industry, FRESH MINDS (April 13, 2017), http://www.freshminds.net/2017/04/3charts-illustrate-future-legal-industry/. 49 11 Professional Services Disruption Operations The Big Four can offer integrated services beyond law that go to management of the entire project. This is a true one stop shop which in essence the exact purpose of the multidisciplinary practice model. This is illustrated by EY – OME Law. 51 The alternative is for law firms to create a joint venture with ALSPs. Given the large number of law firms and the limited number of ALSPs, this is not a practical solution. Both professions can do the same thing. Law firms are branching into this level of cooperation by bringing in ALSPs.52 The Big Four are doing the same thing with law.53 Social Media Social media will continue to grow in importance. While law firms at the top level will not be engaged because of social member, it does mirror how a firm or company is perceived. The size and existing brand recognition has created an inherent level of market awareness surrounding the Big Four. This is reflected by the number of unique users going to the Big Four websites (more than 10 times the competing law firms and the LPO providers). (See Appendix 2 for enlarged version) 51 Rutger Lambriex, Operating Model Effectiveness, EY, http://www.ey.com/gl/en/services/tax/law/ey-law-solutions-operating-model-effectiveness. id 53 id 52 12 Professional Services Disruption It is unlikely that any one firm can ever reach this number of unique users.54 This means that marketing revenue must be spent to differentiate one firm from another. Given the number of law firms in the same space only further increases the costs. Section summary, the principal reason why Biglaw has nothing to fear in the medium term is because they have offices in the same markets as their competition which cumulatively are much larger that the Big Four who have focused on the smaller jurisdictions to expand. This means that adding more lawyers to these markets has a small or no effect on the competitive environment. The separation within the legal and accounting media means that the Big Four are not yet “formally” recognized as part of the legal profession.55 Formal integration and recognition will require a considerable amount of time and resources on their part, which is to Biglaw’s present advantage. 54 55 Similarweb.com Collected May 28, 2018 See discussion at Section III, infra. 13 Professional Services Disruption IV. Threats to Law Firm Networks by the Big Four***** In a global market, it is all about numbers and professional media coverage. A comparison of the number of countries covered by the Big Four and Biglaw shows why the competition among local firms reflects the tectonic shift in the referral pattern. The top 10 largest networks have a presence in, on average, 80 countries. This is similar to the Big Four. Biglaw averages 30 countries. However, when one looks beyond the numbers to the location and relative size in the markets, there is no comparison. While many network firms are of small and medium size, a number of law firm networks include the very largest firms in these countries. In the case of the Big Four, they have been in each of those 80 countries for decades. This is similar to local law firms. Since they are networks, creating a substantial legal practice is not that difficult. Once created, they will be in direct competition with local indigenous firms in a relatively short period of time. The Big Four have been expanding in legal for more than 20 years in these countries. While the focus of recent articles and discussion is on the effects on “Biglaw,” the real and immediate effects will be felt by law firm networks and their respective members because of head-to-head competition.56 Why? The largest law firms are generally located in only 30 countries. On the other hand, law firm network members are in 80 countries without significant international competition — until now. Network members have or will have several areas of competitors in the Big Four. Because the Big Four are networks (not firms), their expansion is likely to be exponential. Additionally, local Big Four firms are and have been part of the native business community for decades. This greatly increases the threat, since they are all indigenous. 57 56 Jim Middlemiss, Accounting for Legal Work, CANADIAN LAWYER (April 2, 2018), http://www.canadianlawyermag.com/author/jimmiddlemiss/accounting-for-legal-work-15535/. 57 Id. 14 Professional Services Disruption Law firm networks, despite their size, are not well-known. Compare this to Biglaw and the Big Four. While Biglaw’s number of attorneys is fewer, media recognition for the Big Four is hundreds of times higher58 Local firms are also being assaulted from law vereins. They have substantial recognition (see Hungary table) and large marketing budgets. The vereins are not limited by their structure. Unlike accounting networks, law firms often belong to multiple networks which make membership in a verein inviting.61 As the vereins enter the market by merging with local firms, a competitive threat is created. An example is what happened in Houston, Texas when nine new firms entered the Houston market.62 The same will occur to local firms in other countries. 58 id LOCATE LAW NETWORKS, available at http://www.locatelawnetworks.com. 62Nicholas Bruch, When Regional Legal Markets Get “Invaded”: The Impact on Local Firms, LAW.COM (June 12, 2018), https://www.law.com/2018/06/12/when-regional-legal-markets-get-invaded-the-impact-on-localfirms?et=editorial&bu=ALM%20Intelligence&cn=20180628&src=EMC-Email&pt=Analyst%20Brief (an excerpt of ALM Intelligence's recent report on the invasion of regional legal markets and how mid-sized firms should respond). 61 15 Professional Services Disruption This illustrated in the Hungarian legal market. Local firms compete against the must larger and the much better recognized Big Four and law firm vereins. This is for clients and legal talent. The competitor provide significant pressure.t The Big Four can also be considered invaders even though they offices in most countries and are local in every sense.63 Their legal practices are an invasion not different from the firms entering the Houston market. However, it is here that opportunities are created. It means that local law firms no longer will refer to accounting firms but require reliable substitutes. It means also that Biglaw will refer to local law firms and local accounting offices. The potential exists because law firm network members have the same competitive footprint as accounting networks and associations. Cooperation and collaboration are only logical. Section Summary: The future of law firm networks is secure for a few more years. However, in the longer term, there will be an erosion of their membership. The members themselves will face new competition with the Big Four’s legal division and also from vereins. They will also be invited to become members of a verein. They are already in competition for the best lawyers. Vereins and the Big Four have greater resources and name recognition which will attract professionals. The principal competitive advantage is that networks are large and have global coverage which can be combined with accounting networks and associations. How these are used will determine their future. 63 The Big Four’s Expansion in the Legal Services Market, ALM INTELLIGENCE (Sept. 2017), https://www.alm.com/intelligence/solutions-weprovide/business-of-law-solutions/analyst-reports/elephants-in-the-room-the-big-4s-expansion-in-the-legal-services-market/. 16 Professional Services Disruption V. Threats to Accounting64 Networks and Associations by the Big Four** The Big Four, as networks of independent firms,65 are much larger than other individual accounting networks and associations. (This is obvious by their name.) It is also obvious that the accounting networks and associations, aside from the Big Four, are not well-known to anyone outside of the accounting profession. However, as a result, networks and associations, being the model for accounting firms are at least recognized as legitimate. The advantage is that accounting networks and associations have recognized their common potential and competitive position. This is very different than in the legal profession, where networks are isolated and operate within their own world. For example, the accounting associations and networks formed EGIAN in 2009. Its objective was to lobby the European Union to adopt policies to promote competition.66 This reflects an alliance culture in their profession.67 Lack of Information on Networks and Associations Informational works are dependent upon publications such as Accountancy Age,69 Accounting Today,70 and International Accounting Bulletin.71 While there are online directories, they are very different from the ranking directories fount in law.72 These publication do provide an advantage in that routinely write about the networks and associations.. This is very different from law firm networks, which are only references them in passing — if at all. The legal media concentrates on the same 50 law firms. Accounting networks share the same issue as law where there is no connection between membership and the network in non-branded organizations. The vereins have occupied this space in legal, as has Grant Thornton, BDO, and several other networks in accounting with a brand. Revenue Statistics What is different in accounting is the availability of statistics to compare networks and associations by many different types of metrics. The accounting media also focuses on statistics, which is understandable. This chart is created each year by Accountancy Age73. The results are used by the associations and networks in their marketing materials. 64 Accounting services have been redefined with different terminology. For example, PwC focuses on audit and assurance, tax, and consulting services. Deloitte’s practice is audit, consulting, tax, and advisory services. EY services are advisory, assurance, tax, and transaction services. 65 Accounting Networks and Associations, WIKIPEDIA, https://en.wikipedia.org/wiki/Accounting_networks_and_associations. 66 EGIAN, available at http://www.egian.eu/about_key.htm. 67 Tyrone Pitsis, Martin Kornberger & Steward Clegg, The Art of Managing Relationships in Interorganizational Collaboration, CAIRN.INFO (2004) https://www.cairn.info/revue-management-2004-3-page-47.htm. 69 ACCOUNTANCY AGE, available at https://www.accountancyage.com/. 70 ACCOUNTING TODAY, available at https://www.accountingtoday.com/. 71 INTERNATIONAL ACCOUNTING BULLETIN, available at www.internationalaccountingbulletin.com. 72 AICPA, available at https://www.aicpa.org/signin.html?returnTo=/content/dam/aicpa/research/externallinks/downloadabledocuments/firmassociationservices.xls%3F contentType%3Dsecured (the AICPA published a paywall-protected directory of associations and networks). 73 Accountancy Age, October 17, 2016. 17 Professional Services Disruption Each year, a veritable tidal wave of statistics is provided by networks to the media, which focuses the discussion on objective analysis. (This is not done in the legal profession whose only focus is on large law firm) It makes relative comparison almost impossible between law firms and legal networks. Without these statistics, who would know that there are 20 networks and associations whose members have cumulative revenues of more than $1 billion annually. Information in accounting networks is usually based upon gross revenue of their members. When various types of revenue are divided into practices, the picture of accounting services is potentially quite different. When auditing is removed, the remainder is $80 billion, which is not significantly greater than the combined revenues of accounting networks and associations. Technology can change this, but it remains a long-term issue. What is not obvious is that as a whole, members of accounting networks and associations provide a similar level of accounting services annually to their clients. This is because approximately 40 percent of the Big Four’s revenue is derived from audits.74 As previously established, the Big Four enjoy vast recognition by the world at large. This is illustrated clearly in the media, where the 74 Revenue of the Big Four Accounting and Audit Firms Worldwide in 2017, by Function (in Billion U. S. Dollars), STATISTA, https://www.statista.com/statistics/250935/big-four-accounting-firms-breakdown-of-revenues/. 18 Professional Services Disruption Big Four have (on average) five million unique views per month.75 Compare this to BDO, which gets fewer than 250,000.76 The technology investment by each Big Four member is considerable. This means while there are quality firms, at the same level, accounting networks and their members have the very difficult task of making the case for their quality. This is compounded by little no advertising or marketing by the networks. The threat is that the Big Four can grow exponentially grow as a result of large budgets. Cumulatively, networks have the potential for greater growth since there are five times more of them. This would require their expansion at a similar level. This cannot happen without the collaboration of law firm networks. 75 76 Id. SIMILARWEB, available at http://www.similarweb.com (analysis conducted on May 31, 2018). 19 Professional Services Disruption Section Summary: The future of accounting networks and associations is secure. Since they have always been in competition with the Big Four for decades, the competitive equation will not substantially change without rethinking their objectives. The members themselves will face new competition in the form of legal and ALSP services that the typical member will not be able to offer. This will potentially marginalize their client offerings. Even with similar services, lack of resources and name recognition will be serious impediments to market differentiation leading to growth. The principal competitive advantage is that networks have cumulative size and global coverage. Deployed with law firms that are members of networks and ALSPs, they have significant opportunities. 20 Professional Services Disruption VI. Collaborative and Cooperative Opportunities for Networks***** There are two principal commonalities for both professions: Do right by the clients. Grow and expand your business. This section focuses on the creation of opportunities that can be developed through cooperation and collaboration between the legal and accounting networks. Collaborative Relationships The previous section analyzed the tectonic shifts in market competition among the Big Four, Biglaw, and network members. If opportunities may be propelled by competition, they are created by interorganizational cooperation and collaboration.77 “Cooperation is the process of groups of organisms working or acting together for common, mutual, or some underlying benefit, as opposed to working in competition for selfish benefit.”78 “Interorganizational collaboration may be defined as a process through which parties, who see different aspects of a problem, can constructively explore their differences and search for solutions that go beyond their own limited vision of what is possible.”79 Professional services firms reflect the collective attitudes and perspectives of the professionals. Over the years these have been categorized for lawyers and accountants. 80 Attitudes regarding collaboration are also different for each generation; Baby Boomers and Generation X have different perspectives, for example.81 Generation Y82 professionals have now entered the accounting and legal professions. They have grown up with the same hierarchical institutional foundation as their parents and grandparents, but they entered the Internet age in their teens. They are part of a new culture based upon open relationships with diverse groups around the world. In five years, the first Generation Z professionals will enter the legal and accounting professions. These are professionals whose lives are now shaped by the Internet and, in particular, Facebook, LinkedIn, and other Internet tools. They will carry the social network model to the professional services business network. When professions expand, they encounter these cultures with their firms and as they interact with other organizations. Market forces compound their effects. This discussion is different from market analysis and goes to cultural differences and similarities that must be taken into account for interorganizational collaboration.. (A) Lawyers and Accountants – Perspectives To understand the synergies within these professions at the network level, it is important to understand both their common and different perspectives that have developed through their practices. This will allow for the design of strategies where they can meet to achieve common objectives. It is also necessary to factor in other 77 Tyrone Pitsis, Martin Kornberger & Steward Clegg, The Art of Managing Relationships in Interorganizational Collaboration, CAIRN.INFO (2004) https://www.cairn.info/revue-management-2004-3-page-47.htm; Heidi Gardener, Collaborating Better Across Silos, HARVARD BUS. REV. (Jan. 5, 2017), https://hbr.org/ideacast/2017/01/collaborating-better-across-silos.html. 78 PATRIK LINDENFORS, FOR WHOSE BENEFIT? THE BIOLOGICAL AND CULTURAL EVOLUTION OF HUMAN COOPERATION (Springer 2017). 79 B. GRAY, COLLABORATING: FINDING COMMON GROUND FOR MULTIPARTY PROBLEMS (Jossey-Bass 1989). 80 Larry Richard, Herding Cats: The Lawyer Personality Revealed, http://www.lawyerbrain.com/sites/default/files/caliper_herding_cats.pdf, Torri Myler, 10 Traits Every Great Accountant Has, https://www.accountingweb.com/community-voice/blogs/torri-myler/10-traits-every-greataccountant-has 81 Nancy Peppard, Closing the Generation Gap: Managing the Multigenerational Law Firm, 32 L. PRAC. MGMT. 30 (June 2006). 82 Generation Y, WIKIPEDIA, en.wikipedia.org/wiki/Generation (Generation Y refers to the generation born between 1980 and 1990. In 2013, this generation would have been 23 to 33 years old). 21 Professional Services Disruption organizations to which these professions look for guidance. When creating new opportunities, this means forming new collaborative relationships. Each profession starts out speaking a different cultural language. It is imperative to recognize what each is trying to convey. Nothing should be taken for granted. The skills may be different, but they must be respected and understood. Simply put, lawyers cannot provide accounting advice, and accountants cannot provide legal advice. However, they often need to connect with each other; this means they can and should establish good working relationships. Cooperation is necessary because of an increasingly litigious and multifaceted environment. Clients are now employing complex structures to manage their personal and business affairs. Both propel collaboration between the two professions. Before one can create opportunities, there must be some analysis of each profession’s subjective qualities. It is also necessary to understand within each profession how they cooperate to maintain standards of professionalism and quality. It is against this multi-tiered backdrop that opportunities must be viewed. The true convergence occurs because at the heart of the matter is the best interest of the client. Accountants Accountants focus on numbers, which are (in theory) objective. While working in the best interest of their clients, society has also given them the role of public watchdogs as a result of their audit function. Accountants must serve the public when they are acting as independent auditors, but when preparing a client's tax returns they are certainly hired as advocates; as such, their work papers are privileged.83 There are a number of organizations in which accounting firms are members. Examples are IFAC,84 AICPA,85 the International Auditing and Assurance Standards Board,86 and the Association of Certified Chartered Accountants.87 The difference between these organizations and networks or associations is that the latter examples focus on relationships in regard to clients. The former’s primary function is policy. Like all professions, the media and profession ranks firms by size. Like law there are various tiers with the Big Four on the top level. The rankings have an effect on the perspective of each firm. Lawyers While lawyers have some public obligations, the primary focus of legal representation is associated with the attorney-client relationship. The perception is that they are confrontational rather than collaborative.88 Broad attorney-client privilege protects the secrecy of what a client tells his lawyer, and the “work product” doctrine protects a client against having his lawyer’s work papers brought into court as evidence against him. It is illustrative of the idea that everything is a confrontation. There are some areas in which attorneys are collaborative. For example, there are a number of organizations in which law firm attorneys are the principal members, the most prominent examples being the American 83 Accountant, WIKIPEDIA, https://en.wikipedia.org/wiki/Accountant%E2%80%93client_privilege. IFAC, available at https://www.ifac.org/. 85 AICPA, available at https://www.aicpa.org/. 86 IAASB, available at https://www.iaasb.org/. 87 ACCA GLOBAL, available at http://www.accaglobal.com/. 88 Mark A. Cohen, How Important is Collaboration for Lawyers? LEGAL MOSAIC (May 18, 2015), https://legalmosaic.com/2015/05/18/how-importantis-collaboration-for-lawyers/. 84 22 Professional Services Disruption Bar Association89 and the International Bar Association.90 Participation tends to be a mix of professionalism and business development. The difference between these professional organizations and networks and associations is that a network or association focuses on relationships related to business opportunities. Network executives do not know one another because there is no focal point or common competition — until now. The largest firms may be in competition, but they are also the source of business because the largest firms are in relatively few countries and rely on local counsel in other jurisdictions. How do these factors play out in the professional services business world? Marketing. The market configuration of both professions is reflected in their respective professional media. The accounting media focuses on the networks themselves, because this is the business structure of the largest accounting firms. This provides accounting associations and networks with an advantage in their profession by legitimizing their structure. This is quite different from law, where networks are not recognized as models for global business because the focus is on law firms. The largest firms dominate the news simply because of name recognition. The result is that there is little attempt to market a network or network membership. In general, there is a lack of promotion of membership on the websites of law firm network members. The result is that legal networks direct almost all of their activity inward and lack external legitimacy. Economics. Lawyers charge more per hour than accountants. Salaries for new attorneys in major firms can reach $200,000 per year.91 This is in comparison to $80,000 for graduates of accounting. Bidding wars for legal graduates are common. This internal competition may result in a difference in cultural attitude and professional perspective that affects collaboration. Education and professional certification. In the United States, law is a three-year program. In most other countries, law is an undergraduate degree, though admission to the bar is still a requirement. This is in contrast to accountants receiving a CPA certificate.92 Since legal networks do not practice law but are a business-related organization, they have been until now at the periphery of the profession. Professional privilege and ethics. Lawyers have the attorney-client privilege. Accountants are only protected if they work under a lawyer or through their working papers.93 In the United States, lawyers are not allowed to share income with other professionals.94 The privilege and ethics still separate the professions. Websites and social media. The emphasis in legal is on the individual attorney and the particular partner’s resume. A review of LinkedIn reflects this difference. It would appear that almost every attorney, including 89 AMERICAN BAR ASSOCIATION, available at https://www.americanbar.org/aba.html. INTERNATIONAL BAR ASSOCIATION, available at https://www.ibanet.org/. 91 Sara Randazzo, Starting Law Firm Associate Salaries Hit $190,000, WALL STREET JOURNAL (June 12, 2018), https://www.wsj.com/articles/startinglaw-firm-associate-salaries-hit-190-000-1528813210. 92 Adem Tahiri, How Much Do CPAs Make? INVESTOPEDIA (Nov. 1, 2017), https://www.investopedia.com/articles/investing/051415/how-much-docpas-make.asp#ixzz5I9HHxk5a; Staci Zaretsky, Sorry, Law Students, But Your Starting Salary Will NOT Be $190K, ABOVE THE LAW (June 7, 2018), https://abovethelaw.com/2018/06/sorry-law-students-but-your-starting-salary-will-not-be-190k/. 93 Accountant Workpaper Privilege Upheld by First Circuit, JOURNAL OF ACCOUNTANCY (Jan. 23, 2009), https://www.journalofaccountancy.com/news/2009/jan/accountantworkpaperprivilege.html. 94 American Bar Association, Rule 5.4: Professional Independence of a Lawyer, https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_inde pendence_of_a_lawyer.html. 90 23 Professional Services Disruption those at the largest firms or organizations, has a profile. This is not the case in accounting, where the referral comes from the firms themselves. The websites of accounting firms also reflect this, as the focus is on the partners. On many accounting network and firm websites, partners’ emails are inaccessible. The same is true for the leadership of associations and networks. B. The Global Professional Services Markets Market Share by Business Model There is a difference between the actual model market share and perceived market share. This is the result of the media’s focus on segments perceived to be the most interesting to their readership. Business Models: $1.1 trillion legal and accounting markets95 The largest legal market share is the “other” category. This is composed of in-house lawyers, both large and small firms, academics, and lawyers in the justice system. The largest market share in accounting is also the “other” category. These are corporate accountants, independent accounting firms and those employed by government and other organizations. To a large extent the “others” are the accountants who engage the firms. Since all of those in the other categories require lawyers or accountants from time to time, this creates huge opportunities. 95 The legal profession does not provide exact data for legal services, and information is found in a variety of different places. These are a few locations where data is referenced: The Handbook: Law Firm Networks, AILFN (2018), http://online.flipbuilder.com/smcgarry/idfm/; Attack of the Bean Counters, THE ECONOMIST (March 19, 2015), https://www.economist.com/news/business/21646741-lawyers-beware-accountants-are-coming-afteryour-business-attack-bean-counters; Taking on the World: The Big Four in the Global Legal Market, AMERICAN LAWYER (Oct. 18, 2017), https://www.law.com/americanlawyer/sites/americanlawyer/2017/10/18/taking-on-the-world-the-big-four-in-the-global-legalmarket/?slreturn=20171117172407; Global Accounting Market Research Report, IBIS WORLD (Sept. 2017), https://www.ibisworld.com/industrytrends/global-industry-reports/business-activities/accounting-services.html; Auditor Market Share of S&P, AUDIT ANALYTICS (Feb. 27, 2017), http://www.auditanalytics.com/blog/auditor-market-share-of-the-sp-500/; The Top 40 Networks & Associations of 2016, ACCOUNTANCY AGE (July 13, 2016), https://www.accountancyage.com/2016/07/13/the-top-40-networks-2016-firms-switching-networks-like-a-game-of-musical-chairs/. 24 Professional Services Disruption C. Bridging the Gap (Members Only) The objectives of this paper are to: (1) objectively define the global legal services market past, present and future, (2) subjectively define the differences and similarities in accounting and legal services, and (3) define the opportunities that have been created by the tectonic shift in the professional services market. This section will define the strategies and discuss their specific implementation. This will require the creation of both a formal and informal organization to establish a framework. Within this framework, the parties will reach an agreement as to the common objectives and the parameters for achieving them.105 Let’s start with the objectives, the primary one being to consolidate legal and accounting networks so they are at the same level as the Big Four. If this can be done, huge opportunities will be created almost simply by the fact that their members already provide their clients $180 billion in professional services annually. Even the smallest change in the referral pattern represents more than a significant amount of revenue. 105 Tyrone Pitsis, Martin Kornberger & Steward Clegg, The Art of Managing Relationships in Interorganizational Collaboration, CAIRN.INFO (2004) https://www.cairn.info/revue-management-2004-3-page-47.htm. 25 Professional Services Disruption What are the factors that will push the professions up the consolidation curve? 1. Macro Collaboration - Moving Network Consolidation up the Curve106 The beginning of this paper set out the macro view of the legal and accounting professions. There were seven primary perspectives and tools: (1) Recognize that there are global shifts occurring in regard to who offers services and how those services are provided. In other words, it is not about the short- or medium-term; it is about structural constructs and not what is occurring in any particular market. It is about professional history, not about local developments. It is about the translation of ideas into implementations. It is about the big picture and, at the same time, it is ultimately about the micro results. (2) Change must be pushed externally. The status quo is affected by understanding the external environment. External development means education at many levels. Any upward movement can easily be set back by a lack of knowledge on the part of those involved.107 (3) Internal actions must be taken to educate network members. External transformation of the market does not mean an automatic internal transformation at networks. 106 Chart adapted from: Steven Martin, 3 Charts Which Illustrate the Future of the Legal Industry, FRESH MINDS (April 13, 2017), http://www.freshminds.net/2017/04/3-charts-illustrate-future-legal-industry/. 107 Heidi Gardener, Collaborating Better Across Silos, HARVARD BUS. REV. (Jan. 5, 2017), https://hbr.org/ideacast/2017/01/collaborating-better-acrosssilos.html. 26 Professional Services Disruption (4) Various products must be developed. In 2018, having a searchable website is a key component. However, websites tend to fall under the education process in (2) and (3) above. Any website must create opportunities for interaction rather than just be an online newspaper and Rolodex. 5) The objective should be refined by a database of each element in the developmental process. Everyone involved, related to, or affected by the process needs to be informed. This is only accomplished by a database can pinpoint individuals and organizations who are affected by the changes. (6) Technology is the engine of the overall collaboration process. 2. External Education and Relationships Publications. The most important element is to get everyone on the same page and define common denominators. This is particularly important when each profession has different competitive perspectives. The following books and manual serve this purpose:     Multidisciplinary Practices: Lawyers, Accountants and Consultants, the only treatise on MDPs; The Handbook: Law Firm Networks (2011-2018), a detailed 177-page analysis of legal and accounting networks as the model for global business; Leaders in Legal Business (2015 and 2018), the only book written by 33 leaders in legal business about their companies’ and organizations’ contributions to the legal profession. Authors include the presidents of the ABA, ACC, IBA, LMA, ALA, ALM, leading consultants, and academics; and The 1,000 Influencers and Leaders in Legal Business (2017), a comprehensive directory of the most important influencers in legal business. It is not just the publication of information that matters, but to whom that information is directed. The amount and scope are crucial. Too much information will be viewed negatively as an attempt to sell something. Too little, and there is no ability for the professional to connect the dots. The issue is to whom the information is directed. This requires the evaluation of each organization. For example, some organizations are hierarchical, meaning there is one or very few decision makers. In this case, information goes only to them. However, if there is a negative decision, it will be extraordinarily difficult to reverse it. In others, it is the opposite. There may be 20 directors, each of whom has a vote. Only one objection is required to negate a positive decision or essentially postpone a decision. This can be positive if there is one champion and the other 19 do not have a strong opinion. Therefore, it is key to locate this individual by contacting all of the directors. 27 Professional Services Disruption Social Media Social media is key because networks and associations require an independent means to deliver their messages. The reality is that legal media will rarely publish an article on networks. When there is an article, the subject matter is always the same. Something similar takes place in accounting. While there will be articles about events like a new executive director or the loss of a key member, the press tends to focus on the Big Four. AILFN has used social media to its advantage. The Independent Business Law Firm newsletter had 5,000 subscribers. Downloads of our publications include 17,300 of The Handbook: Law Firm Networks, 12,000 of Leaders in Legal Business, and 3,000 copies of The 1,000 Leaders and Influencers in Legal Business. A database of more than 26,000 individually-selected attorneys, legal entrepreneurs, and law firm managing partners, academics, the legal media, and anyone else interested in the business of law are now kept fully informed about networks. AILFN has 17,000-plus followers on LinkedIn. Information on networks has been viewed an estimated 750,000 times on social media. 3. Internal Education and Relationships It is little value if no one in the legal and accounting professions is aware of a collaboration strategy except the firms and their professionals who participate in the consolidation. What is required is to establish a focus that complements existing practices without creating a different layer of activities. This is where AILFN’s websites can be utilized. As such, organizations must enter the relationship with a thirst for new knowledge and be committed to the mutual growth so they can reach their objectives. Learning must be fostered, encouraged, and supported through knowledge management systems. This would include publications, websites, and social media. 28 Professional Services Disruption Collaborative knowledge management involves bringing organizations together to transform collaborative learning into intellectual assets by capturing, storing, retrieving, and disseminating knowledge that adds value. Knowledge of organizations needs to be known and recognized by individual professionals. “Collaborative knowledge management requires appropriate information technologies that promote foster collaborative relations. It also requires management systems in place that promote and foster the notion of collaborative learning. Integral to the success of this synthesis is the ability for the collaborative partners to transfer knowledge. First, they must be able to transfer the knowledge within each parent organization across the project, and second, the parent organizations must be able to transfer the knowledge gained at the project level back into the organization. In this sense, there should be specifically-designed processes for capturing and sharing knowledge in addition to the knowledge management tools outlined above. There must be a commitment to knowledge transfer and clear procedures regarding what knowledge is captured and transferred, and what knowledge is not important. Ideally, all professionals, irrespective of seniority or role, will be able to recognize the inherent value of learning.”108 4. Websites There are two types of websites, the most common being a passive provider of information: an online newspaper or Rolodex. The second is one that creates interaction and relationships. This should tie into internal education and relationship development. Aside from individual organizational memory, it is critical that collaborative learning and knowledge is captured and stored in an easily-accessible way. Human memory serves a critical function for survival. For a professional, having a system on which to rely for client representation is a form of professional survival. The right website can provide this type of system. 108 Tyrone Pitsis, Martin Kornberger & Steward Clegg, The Art of Managing Relationships in Interorganizational Collaboration, CAIRN.INFO (2004) https://www.cairn.info/revue-management-2004-3-page-47.htm. 29 Professional Services Disruption 5. Database The focus of the above has been on targeting the right individual or organization. A database is the key component in this search. It should be able to allow an individual to appear in multiple categories. For example, a person may be a partner at a firm, a member of a committee, a director of an organization, or located in a certain country/region. Segmentation allows one to direct information based upon specific interests, which facilitates collaboration. 6. The Technology Revolution – Leveling the Playing Field109 Of the six factors previously mentioned, information technology will have the greatest impact on professional services networks. It cuts across and is an integral component of all the other factors, for the simple reason that technology has already revolutionized how people interact with one another. Technology is scalable, so networks of all sizes are in an optimal position to use it. Even the smallest members in the most remote jurisdictions are now linked through networks that meet their specific needs. Technology enhances both the effectiveness and the efficiency of the services that they provide their clients. Multidimensional technology will allow attorneys to offer cost-effective and individualized services to clients. Networks, as the consolidator of resources, can provide or facilitate technology reaching all their members. Technology is a key component in bridging the gap.110 There are three types of technology: matter-centric, administrative, and organizational. Each of these types of technology relates to the others. Matter-centric facilitates specific types of projects or matters. Administrative relates the operation of the organization. Organizational relates to relationship among the professions or between organizations. For example, communications 109 Stephen Kelly, Digital Business: Technology Trends to Watch Out For in 2018, SILICON REPUBLIC (Feb. 8, 2018), https://www.siliconrepublic.com/enterprise/digital-workplaces-ar-vr-iot-2018; Roberto Saracco, A Never Ending Decrease of Technology Cost, IEEE FUTURE DIRECTIONS (Oct. 18, 2017), http://sites.ieee.org/futuredirections/2017/10/18/a-never-ending-decrease-of- technology-cost/. 110 “Depending on what the collaboration is meant to produce — be it a technological innovation, construction of a building, or to provide a service — technology and available expertise are critical. Experts are able to adapt and respond to uncertainty because they can use their knowledge and skills to overcome almost any problem. However, the technology they have available is also critical because expertise is embedded also in systems, things and material practices. Collaboration should not be entered into because, as some literature suggests, it is a cheaper way of doing business, but because there is a desire to achieve excellence at all levels of the project. Collaboration is by no means a ‘cheap’ way of doing business.” Tyrone Pitsis, Martin Kornberger & Steward Clegg, The Art of Managing Relationships in Interorganizational Collaboration, CAIRNS.INFO (2004), https://www.cairn.info/revue-management-2004-3-page-47.htm. 110 How Tech is Leveling the Playing Field for Small Businesses, SPRINT BUSINESS (2017), https://smallbusiness.sprint.com/wp-content/uploads/sites/4/2017/02/Sprint_how-tech-is-leveling-the-playing-fieldfor-small-business.pdf; Mark A. Cohen, Global Legal Tech Is Transforming Service Delivery, FORBES (Aug. 29, 2017), https://www.forbes.com/sites/markcohen1/2017/08/29/global-legal-tech-is-transforming-service-delivery/#62531dbe1346; Aaron Baer, Legal Tech and the Changing Legal Services Industry, LEXOLOGY (April 18, 2018), https://www.lexology.com/library/detail.aspx?g=2372fd05-ba5b-4888-8ee8b8c7452fe4f8. 30 Professional Services Disruption technology relates to all three. To be successful in collaboration, there must be common denominators on which each sector agrees. Related to technology is the concept of location. This has been described as primary markets and secondary markets. It has also been used in relation to where expertise is found. The assumption has been that there is different levels of technology in each. Technology flattens the world, and location itself is only one factor that is largely irrelevant when considering the resources available. Today, it is about access to information and resources. A second theme of this paper is the size of member firms. As previously discussed, size is associated with firm recognition. At one time, technology created an advantage for the largest organizations. In order to lead, the organization had to invest. With technology, there is no need for industry specialization because technology is fungible and scalable.111 These days, technology is professionally neutral. All firms have access to similar technology created for an ever growing number of number of companies. The third aspect of technology is how network members communicate and the structural foundation for their communications. Technology reconfigures the ability to contact one another and develops relationships among members or others. How can technology be used to benefit networks and clients? The first step for using technology is to carve out a market. For example, Uber deployed technology to use an existing underutilized resource. The resources were already in place, so all that was necessary was to develop a way to use these resources. It carved out the market and deployed resources for users to tap into the services for a relatively low cost. This was possible because if the limited role it place as an intermediary. In legal and accounting, it is possible to carve out such a market. AILFN has already accomplished this by defining the commonalities with statistics. It then took those resources to develop LawyersAccountants.com. Clients are asking for specific expertise at a fair cost. Locate Law Networks and Requests for Qualifications, which serve as the foundation of LawyersAccountants.com, supplies this. Cost has always been a significant determinative factor when it comes to accessing technology. Professional services integration requires a common level of technology, which was not possible as recently as the year 2000. The Big Four had the cost of technology but lost their technical advantage as pricing and availalbity of technology has decreased. The same technology available in 2000 costs a fraction of that in 2018, making it readily available.112 The Internet, now a necessary part of daily life, is provided to through utilities. This means the cost is substantially reduced because the largest market — consumers — are supporting it. 111 Id. D. Jordan Lowe, James L. Bierstaker, Diane J. Janvrin & J. Gregory Jenkins, Information Technology in an Audit Context: Have the Big 4 Lost Their Advantage? 32 J. OF INF. SYSTEMS 1, 87-107 (May 1, 2017). 112 31 Professional Services Disruption As a result of cloud capabilities, the same software and apps are available worldwide at a reduced cost because the distribution is greater. A cost and availability comparison chart would look similar to this:113 The fragmentation in law placed smaller firms at the very bottom of the access to technology. One of the reasons the Big Four were able to consolidate was because of common technology across the network. To move up the consolidation curve have to have come common technology. This has already effectively occurred because of the companies creating and supply technology provide it to everyone. Given the transformational impact that IT could have on both legal and accounting, a set of strategic imperatives emerge at three levels for technology management:    Strategic: establishing a close alignment with the business, developing a highly strategic approach to management of IT and building a radar/sensory function to spot and evaluate potentially disruptive developments coming over the horizon. Value-Additive: keeping a strong focus on innovation, value creation, communication, collaboration, and greater employee mobility. Operational: evolving an appropriate IT staff profile to support a more strategic role; helping deliver cost and efficiency gains across the practice; learning to master data and knowledge; strategic management of external partners; and ensuring a flexible technology infrastructure. (D) Opportunities for Networks with Biglaw and “Other” Law and Accounting Associations** One of the largest market segments is the “other” categories. Some are accounting and law firms that are not members of a network or association. These firms are not likely to use the largest firms for periodic selection of international counsel. It includes Biglaw which requires attorneys and accountants in other countries for their transactions or litigation. Biglaw 113 Steven Martin, 3 Charts Which Illustrate the Future of the Legal Industry, FRESH MINDS (April 13, 2017), http://www.freshminds.net/2017/04/3charts-illustrate-future-legal-industry/. 32 Professional Services Disruption Biglaw implies that the firms are global; however, the reality is that firms are international at best. Biglaw will continue to consolidate in the high-end market. Network member firms represent a location for each firm to find the talent to complete their team for any transaction. The assumption is that these firms already have connections. There are only 300 firms in the United States large enough to have any significant international practice.114 Networks can easily approach these firms acting as a group. This provides all of them access to quality firms for their clients. These firms are not in competition with local firms in the vast majority of countries. If you put the charts together, one discovers a fantastic and low-cost opportunity. Beyond the 25 largest, U.S. law firms do not have large international practices necessitating offices in other countries. This does not necessarily mean they do not have international clients.115 Their predilection may be to use indigenous firms as opposed to the competition, verein or the Big Four. 114 United States-Based Law Firms, WIKIPEDIA, https://en.wikipedia.org/wiki/List_of_largest_United_States-based_law_firms. Nicholas Bruch, ALM Legal Compass Snapshot: The NLJ 500, LAW.COM (June 28, 2018), https://www.law.com/2018/06/28/alm-legal-compasssnapshot-the-nlj-500?et=editorial&bu=ALM%20Intelligence&cn=20180628&src=EMC-Email&pt=Analyst%20Brief. 115 33 Professional Services Disruption Opportunity: Networks should market to all of the largest 500 firms — except the largest 25. If you look at the IBA directory, you see the U.S. membership is sparse. The Law Firm Yellow Book, on the other hand, provides access to 750 firms and their corporate practice leaders. Regular communications with them about network resources is easy and free. “Other” Accounting and Legal Opportunities Even when an accounting or a law firm is not a member of a network or an association, from time to time they will need to locate an attorney or accountant in another jurisdiction. The potential market for this is large, representing 60 percent of the global market for services. This is easily done with LawyerAccountants.com. Opportunity: This can only be accomplished through group efforts. Al that is required to do is contact the managing partners and corporate attorneys at each of the 500 largest U.S. firms and send them periodic information on networks and their resources. 34 Professional Services Disruption (E) Other Services – ALSPs** The ALSP market is projected to be worth $27.19 billion by 2024.116 The issue is who the providers will be: Will they be independent providers, or will they be offered by the Big Four on their menu of law services?117 The independent ALSP companies do not directly compete with law firms in the jurisdictions they both occupy. Firms are their clients, which may not want to use the Big Four because of competitive issues.118 The companies are highly specialized beyond the services that can be offered. Opportunity: While their services are currently being offered to Biglaw, these services and products will be offered to smaller firms.119 This can create an opportunity for mutual referrals, since their profile with clients will increase. 116 Legal Process Outsourcing (LPO) Market Worth $27.19 Billion By 2024, GRANDVIEW RESEARCH (Dec. 2016), https://www.grandviewresearch.com/press-release/global-legal-process-outsourcing-lpo-market. 117 Neil Rose, Growth of Alternative Providers – Especially Big 4 – Could Push Law Firms into ‘Contractor’ Role, LEGAL FUTURES (Feb. 1, 2017), https://www.legalfutures.co.uk/latest-news/growth-alternative-providers-especially-big-4-push-law-firms-contractor-role; David Curle, Alternative Legal Service Providers: Changing Buyer Perception, THOMSON REUTERS LEGAL (May 2, 2017), https://blogs.thomsonreuters.com/answerson/alternative-legal-service-providers-buyer-perception/; Mark A. Cohen, Legal Delivery at the Speed of Business -- And Why It Matters, FORBES (June 25, 2018), https://www.forbes.com/sites/markcohen1/2018/06/25/legal-delivery-at...it.../2 118 ALSPs Are About Specialized Expertise, Not Just Costs, Says New Study, LEGAL EXECUTIVE INSTITUTE (Jan. 31, 2017), http://www.legalexecutiveinstitute.com/alsps-new-study/; Hugh A. Simons, ALSPs Coming-of-Age Is Putting In-House Counsel in the Driver Seat of Industry Restructuring, LAW.COM (March 26, 2018), https://www.law.com/corpcounsel/2018/03/26/alsps-coming-of-age-is-putting-in-house-counselin-the-driver-seat-of-industry-restructuring/?slreturn=20180517123051. 119 Legal Process Outsourcing Market Size by Service, GLOBAL MARKET INSIGHTS (April 2017), https://www.gminsights.com/industry-analysis/legalprocess-outsourcing-lpo-market-size. 35 Professional Services Disruption Chapter VII. 12 Conclusions and Predictions 1. The Big Four are a concern but do not pose a concrete threat to Biglaw. Statistically, the threat is hard to ascertain because the information and media market is weighed toward law firms. The legal market in the largest locations is simply too large and complex for the Big Four to have any noticeable impact. Biglaw has significant name recognition at all levels, with the exception of social media. 2. Audit is the core around which the Big Four were organized. Audit also provides the Big Four an immediate in-road to sell other services, including legal services. Audit outside of the U.S. is less significant, opening up opportunities for law and accounting firm networks. 3. The Big Four are agressively entering the legal profession. They already have 10,000 attorneys and are located on average in 80 countries. With the exception of the United States (as a result of ethics rules), their legal practices will be global in a few years. 4. As the Big Four enter into legal practices in their existing locations, the largest indigenous law firms will no longer refer matters to the Big Four, since they are in direct competition. 5. Law firms will look for local accounting firms to refer their accounting matters. 6. Locating an accounting network member is difficult because they do not provide direct contacts. Law firms network have no information on accounting networks, and accounting networks have no information on law firm networks. 7. The largest law firms in other countries would rather not refer their matters to the Big Four, as their stated ojective is to represent clients at all levels of transactions. They need to locate accounting and law firms in each country. This creates opportunities for both professions. 8. If law and acounting network members can refer business, tools must be created to make locating each other simple. Creating and marketing these tools is not realistically possible for one network. 9. Increasing law and accounting network profiles will require additional branding. Given the number of networks, they will not be able to do this 100 percent by themselves. Organizations that represent their common interests are required. 10. Technology is changing how information is accessed and distributed. This increases access, reduces cost, and makes referrals possible. As in other businesses, this is inevitable and must be addressed in some organized way to compete and open up opportunities. 11. A system to make information available for potential business clients must be created, because they continue to select firms themselves. This system has already been created by AILFN for law firms and will be extended globally to accounting networks. 12. Other services are in competition with the Big Four, such as consulting (McKinsey or Booz Allen), ALSPs (Integreon, UnitedLex, and Elevate Services), and other service providers. Relationships with these organizations can generate referrals to accounting and legal network members. 36 Summary: 2018 - 2021 100% 80% Global Market Concentration 60% 40% 20% 0 Va Sauce-2 t'om Hoard Besiness 'he Consolidalbn Cave Stage I 51090 7 Opening 5ch lo Professional Services Disruption Stage 1% Stage 4 Fricus Balance Alliance Legal and Legal and Accounting Networks and Associations Global Market Consolidation Accounting Networks and Associations of Independent Firms $190 billion Legal and Accounting Networks and r, Associations of Independent Firms $180 billion Big Four Accounting Networks $145 billion Consolidation drlven by deregulation. new technology and successful firms Insurance . legal services Individual Law I Individual Law Firms Firms 37 Adapted: Fresh Minds, 3 charts which illustrate the future ofthe legal industry 13 April 2017, Steven Martin Professional Services Disruption Appendix 1 Global Legal Market 2000 20 Largest Law Firms Coverage 30 jurisdictions, 40,000 ettorneys Cumulative Revenues - $30 billion 51096: I SlnuH f) Sl?ge 4 {Dimming f?li?jtilli} . Bulunce 8. Alliunce 100% . . Defence 301%: Industry concenh?ulion Accountancy ?rms] Aulumo?ve 40% consolidollon driven by deregulollun. new lechnology and 20% successful iirms Insurance . legul-xerulcei (deucnd'riu SHEET: 0% Time Euu'cv: ?duu'vu I'u?n "lu. iui'rwu ?cu-v 38 Professional Services Disruption Appendix 2 – The Big 4 and Biglaw Online – Unique Users Per Month (Similarweb.com) Legal Sites of Firms and Businesses (February 2018) 39 Professional Services Disruption Appendix 3 – Bibliography 2018 – Big Four and the Legal Profession Jim Middlemiss, Accounting for Legal Work, CANADIAN LAWYER (April 2, 2018), http://www.canadianlawyermag.com/author/jim-middlemiss/accounting-for-legal-work-15535/ Erin Hichman, The Big Four are at the Door - and They're Better at Meeting the Future Needs of Your Clients, LAW.COM (April 12, 2018), https://www.law.com/2018/04/12/the-big-four-are-at-the-door-and-theyrebetter-at-meeting-the-future-needs-of-yourclients?et=editorial&bu=ALM%20Intelligence&cn=20180412&src=EMC-Email&pt=Analyst%20Brief J. Patrice, Twilight of the Law Firms: the Big 4 Are Poised to Conquer the Legal Landscape; the Existential Threat to Law Firms May Not be Technology After All, ABOVE THE LAW (Feb. 8, 2018), https://abovethelaw.com/2018/02/twilight-of-the-law-firms-the-big-4-are-poised-to-conquer-the-legallandscape / Nicholas Bruch, David B. Wilkins & Maria J. Esteban Ferrer, Taking on the World: The Big Four in the Global Legal Market, LAW.COM (Oct. 18, 2017), https://www.law.com/americanlawyer/almID/1202798449576 Steve Burkholder, Law Firms, Regulators Keep Eye on Big Four Move to Legal Services, BNA.COM (Oct. 17, 2017), https://www.bna.com/law-firms-regulators-n73014471292/ Stephen Poor, Big Four vs. Big Law: The Race to Change Legal Services Delivery, BIG LAW BUSINESS (Oct. 4, 2017), https://biglawbusiness.com/big-four-vs-big-law-the-race-to-change-legal-services-delivery/ David B. Wilkins & Maria J. Esteban Ferrer, The Rise, Transformation, and Potential Future of the Big 4 Accountancy Networks in the Global Legal Services Market, CLS BLUE SKY BLOG (Sept. 26, 2017), http://clsbluesky.law.columbia.edu/2017/09/26/the-rise-transformation-and-potential-future-of-the-big-4accountancy-networks-in-the-global-legal-services-market/ Debra Cassen Weiss, PwC to Open US Law Firm, a Sign of Increasing Focus on Legal Operations by Big 4 Accounting Firms, ABA JOURNAL (Sept. 21, 2017), http://www.abajournal.com/news/article/pwc_opens_us_legal_arm_a_sign_of_increasing_focus_on_legal _operations_by_bi Chris Johnson, Do the Big Four Accounting Firms Pose a Big Threat to Big Law? LAW.COM (Sept. 14, 2017), https://www.law.com/sites/almstaff/2017/09/14/do-the-big-four-accounting-firms-pose-a-big-threat-tobig-law/ Michael Cohn, Big Four Increasingly Competing with Law Firms, ACCOUNTING TODAY (Sept. 14 2017), https://www.accountingtoday.com/news/big-four-accounting-firms-are-increasingly-competing-with-lawfirms Nicholas Bruch et al, The Big Four’s Expansion in the Legal Services Market, ALM.com (Sept. 2017), https://www.alm.com/intelligence/solutions-we-provide/business-of-law-solutions/analystreports/elephants-in-the-room-the-big-4s-expansion-in-the-legal-services-market/ David Wilkins & Maria Jose Esteban, The Reemergence of the Big Four in Law, HARVARD CENTER ON THE LEGAL PROFESSION (Jan. 2016), https://thepractice.law.harvard.edu/issue/volume-2-issue-2/ (global legal market $700 billion) 40 Professional Services Disruption Julius Melnitzer, Accounting Firms in Law: The Long Game, LEXPERT (Sept. 11, 2017), http://www.lexpert.ca/article/the-long-game/?p=&sitecode= Miriam Rozen, Brand Rankings Show Law Firm Alternatives' Growing Clout, LAW.COM (Feb. 14, 2018), https://www.law.com/americanlawyer/2018/02/14/brand-rankings-show-law-firm-alternatives-growing John Gould & Michael Stacey, Are Accountants Disrupting the Legal Services Market? ECONOMIA (Jan. 14, 2016), http://economia.icaew.com/opinion/january-2016/are-accountants-disrupting-the-legal-servicesmarket Michael West, Come Hide With Us – Bean Counters Raid Big Law Firms, THE CONVERSATION (Oct. 16, 2017), https://theconversation.com/columns/michael-west-339731 Andrew Arruda, Can the Big Four Accounting Firms Become the Biggest Disruptors in Law, ROSS INTELLIGENCE, https://rossintelligence.com Deloitte Muscles in on Legal Services in UK, FINANCIAL TIMES (Jan. 9, 2018), https://www.ft.com/content/fa38f3c8-f54a-11e7-88f7-5465a6ce1a00 Stephen McGarry, The Big Four and the Real threat to the Global Legal Market, LEGAL BUSINESS WORLD (Oct. 7, 2017), https://www.legalbusinessworld.com/single-post/2017/10/04/The-Big-Four-and-the-Real-GlobalLegal-Market Sol Dolor, Here’s Why Law Firms Should Keep an Eye on the Big Four, THE AUSTRALIAN LAWYER (Dec. 22, 2017), https://www.australasianlawyer.com.au/news/heres-why-law-firms-should-keep-an-eye-on-the-big-four245035.aspx Big Four Audit Firms Eye the Pie in Legal Services, GEP.COM (Nov. 3, 2017), https://www.gep.com/mind/blog/big-four-audit-firms-eye-pie-legal-services 41 Professional Services Disruption Appendix 4 – Multidisciplinary Practices and Partnerships – Lawyers, Consultants and Clients, ALM (2002), Stephen McGarry 42 Professional Services Disruption Law Office Management Series Multidisciplinary Practices and Partnerships Lawyers, Consultants and Clients Stephen J. McGarry Member of the Texas, Louisiana and Minnesota Bars 2002 American Lawyer Media 105 Madison Avenue New York, New York 10016 43 Professional Services Disruption Table of Contents Chapter 1 Introduction: Why is this Happening Now? Stephen J. McGarry 2 The Work of the ABA Commission on Multidisciplinary Practice Professor Laurel Terry The Dickenson School of Law 3 The International Bar Association Perspective Dr. Heinz Lober Partner, Freshfields 4 The Multidisciplinary Practice of Law in Europe Ramon Mullerat, OBE Partner, IURIS VALLS Abogados 5 The WTO General Agreement on Trade in Services (GATTs), the Liberalization of Legal Services and Multidisciplinary Partnerships Carlo Gamberale Associate, Cleary Gottlieb Steen and Hamilton 6 A Few Lessons from the Accounting Profession Richard Miller General Counsel, AICPA 7 Big 5 Practice Geanne Rosenberg Professor, Baruch College, U of NY 8 Law Firm Diversification Robert Denney Principal, Robert Denney and Associates 9 Dancing Among Giants – Smaller Firms in the MDP Age Norman Clark and Lisa Walker Principals, Walker Clark 10 Of Brain Surgeons and Barber Shops: The Economic Consequences of MDPs on the Legal Profession Bryant Garth and Carole Silver Director, ABA Foundation; Professor, Northwestern University School of Law 11 What’s in MDPs for the Public? The Consumers’ Viewpoint James Brown Director of Center for Consumer Affairs, U of Wisconsin 12 The Corporate Client’s Perspective: Legal Services for Clients who Do Business in the 21st Century Susan Hackett General Counsel, ACC 13 The Incompatibly of Multidisciplinary Practice and Lawyers as Officers of the Court William Ide Former President ABA, and GC, Monsanto 14 Multidisciplinary Organizations (MDOs – The Competitive Alternative to the Big 5) Stephen J. McGarry 15 Making MDPs Happen – A Look into the Crystal Ball Anthony E. Davis Partner, Moye Giles O’Keefe Vermeire & Gorrell 44 Professional Services Disruption CHAPTER 14 Multidisciplinary Organizations (MDOs), the Competitive Alternative to the Big 5 Multidisciplinary services are here to stay. The Big 5 professional service firms are able to offer legal services in more than 150 countries directly from their offices. They have also formed networks. Combined, they now have 8,000 attorneys practicing law. What alternatives does the independent professional service firm have? Are the only alternatives to either: (1) join an MDP, (2) become an MDP or (3) confine practice to litigation where MDPs may not practice? This chapter discusses how service providers of all sizes will be able to offer the full range of services through Multidisciplinary Organizations (MDOs). In an MDO, professional service providers maintain their independence but geometrically expand their referral base and gain access to the full range of services to offer clients. The chapter will also analyze how large independent service providers, such as law, consulting and accounting firms, can create an organization to compete directly with the Big 5. 45 Professional Services Disruption Chapter 14 Multidisciplinary Organizations (MDOs) - The Competitive Alternative to the Big 5 Stephen J. McGarry120 Chapter Contents § 14.01 Overview § 14.02 Multidisciplinary Organizations and Professional Services [1] [2] [3] Globalization and Localization Core Competencies and Quality Cost Effectiveness through Technology § 14.03 MDOs and the Big 5 — Client Relationships and Choices § 14.04 Multidisciplinary Organization Models UI [2] Independent MDO (I-MDO) Relationship MDO (R-MDO) § 14.05 Rules and Enforcement — Interests of the Parties [1] [2] [3] [4] [5] Unauthorized Practice of Law by an Association Multi-Jurisdictional Practice — Unauthorized Practice by Lawyers Referral Fees Advertising Marketing Directories — Organization and Lawyers Other Issues § 14.06 Competitive Implications § 14.07 Summary 120 Stephen J. McGarry, BA, MA, JD, LLM is a member of the Texas, Louisiana and Minnesota bars. He is currently president of HG.org, one of the largest Internet legal sites. McGarry is the founder of Lex Mundi and its past president. Lex Mundi is the leading association of independent law firms whose 15,000 attorneys in 100 countries billed in aggregate $5 billion in 2000. 46 Professional Services Disruption § 14.01 Overview The first chapter discussed the development of multidisciplinary practices and partnerships through 2001. It did not discuss other alternatives where traditional networking organizations expand to include multiple professions. Through membership in the multidisciplinary organization (MDO), many different types of professionals are able to aggregate resources and offer true multidisciplinary services to their individual clients. The professionals are able to develop new relationships and at the same time resolve all of the ethical and regulatory issues that have been discussed throughout this treatise. Is this possible? Let’s jump ahead to the year 2010. Professional Services, Inc. — John Smith is an attorney in a small office in Wichita, Kansas where his practice focuses on agricultural law. He has developed a regional and a national reputation in agricultural financing. His six-attorney office has no branches but does from time to time become involved in complex transactions.121 These transactions could put a strain on the firm’s resources if not for the fact that his firm belongs to Professional Services, Inc. (PSI), a subsidiary of Microsoft. John and his partners regularly use the PSI team members in complex litigation and commercial matters. PSI brings together on-line many types of professionals in areas of law, accounting, technology, management consulting, financial planning, real estate, and similar areas. After an extensive interview, references are checked and the firm or professional can join the group by paying an annual fee based upon the number of professionals at the firm and a percentage of the previous year’s overhead. As a member of PSI, John gains instant access to 100,000 screened professionals from small and medium-sized professional firms across the United States and Canada. With a few clicks on his mouse, he can locate professionals, review their credentials and run a preliminary check for conflicts. After his review, he can set up a videoconference, right from his search. PSI is managed and controlled by Microsoft but does have advisory boards for each profession to assure compliance with ethical rules. To assure that members benefit, Microsoft spends more than 309a of the revenue on advertising PSI. This includes advertising at its websites like CNBC and in printed publications that go to hundreds of thousands of small businesses. World Services Group — Judy is a lawyer with a very large law firm that has offices in a number of jurisdictions. Her clients are principally large international companies. She, too, requires many different professionals to complete the complex transactions on which her firm works. Even though the ABA in 2003 finally passed a recommendation to permit multidisciplinary partnerships, which was adopted by 37 states, her firm believes it has found a better alternative in World Services Group (WSG). WSG is an organization formed by large service firms themselves. Each member is a leader in a profession, field or jurisdiction. They include the traditional regulated professional practices such as law, accounting, and real estate, as well as computer and management consulting, insurance, baulking and other financial services, 121 Clark, Multidisciplinary Practices: What Will It Mean for the Smaller Law Firm, 72 Wisconsin Lawyer 19 (3) Sep 99. 47 Professional Services Disruption investigative services, and related services. In total there are more than 40 different services offered. The members are the companies, firms or networks of firms. Each group has placed detailed information on the members and on each professional into a database. With a few clicks, each professional can choose among 100,000 professionals in 140 countries. The firm, company or network pays an annual fee. The fee covers the technology, which is also supplied by Microsoft, internal networking programs and external marketing. As an association of independent entities, a board of directors sets general policies with which each member must comply. In addition, WSG members regularly meet based upon their common interests. The multimillion-dollar marketing budget is used for joint client seminars and publications. The members’ principal competition for projects is the Big 5. As a result of the reputations of the members, existing contacts with major clients and governments WSG has gained a reputation for having the best independent firms. In recent years, members feel that WSG has made it possible for them to acquire a disproportionate amount of work for its members. While PSI and WSG are fictional, the building blocks for such organizations are already in the market place.’122 These services include matching services such as Elance.com and First Law, UK.123 There are also associated service providers (ASPs) that permit professionals to create secure extranets with their clients.124 Combining these functions with those of a traditional professional network would result in a multidisciplinary organization. PSI, a highly sophisticated directory, is an example of a possible Independent Multidisciplinary Organization (I-MDO) where independent professionals pay a fee to a third party to match their needs with the expertise of other professionals. To locate one or more professionals from the database to meet their needs, consumers, both individuals and small businesses complete a form. The needs are matched with those of professionals who would like to handle the matter. The professionals are notified by email when there is a match. WSG is the Relationship Multidisciplinary Organization (R-MDO)125 where the service providers themselves created an association to systematically establish relationships among a number of networks, firms, companies and, most importantly, the professionals themselves. Membership is limited by the type of service and by jurisdictions depending upon the nature of the services. The result is that all types of professional services are available through WSG. In this way each professional can easily locate end assemble a team by choosing the exact professional to meet clients’ needs from firms with whom they have a relationship. The MDO extends the concept of a professional networking, which is common in the legal profession,126 to other service providers. Combining the traditional functions of professional networking organizations (publications, meetings, committees, etc.) with databases of 122 One can find them in a number of industries such as steel, oil and gas, and automobile parts. Matching services for expert witnesses have been around for a number of years through TASA. Each witness and each person seeking a witness pays a fee. Serengeti, Inc. (http//www serengetius com) intends to create a location to purchase 50 services. Vorhees, Am. Law., Apr. 2000 at 3028. 123 First Law, http://www.firstlawsolicitors.co.uk. 124 Niku, http //www niku com. 125 Freidheim, The Trillion-Dollar Enterprise (Perseus Books 1998) uses this term to define a network of networks or alliances. 126 Martindale Hubbell publishes a list of networks, alliances and affiliations in its directories. Updated Background Information Report and Request for Comment, May 12, 2000 (http://www.abanet.org/cpr/febmdp.html). Martindale Hubbell, Volumes I, II and III, International Law Firms. HG.org — the Comprehensive Law and Government site (http//www.hq or9) has a similar list. McGarry, Practicing Law in the 21“Century Will Require Affiliation, Legal Management, 34, May/June 1994. Semoa, Captive Law Firms vs. Global Legal Networks. The MDP Inquiry Continues, 82 Tax Notes 36-40 (Jan. 4, 1999). 48 Professional Services Disruption professionals allows for the instant creation of multidisciplinary teams. The MDO is more than an association; it is an entity whose objective is to assist members in acquiring and retaining clients. § 14.02 MDOs and Professional Services The first chapter discussed several trends that accelerated the creation of the Big 5: globalization, core competency convergence and increases in efficiencies resulting from technology. The MDO must be placed in context as to provide a contrast between it and the Big 5 consulting firms. The reasoning might seem circular that professional services are created out of the demand for the services.127 Demand is largely external, although new services themselves sometimes create the demand for those services. Assuming there is a demand, the primary competitive issue for professionals is how they can locate clients who want or need their services. When competition is high, as is the case in the service markets today, the cost of client acquisition becomes more important. Law firms, which spent little for marketing in the past, have extensive and growing marketing departments. That said, law firms, no matter what their size, cannot match the Big 5’s marketing budgets that together exceed $100 million.128 Service providers are now expanding geographically as never before. Their objective is to locate geographical and topical markets that have not been fully penetrated. one of the primary benefits to professionals in the Big 5, as one-stop shops, is that they reduce the cost of new market penetration through the cross-selling of new services by professionals who are already in the marketplace. This leverage is not available to independent firms, which must undertake significant costs in order to expand into new markets. It is also not available in most law firm networks because few law ferns have an interest in assisting a fellow law firm member, which could become a competing law firm, enter their market. However, in the case of an MDO, non-competing professionals can create new joint services using each other’s services. The MDO, by combining traditional networks with new technology, creates a way to penetrate existing and future markets.129 It does so by creating a high level of resource transparency between independent networks, companies and businesses so each has the resources of the other available in all markets. They can provide access to professionals everywhere for every service as well as create new services. Ultimately, the scope of the services could extend beyond that offered by the Big 5. Once contact is made among the professionals, a peer-to-peer relationship can be developed independent of the central network.130 All this is done without the overhead of a large centrally located bureaucratic organization. Resources can then be spent to cross-market services while internal control shifts to each unit of the MDO and focuses on its own core competencies. Access to the MDO can be extended to the public or the corporate client if the organization would like to further broaden the referral base. The gatekeeper is no longer required. The corporate client can create peer127 The American Bar Association Commission on Multidisciplinary Services was unable to study the interest in MDP services but commented that it was not the objective of the Commission to determine demand 128 In addition to large marketing budgets, a number of Big 5 firms are now in the venture capital business funding tech companies with whom they can joint venture. MacDonald, Arthur Andersen Sets Up Fund to Take Stakes in Web Startups in Lieu of Peas, WSJ, AIO, January 24, 2000. 129 Elkin, Law and Economics in Cyberspace, Annual Conference of the European Association of Law and Economics, 19 Int’l Rev. of Law and Econ., 553-581 (Dec. 1999). 130 The traditional concept of a network, including the Internet, is that communications is through a central hub. Peer-to-peer permits users to bypass the hub and deal directly with others. A directory is one example of a peer-to-peer vehicle and a matrix is another. When it is done on line, the users separate themselves from the network and begins to deal with each other directly. An example can be found in Niku Legal (http://wwwniku.com/legal/index.html). 49 Professional Services Disruption to-peer relationships outside of the system with selected professionals. The result is that the centralized MDP loses some of its advantages and the members of the MDO receive additional referrals.131 While the Big 5 will maintain their considerable advantages of common quality and responsiveness standards, MDOs can create structures to challenge these advantages. [1]—Globalization and Localization Clients’ needs for services are unique. There are no two businesses that have the same needs at the same time in the same locations. The Big 5 seeks to solve this problem by bringing resources in-house to offer all services to businesses everywhere. The MDO seeks a solution by combining existing networks and service providers into a common organization. Each has the common objective of being global as well as local at the same time. Legal services traditionally have been local in nature. This is changing, as services are more uniform.132 It is not uncommon for lawyers to have a national practice in a particular area of the law. The Internet makes it easier to locate attorneys with national expertise as John in the PSI example. It also makes it possible for John to market his services to a large group of potential clients. The Big 5 have used globalization as a way to offer similar services and products developed in one market or country in other markets or countries. Beginning with accounting and auditing, which required common standards be applied, the Big 5 have applied the same principal to other services. As transactions become even more uniform, products developed in one jurisdiction can be applied in another. The result is a high return on their investment. True economies of scale can be achieved because they are at the same time global as well as local. Using information technology, the Big 5 have the opportunity to localize and tailor services to specific clients anywhere in the world by using vast resources developed in other parts of the world. The client can then further refine the services with the local professional. Professionals, who can provide these tailored services, create a loyal client who knows that in the future all of his consulting needs can be satisfied in one place. Law and consulting firms, not part of the Big 5, cannot provide these services on a uniform and global basis. The challenge for the professional service organization lies in being able to differentiate their services. In theory, firms or companies that are members of an MDO have the advantage because they have access to greater resources that they do not have to maintain themselves. Most importantly each is already a brand associated with a type of service. On the other hand, the Big 5 have the resources to reach many more possible clients. To provide this transparency for the services of the members, the MDO will need to create structures in which information can be shared local, globally and between the different members and with clients. The type of information would provide comparisons with the competition in each of the areas. When this is done, it will become clear that the MDO members can offer far more services then the Big 5. 131 When communications are direct among the principals in a transaction, this affects other organizations that have traditionally filled the role of monitor or intermediary. 132 Daly, Resolving Ethical Conflicts in Multijurisdictional Practice — Is Model Rule 8.5 the Answer, An Answer, or No Answer at All, 36 S. Tex. L. Rev. 715, 723 (1995). 50 Professional Services Disruption Because top professional service firms must provide both local as well as global services, they have no choice but to be part of an MDO or MDP. While the Big 5 are adapting their strategies to both localization and globalization, the larger issue is whether their structures are suited for optimum performance when new technology makes a decentralized operation much more efficient and cost effective. [2]---Core Competencies and Quality The American Bar Association’s Commission on Multidisciplinary Practice in its final report added competency as one of the core values of the legal profession.133 While the other core values may be what distinguish a profession from a job,134 competence of professionals is what clients seek, perhaps above all. The Big 5’s MDP strategy developed because complex transactions require assembling and managing teams of competent professionals to assist the client. As competencies converged or began to intersect this raised the unspoken issue that is the heart of the multidisciplinary practice debate: Who manages the team when many issues are involved in the transaction? It is the “managed’ who must make decisions on the importance of each of the services being provided to achieve the desired result. This is where the power lies and what may be really at stake in the MDP debate. The Big 5, using their multiple services, would like to manage the entire transaction. Managing the transaction means higher fees than simply being part of the team. Perhaps this is why the Big 5 places so much emphasis on management and marketing 135 Law firms and other professionals may be extremely competent in their limited areas of expertise. However, the skills that are required to reach and implement a conclusion are more managerial then professional. Since multidisciplinary partnerships are prohibited in most of the principal jurisdictions, the very real question for the legal profession is: How are lawyers going to develop these managerial skills that the client considers to be the most important element of the transaction? For the time being, law firms, because of ethical restraints or lack of skills, are unlikely to be the ones chosen to manage the transaction. This means that the Big 5 have the capacity to control the transactions regardless of the other services that may be required to complete it. Again, the MDO can assist all of its members in developing new management skills by sharing information. This can be done at meetings and in publications. Members can meet individually to form sub-groups. These new skills will make each of the members more competitive as well as more competent to provide and manage complex services for their clients. [3)----Cost Effectiveness through Technology More than one third of the cost for legal services is overhead including rent, support, equipment and marketing. Technology in recent years has reduced the staff support costs and generally improved productivity.136 The Internet, because it is accessible from many location, will even make more change in the 133 American Bar Association, Final Report to the House of Delegates, July 2000. 134 The other core values were independence; maintain confidences and loyalty by avoiding the conflicts of interest. 135 Arthur Andersen has numerous training facilities where new recruits as well as lateral hires are trained in the business of management. http://www.arthurandersen.com/website.nsf/content/CareersTraining?OpenDocument. 136 For overhead comparisons, see the Altman-Weil Annual Law Firm Survey results. 51 Professional Services Disruption cost structure possible,137 as even less space and support are required, and a different type of marketing is deployed."138 The Big 5 are already deploying the Internet to take advantage of its efficiencies. For example, they are in the process of physically restructuring their offices. In some cases, this means standard-size offices for everyone while in other cases the complete elimination of offices even for the partners. Should a partner require a space, it must be booked in advance. With technology, virtual private networks can be created by anyone. These secure communication links permit direct access from home or on the road to all information. When professionals work at home, they require less staff support. New technology also means that operations can be efficiently managed by making internal documentation easily available without the need for printing and distribution. Contacts with home office departments are possible from anywhere so that separate regional administrative centers are no longer necessary. MDOs can create the same reduction of overheads even though the member organizations are independent. The Internet can be used to bring the sum total of all the resources of the individual parts of the MDO to each individual professional. For example, office space can be scheduled in remote locations through the network.139 Assistance can be provided when professionals travel through a free-advice policy. Marketing is one area where legal networks have not taken full advantage of their power. Using a database can make marketing very low cost since it creates the opportunity to share information with clients and nonclients based upon self-defined interests. Much of the marketing of the future will be matching interests of clients to those areas in which the firms have expertise. Demand for new services is created by demand for old services. A major concern of lawyers is that they do not have the same daily contact with clients as the Big 5 140 members know how to use information, cost efficient opportunities are easily created for the professionals and entities to market directly to clients. Information can be shared to cross-sell services or create bundled services. The MDO reduces costs for services while it increases the return to the professional providing the service. The costs are reduced by the elimination of distribution inefficiencies.141 Professionals deal directly with each other in real time and with their clients. The resources available for each unit are the total resources in the 137 At present there are few articles on MDPs and the Internet. There are a number of articles that look at the impact of the Internet on the practice of law in general. Kraft, The Increasing Use of the Internet in the Practice of Law, 69 J. Karr. B. Assoc. 15 (9) (Feb. 2000); Pruner, The Internet and the Practice of Law, 19 Pace L. Rev. 69-93 (Fall 1998); Dog The Competitive Law Firm of the 21" Century: Web Technology 62 Tex. B.J. 676 (3) (July 1999); The Internet “Full and Unfettered Access” to Law and Some Implications, Martin 26 N. Ky. L. Rev. 181-209 (Summer 1999); Hellwege, Will B-law Change the Practice of Law, 36 Trial 12 (June 2000), Munneke, When E-lawyering and Legal Ethics Collide, Nat’I L.J C25. (August 28, 2000); Schmitt, Lawyers vs. The Internet, WSJ, R34 (July 17, 2000); Davis, Meyer, Davis, Blur: The Speed of Change in the Connected Economy (Little Brown & Company 1999); Kelly, New Rules for the New Economy (Penguin Books 1999). 138 One example is LawCommerce.com (http://www.lawcommerce.com), which has created a superstore for purchasing products used by lawyers and law firms. There are substantial discounts on these products that can be purchased at the site. 139 For example, Lex Mundi (http //www.lexmundi.org) has a free-office-space policy that permits any of the 15,000 member-lawyers the opportunity to arrange for space in the more than 400 offices worldwide. 140 “There is perceived, for example, to be an unusually close relationship between managers and consultants and senior executives whom they advise. Attorneys may, and I think do, fear that accounting/consulting firms can leverage, perhaps: ‘unfairly’ these relationships to sell the services of the laws firms owned by them.” Written comments, William Hannay, March 11, 1999, American Bar Commission on Multidisciplinary Practices. 141 Solomon, Matter Management Software Now Available Online, Nat’1 L.J. CS (Jan. 24, 2000), discusses combining Elite for time keeping, iManage for documents and SQL into a single interface so that an attorney can have access to all client shatters from a browser. 52 Professional Services Disruption virtual network as a whole rather than the limited resources at the individual member firms. Those resources can efficiently be deployed where and when they are needed. § 14.03 MDOs v. Big 5 - Client Relationships and Choices The heart of the MDP debate is creating relationships with clients so that they are attracted to the one-stop shop. Clients want the opportunity to choose. The Big 5 and the MDO members have similar but different perspectives on these objectives. The Big 5 are seeking to maintain and consolidate their global lead in the professional services market by creating relationships with existing and potential clients.142 Increasingly technology is being used. While bar and other professional associations have made good use of technology to channel communications to and from the organization, few associations use it to foster relationships among members themselves. Peer-topeer networking is still an untapped opportunity for almost all professionals outside of the Big 5. At present most of the networking is done at meetings rather than on-line. In the same way the Big 5 create teams internally and develop relationships,143 independent professionals and organizations could create competitive, if not better, alternatives for multidisciplinary services. A group of independent firms can likewise increase the level of internal contact among professionals in different fields. For example, environmental lawyers would have the opportunity to network with environmental consultants, engineers and others who have common interests. When information is collected, it can also be shared with clients of all of the members.144 In short, building these relationships makes it possible for the MDO to take multidisciplinary practice to its logical conclusion. It permits professional service providers the opportunity to focus on one or several core competencies but at the same time have access to all services. This model contrasts significantly with the existing Big 5 strategy to bring all services in-house. Even while some of the Big 5 are reorganizing to create separate entities for accounting/auditing and their consulting practices, their model remains the management of large numbers of professionals operating under a single brand name. The strategy is the same for large multinational law firms that have become MDPs that generally elect to retain their other professional services in-house.145 The MDO also permits establishing a secondary name brand that can be used by the member firms but without the ethical constraints discussed throughout this treatise. One-stop shopping is about choice. Ironically, at the same time the Big 5 are explaining the benefits of the one-stop shopping, the in-house MDP model may actually be undermining the very purpose of expanding choices to clients. The reason is that the only services that are available are from the professionals in the MDP itself. If a grocery store only offered its own brand names, it would not be a one-stop shop since its capacity to offer products is limited. The same limitation applies to the Big 5. The MDO, where each member individually focuses their practices and services on a few competencies, can offer the public and businesses even greater choices at a reduced cost. The MDO model is likely to be very 142 The Big 5 have unlimited access to technical resources as a result of their consulting practices and also their venture capital investments. When Dupont wanted a system designed to manage outside counsel, they turned to Arthur Andersen. AA now can use a similar system to manage its relationships with clients. like Law and Disorder, Redherring (Apr. 1999) at http://www.redhearring.com/may/issue65/news- law.html. 143 Arthur Andersen permits its clients to access its database of papers and monographs. See http:/fwww.globalbestpractices.com/. 144 For example, law firms and other service providers are purchasing product that facilitate interaction between professionals and clients through the sharing of real time information. One product can be found at http://www.niku.corn/legal/index.html. 145 There are a number of firms that have MDPs, including Womble, Carlyle, Sandridge and Rice (Technology), Littler and Mendelson (Employment), Hale Dorr (Technology), Howey Simons (Employment), Arnold and Porter (Lobbying), to name a few. 53 Professional Services Disruption competitive since it would permit a greater amount of tailoring of the services to meet the exact needs of the client by offering an expanded palette of choices. Growth of the available services would be unlimited since each professional entity manages itself. New services can be readily added to further increase choice. The MDO can go beyond the Big 5 model by creating opportunities for clients to become a de facto part of the system.146 While the existing MDPs’ one-stop shopping is based upon the professional gatekeeper at the MDP who selects other professionals, why is this necessary? The MDO retains the gatekeeper professional but it could empower the corporate client to shop directly for services that are contained in the MDO. The client becomes almost an associate member. This latter opportunity is likely to have great appeal to the inhouse corporate counsel who wants to select the best professionals from among a range of professionals who have already been screened by a reputable organization. While the Big 5 may have ethical and regulatory issues, they are well organized. On the other hand, the MDO will face organization and structural issues when they are created. To achieve their objectives, standards and rules must be adopted by the MDO to apply to all the members when working with clients. Since the MDO professional team will be judged on the same performance standards as an in-house MDP, these standards are going to require significant amounts of work. New skills will need to be developed as the professional roles converge with that of managerial roles. § 14.04 MDO Models In the beginning of this chapter, the two hypothetical examples were introduced and have been referred to in a number of places. Before evaluating the ethical issues, additional detail on the models would be useful. They are the I-MDO and the R-MDO. [1]—An Independent MDO (I-MDO) There are already a number of virtual MDO’s that are interested in providing consumer’s access to professionals.147 “The user simply enters some basic information about the issue, which is then matched with a lawyer, architect, accountant or other professional. In addition, there are a number of services that provide real time answers to questions from experts, including lawyers.148 At present, on-line services do not attempt to match professionals to professionals, though the professionals themselves can do this through the services. The services charge the lawyers a monthly fee. The payment of a fee for possible referrals raises a number of issues, though if done correctly, they can be resolved.149" The I-MDO is essentially the same as a directory with the added feature that the members must have a certain reputation for quality. The members must also trust that the criteria for selection have been objective. Without these common standards, developing relationships among members will not occur. Several ethical issues are discussed in the next section. 146 The best- known example of this is the Dupont model. In 1996, Dupont had employed over 300 law firms. They decided that this fragmentation was not cost effective and derided to reduce the number to 30 firms. Among the criteria was the technology. As part of the process, in-house counsel took on the role of selection of attorneys for each part of the litigation or transactions. Competitors were sometimes hired to provide specific parts of the services. The corporation likewise would select the specific lawyers. Law and Disorder, Redherring (Apr. 1999) at http://www.redhearring.com/may/issue65/news-law.html. 147 Carte, High Tech Matchmaking, 86 ABA Journal 47 (June 2000). 148 Keem.com (http://www.keem.com) permits users to locate people who hold themselves out as experts in an area. 149 According to Arthur Miller, a Harvard Law professor who has an interest in amerilaw.com another similar referral group, the rules on non-lawyer investment do not apply because the site itself does not provide legal services. 54 Professional Services Disruption [2]—Relationship MDP (R-MDO) A more sophisticated concept is the relationship model where a group of independent professional service providers themselves create a permanent entity to act as the intermediary between them, i.e. a relationship multidisciplinary organization. Even though the MDO is easy to conceive, the American Bar Association Commission on Multidisciplinary Practices did not mention or discuss it.150 Today there are many networks of professional firms in a single profession that provide access to resources at the other member firms. While the firms are independent, they cooperate to provide services to clients. In some cases, these networks function semi-autonomously. In others, they provide back-office services to the members.151 The R-MDO, because it contains more members, could provide, as necessary, a similar range of services that the home offices of the Big 5 provide their other offices. The real benefit is economic since professional service firms require managing large numbers of people. There is a disproportionate increase in the bureaucracy as the number of locations increase. The fundamental benefit of membership in the MDO is that the client receives the services, but the member firms are not confronted with the daunting task of managing large numbers of professionals in remote jurisdictions. They do not have to harmonize salaries and benefits among the professionals since each member does this independently? The R-MDO model takes the American Bar Association’s ad hoc model, which is based upon individual networking, four steps further: First, systematic relationships are formed in the context of multi-professional and multi-service organization rather than being created on an ad hoc basis. Since the object is true one-stop shopping, the number of professional groups could be substantially more than those that would be brought in-house by the Big S. This is because the profitability of each member unit is independent. In addition, professional services could be extended vertically so that the R-MDO could service different markets, such as consumers and businesses. Second, the referral base of the professionals is extended geometrically. Because lawyers are competitors, networking, despite collegiality, may be somewhat restricted. Building coalitions is difficult because others at the firm may practice in the same area or have different relationships with lawyers at other firms. In an MDO the vast majority of the professional are not lawyers and therefore not competitors. They are not reluctant to make referrals of their clients. Third, unlike existing networks that are common in the legal profession, the foundation for the R-MDO would be to extend scope and depth of the traditional organization using new technologies. The objective is to create the maximum number of relationships between the professionals in each of the disciplines. 150 An MDO is similar to Model 1, as described by the American Bar Association’s Commission on Multidisciplinary Practices, except it is organizations that work together, rather than individual professionals. “Model 1: The Cooperative Model": This model retains the status quo. There would be no changes to Model Rule 5.4. The prohibitions against fee sharing and partnerships with non-lawyers would continue. Lawyers would be free to employ non-lawyer professionals on their staffs to assist them in advising clients. Lawyers could work with non-lawyer professionals whom they directly retain or who are retained by the client. To the extent that the non-lawyer professionals are employed, retained, or associated with a lawyer, the partners in a law firm and any lawyer having direct supervisory authority over a non-lawyer professional would have to take steps "to ensure that the person’s conduct is compatible with the professional obligations of the lawyer,” especially with respect to the obligation not to disclose information relating to the representation and the protection of work product.” American Bar Association Commission on Multidisciplinary Practices - Final Report, Appendix C, Reporter’s Notes (July 2000). The major difference, however, is that it presumes that the lawyer is responsible for the entire transaction when in fact the legal aspects may be relatively minor. Stratton, ABA Voted No MDP: But What About “Virtual” MDPs, 85 Tax Notes 1122-1124 (Nov. 29, 1999). 151 The Commercial Law Affiliates (CLA) provides marketing support for its members. 55 Professional Services Disruption Information on professionals, as well as non-proprietary content, would facilitate creating relationships. An extensive non-confidential knowledge base would be created and shared within the MDO.152 Fourth, access to information on MDOs would not be confined to the participating entities but provided to clients. Clients could use the information to construct virtual relationships of their own using, as the initial building blocks, the professionals and services in the R-MDO. This would be of great appeal to sophisticated clients and of interest to the MDO members. Once the R-MDO is created, the fundamental question is whether it can meet client needs. This very issue was discussed in Cyrus Freidheim, The Trillion Dollar Enterprise (Perseus Books, 1998). Freidheim, vice chairman of Booz-Allen Hamilton, sets out the same elements discussed in this chapter — globalization, standards and localization — as characteristics that will determine the success of any business the new economy. He defines “global” to mean that businesses must serve and have access to clients around the world, understand customers, meet and anticipate their needs, obtain resources as well as develop market information. In the professional services market, only the Big 5 have already accomplished this as a result of their accounting and auditing practices. Law firms, notwithstanding the number of offices, are a long way from this global coverage. To be successful, an organization must be able to set world standards. They must show leadership and innovation, provide value and performance, and have processes, people and capacities that define these world standards. Many of the large law firms such as Baker & McKenzie and Clifford Chance, are far along on meeting these definitions. An MDO consisting of the leading firms would have the advantage, since the highest standards are part of the selection criteria. Lastly to be global the organization must be local everywhere. Freidheim defines “local” as understanding local customer markets, having a national image, local workforce and local operations. While the largest firms may have 50 or more branches, many are not local in that they have few local professionals.153 Some may argue that localization is not required when advice is being provided for global companies. However, because lawyers deal with governments, understanding local conditions may be difficult unless the firms are clearly lock. Even though the Big 5 may be well on the road to achieving each of these standards by themselves, according to Freidheim a single entity achieving the highest level of each of these standards is not possible. The only way to achieve the highest level is through cooperation with similar entities that share a common vision that he describes as the relationship enterprise. The R-MDO may in fact be the ultimate MDP because it is able to grow globally to be truly local in every jurisdiction. Beginning with the best firms and companies, it can rapidly set world standards for services. Many ethical issues discussed in this treatise can be resolved without changing the existing rules. For example, the R-MDO could grow to represent all possible clients without conflicts of interest since those 152 Stratton, ABA Voted No MDP: But What About “Virtual” MDPs, 85 Tax Notes 1122-1124 (Nov. 29, 1999). 153 Of the 50 largest law firms worldwide with sizes from 603 to 2732, the percentage of attorneys outside the country ranges from 9% to 60%. There are only three firms with over 50% and 12 with between 20% and 50% with most in the 20% to 30% range. Law firms are far from global or local in other countries. 56 Professional Services Disruption conflicts are confined to the participating entities.154 On the other hand, there are some issues that are similar to those found in in-house controlled MDPs. For example, location is largely irrelevant; professionals will be even more tempted to advise in jurisdictions where they are not licensed. § 14.05 Rules and Enforcement — Interests of the Parties In the introductory part of this chapter, two hypothetical WSG, were described. How do they measure ethically? The traditional rules that govern lawyers, accountants and other professionals are based upon concepts grounded in relationships between clients and professionals. They are not generally based upon the relationship between the client and a law155 relationship with a directory. Using communications tools like the Internet, without separate organizations like WSG and PSI, does not create issues that have not been dealt with in other chapters.156 The standard issues raised in Chapter One and throughout this treatise can easily be dealt with because of the independent nature of the participating professionals, firms and companies in the MDO. MDOs, absent fee splitting, are consistent with the both the ABA and AICPA rules that regulate the individual professional since there are p changes in the professional relationships with clients. Confidentiality is maintained when there is an attorney/accountant/client relationship established because actual cases are handled separate and apart from the MDO. The MDO is consistent with the conflicts of interest rules since the entities retain their independence from each other. Fee sharing, prohibited by the ABA rules, is not an issue even if there is a central billing system because the function would be bookkeeping rather than fee sharing. However, WSG and PSI may create other ethical concerns, such as the unlicensed practice of a profession, multi-jurisdictional practice, professional referral fees, advertising and others. [1]—Unauthorized Practice of Law by an Association As was set out in the opening example, John pays a fee to PSI each year in order to have access not only to the resources but also to receive referrals from other members with whom he works on cases. He also knows that 30% of the fee goes to marketing the organization to consumers and small businesses. WSG’s principal purpose is to allow Judy and leading professional firms to gain access to resources and network with other professionals, but also to market WSG as an alternative to the Big 5 MDPs. Over 50% of WSG’s budget is dedicated to internal and external marketing. Is PSI or WSG practicing law? The purpose of the attorney prohibition on assisting others in the unauthorized practice of law is to protect the public from the consequences of incompetent legal services. Because the definition of the practice of law is unclear and varies from state to state and country-to-country, one must look to specifics to determine whether promotional activities by an entity come within the scope of law practice. 154 Provided that the members are independent organizations with no obligation to refer business to each other, there is no confidential information shared among all of the members. Though transactions are individual in nature, there is no reason why members could not represent all clients and even clients with interests in the same matter. 155 Under ABA Model Rule 1.7, the confidences of each attorney in a law firm are imputed to the other attorneys. This does not mean that the firm is regulated; it is simply the conduit for the imputation of conflicts. 156 For a general discussion of the traditional rules as applied to the Internet, see Fishkin and Thomason, The Wild West Frontier (No Ethics Immunity for Use of the Internet), 26 San Fran. Att. 14 (4) (April/May 2000). 57 Professional Services Disruption Matching services create a database where clients can post needs and be matched with lawyers who perform legal services. This could not reasonably be said to be the unauthorized practice of law."157 Under EC 3-5, the practice of law relates to the “rendition of services for others that call for the professional judgment of a lawyer.” Professional judgment is further defined as the “educated ability to relate the general body and philosophy of law to a specific legal problem of a client.158 The underlying rational for the rules is the assumption that there is a client. Marketing assumes that there is no client and therefore it cannot be the unauthorized practice of law. In the case of an online listing service, there are no practice of law issues since the service is not providing legal services but information, which is protected speech. Attorneys need to be sure that the information in the directory or online is in compliance with state bar regulations relating to their listings. Online directories that are searchable by practice area means that lawyers, particularly if they specialize, may be tempted to practice outside of the jurisdictions in which they are admitted. In addition, from time to time a lawyer with a particular expertise is featured in WSG publications. If these lawyers are hired, does PSI or WSG incur liability for promoting unlicensed practice by attorneys not admitted to the bar? While the technology aspects of these issues have not been addressed,"159 there is no reason to think that the general rule should not apply. For example, while the behavior might be frowned upon, courts have held that in disaster or mass torts that marketing by law firms from other jurisdictions is not practicing law. Even if the rule should be changed, given that the solicitation rules are enforced by the jurisdiction that admitted the attorneys, these jurisdictions may have little interest in enforcing prohibitions in another jurisdiction against an entity that merely supplies information but is not involved in the selection.160 Absent circumstances where the WSG or PSI becomes involved with clients directly, they would not violate the unauthorized practice of law statutes and regulations. [2] Multi-Jurisdictional Practice161— Unauthorized Practice by Lawyers162 John is admitted only in Kansas but spends at least 30% of his billable hours traveling to other jurisdictions or advising on the law of other jurisdiction. Particularly the case in several states that have patterned their agriculture laws after Kansas. He also represents a number of clients before various boards, in particular, the Agricultural Department. Approximately 30% of his work comes from PSI, in which he is listed as an expert in these areas. John is regulated by the Kansas Bar Association because: (I) the state or local association has a vested interest in protecting the public; (2) local rules or conditions may be unique; (3) the local professional association may want to protect itself from outside professionals to assure a level or quality or professionalism; and (4) some local professionals would like to limit competition in the jurisdiction. 157 Schmidt, Lawyers vs. The Internet WSJ, R36 (July 17, 2000). 158 Annotated Model Rules 444, 1995. 159 William E. Homsby, Jr., Marketing and Legal Ethics, ABA 2000 at 125 160 Lawyer’s Disciplinary Board v Allen, Coale & Van Susteren, No. 22700 (W.Va. Sup. Ct. 11/15/96). 161 Wolfram, Sneaking Around in the Legal Profession: Inter-jurisdictional Unauthorized Practice by Transactional Lawyers, 36 Tex. L.R. 715 (1995), Sutton, Unauthorized Practice of Law by Lawyers: A Post-Seminar Reflection on 'Ethics and the Multijurisdictional Practice of Law” 36 Tex. L. Rev. 1027 162 The medical profession has the same unlicensed-practice issues as a result of the Internet. This is usually classified as a felony. The certification process is required where the patient is physically located. The exception is consultation but is based upon infrequency. Given the Internet, there are discussions mall states on perhaps redefining the licensing requirements to carve out a few additional exceptions. 58 Professional Services Disruption Kansas’s rule 5.5(a) states that a lawyer must not practice law in a jurisdiction where doing so would violate regulations of the profession in that jurisdiction. When John does practice in other jurisdictions, Kansas could penalize John for his practice. These rules would seem to be in opposition to both clients’ interests (to have the best possible legal representation) and the objective of multidisciplinary practices (ton use the best professional for the job). John is open to sanctions both in the state in which he is practicing without a license and in Kansas. However, the bar has tended to ignore unauthorized practice of law by attorneys from other jurisdictions, particularly corporate counse1,163 absent some egregious circumstances.164 [3] Referral Fees165 Referral fees for work are suspect and viewed as unprofessional. In the case of the medical field, they can be illegal.166 While the rules are very strict in the medical field, attorney rules have substantially changed to permit advertising. The restrictions seem to be aimed at referral fees that are outright solicitation or are fee splitting. States have their own statutes. Referral fees are permitted when they are reasonable and not related to a particular transaction or matter.167 For example, firms lending funds to other firms and accepting referrals as payment and payment of a bonus for each referral by an employee are prohibited. The service provider, such as PSI, cannot charge a transactional fee for each referral but it can charge a percentage of the overall transaction. If the amount is excessive, the fee may be suspect. PSI offers the possibility of referrals both from the public and from other professionals. WSG offers professionals the opportunities to get to know others, share information and, in particular, place information about them in the database. Each receives a fee. Are these referral fees prohibited by bar regulations? In Alabama State Bar Association v. R.W. Lynch,168 the court dealt with facts similar to PSI. In that case a number of independent attorneys created a commercial for legal services. When clients called a telephone number, they were referred to the attorneys who had paid for the ad. This was held not to be a referral service, but permissible advertising. Since payments are not based upon the number or size of the referrals, John’s participation in PSI should pose no referral ethical issues. WSG is different in that it is more of a networking organization. Attorneys can participate in a networking group provided that the membership fee is fixed and not based upon work generated, the referral function is not the sole purpose, the lawyer does not accept clients based upon referrals from other members, lawyers do not solicit members and the lawyer does not set up a booth at the networking convention.169 In short, as 163 The best example is that of in-house counsel who do practice in almost every jurisdiction without any sanctions. The same result is generally true for lawyers practicing in a different state. Vigil, Regulating In-house Counsel: A Catholicon or a Nosy 78 Marg. L. Rev., 307 (1994); Pull admission Reciprocity Is In-house Lawyers’ Goal, 9 Laws. Man. on Prof. Conduct (ABA/BNA) Current Reports at 352 (1993). 164 “Standing alone, unauthorized practice out-of-state by an attorney in-state may not be considered sufficiently noteworthy to excite prosecution efforts from disciplinary authorities in the lawyer’s home state.” Wolfram infra n 14 at 686. 165 7 Martin, Not So Fast, It’s Regulated — Some Warnings for the B-health Business, Bus. Law Today (Sept./Oct. 2000); Braender and McCarthy-Perry, Making a Virtual House Call, Nat. L.J. Cl (Aug. 21, 2000); Meek, "Telemedicine: How an Apple (or Another Computer) May Bring Your Doctors Goser," 29 Cumb. L. Rev, 173 (1999). 166 There is an anti-referral statute, 42 U.S.C. § 1320a-7(b), which pertains to Medicare and Medicaid 167 ABA Model Rule 7.2(c). 168 655 So. 2d 982 (Ala. 1995). 169 Md. State Bar Ass’n. On Ethics, Op. 88-78 (1988). 59 Professional Services Disruption an organization whose objective is promoting professional activities, WSG should not violate the ban on payments for referrals and would not be involved in fee splitting. [4]—Advertising Marketing Directories — Organization and Lawyers John joined PSI not only because of the resources that PSI makes available, but he knows that PSI/Microsoft, in order to retain members, must spend considerable amounts on advertising to “guarantee referrals.” Judy’s firm pays indirectly a portion of the advertising for WSG whose budget is $5 million. What rules, if any, apply to PSI, WSG and their members related to advertising? Each profession has their rules of permitted advertising.170 To be viable, PSI, the service provider, must attract a large number of consumers of services. This requires a concerted marketing effort. While in the United States attorneys now have fairly liberal advertising privileges, lawyers in many other jurisdictions are prohibited from marketing.”171 The professionals could be responsible for the advertising of the service provider. The first issue is whether John and Judy are advertising or whether the activities of PSI and WSG are independent of the members. In the United States advertising is permitted if it not false and misleading.172 Thus, the issue is whether the advertising violates the rules of the lawyers in the association. In the United States, lawyers are subject to ABA Model Rule 7.2. Rule 7.2 Advertising (a) A lawyer may advertise services through public media, such as a telephone directory, legal directory, and newspaper or other periodical, outdoor advertising, radio or television or through written recorded communications. (b) A copy or recording of an advertisement or communication shall be kept for two years after its last dissemination along with a record of when and where it was used. (c) A lawyer shall not give anything of value to a person for recommending the lawyer’s services except a lawyer may (1) pay the reasonable cost for advertisement or communications permitted by this Rule; (2) pay the usual charges of a not-for-profit lawyer referral service or legal service organizations; and (3) pay for a law practice in accordance with Rules 1.17. (d) Any communication made pursuant to this Rule shall include the name of at least one lawyer responsible for its content. While lawyers have had very specific rules on directories, WSG is not a directory but an association. Its directory is incidental. However, if the materials from the WSG contained language to the effect that the 170 Multidisciplinary Practice of law - hazards of dual practice with respect to advertising, solicitation and reasonableness of fees. 13 CBA Record 47(2) (Nov. 1999). 171 Altof, Lawyer Advertising on the Internet (Practical and Ethical Considerations of Internet Advertising) 453 Wash St. Bar News, 32 (11 Dec 1999) 172 Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.G. 2691, 53 L.Ed. 2d 810 (1977). 60 Professional Services Disruption materials were meant to comply with all applicable rules and that they were “void where prohibited,” it would have additional protections.”173 PSI is a directory, albeit more sophisticated than most. PSI does not have activities other than the information that is made available to each member. In the case of directories, the directory publisher has no liability only the lawyer.174 These types of issues have been dealt with by the PSI Legal Advisory Board by setting out some specific rules for listings. While bars have rules, many of the rules are under attack. All can be complied with provided PSI and WSG recognize what must be done for compliance. [5]—Other Issues While there is no case law on the issue, would Judy’s and John’s firm be able to list their firms as members of WSG or PSI on the firm’s letterhead? ABA Model Rule 7.5 requires a lawyer to avoid the implication that they practice in a partnership when this is not the case. Listing membership in an organization is not covered directly. It would appear that this would be permitted since WSG does not practice law — provided this is clearly defined. They would want to provide a description of their respective organization — to the effect “Member World Services Group — An Association of Independent Professional Firms and Businesses.175 § 14.06 Competitive Implications The professional objectives of any for-profit organization are: maintain standards of conduct; offer highquality, cost-effective services; and compete against the other professionals, who have precisely the same interests, to make the most money. The MDO can make four profound changes on how professional service providers compete. First, information about clients and professionals can be automatically matched through databases and further refined by the clients and professionals themselves. Professionals to find other professionals can also use the matching function. When done systematically, a multidisciplinary team for any issue, anywhere, can rapidly be formed. Second, the professionals geometrically expand their referral base because the nonlawyer members are greater in size and are not reluctant to make referrals for fear of losing a client. In addition, the number of clients represented by the MDO is vastly larger than those represented by even the largest law firm network. Third, professionals and clients can be matched according to their interest profiles within an organization. This expands vertically the number of participants if each group is in a different market or provides a different service. For example, large law firms are not interested in consumer type transactions that would interest small- firms. This can be programmed into the matching function within the same MDO. Adding services is inexpensive so that firms interested in consumer practice can be added to the group without competing with 173 In the event this material is not deemed to fully comply with the provision of the rules of professional conduct of any particular state, this firm will not accept clients or representation that derived from the distribution of this material." American Bar Association Commission on Advertising (1995). 174 Bates v. Arizona, 433 U.S. 350 (1977). 175 Lex Mundi, an association of 160 law firms permit the members to place Lex Mundi on letter heads and other materials. However, they require that precise words be used. Members must state: ”Member Lex Mundi, an Association of Independent Law Firms.” 61 Professional Services Disruption large firms interested in corporate transactions. The Big 5 cannot do this because it is difficult to differentiate practice areas within the same organization. Fourth, MDOs can provide clients access to the same database and tools that members of the relationship enterprise have at their fingertips. Since professional services, rather than the management of these set vices, is the profit center for professionals, delegating a portion of “management” to the client would therefore contribute to the bottom line. It would also make the client the marketing vehicle for services, which effectively increases the referrals base for each professional. The MDO radically changes the competitive equation making it possible for firms of all sizes to offer services to their individual clients. It does so at a fraction of the cost of bringing all services in-house and in a way that sets the highest standards both globally and locally. § 14.07 Summary While large providers of professional services must compete with the Big 5, they now have the opportunity to come together to create MDOs to jointly offer services. These relationship organizations can be rapidly created because they take advantage of existing resources that are in place. They avoid the serious bureaucratic, regulatory and ethical constraints faced by the Big 5 in particular conflicts, confidentiality and fee splitting issues that may never be resolved. These organizations have the potential of setting standards that, in many cases, may exceed those of the Big 5 if they can be done correctly. The most revolutionary aspect is that the MDO can allow corporate clients to create their own teams among service providers by permitting access to the professionals. The result is a referral potential which far exceeds that of existing networks, which are limited to one profession. Using the PSI, firms like John’s can offer multidisciplinary services to small business and individuals. Through WSG, Judy can offer more services to compete with the largest MDP provide. 62 Professional Services Disruption Appendix 5 Directory of Law and Accounting Network Executives Law and accounting networks/associations of independent firms account annually for $180 billion of professional services. The 70 executives listed in the directory represent over 500,000 licensed professionals. They have over 15% of the global market for legal and accounting/advisory services. On average each of the executives represents members who provide of $2.6 billion of services each year. The $1.1 Trillion Market for Legal and Accounting Services ($ billion) Law and Accounting Networks/Associations – Branded and Non-Branded The quality and stature of the firms’ associations and networks are the most important aspect. They are all members of what is generally defined as professional services networks. Each organization has standards and a review policy for admission and continuation of membership. There are two basic types of professional services networks: branded and non-branded. They are the primary model for global services. Branded network member firms all use the same name in each state or country. In accounting the most well-known are: PWC, EY, Deloitte and KPMG. In law examples are: Dentons, Baker McKenzie and DLA. Non-branded networks/associations examples in accounting are: GGI, MSI and DFK. Examples in law are: Lex Mundi, TerraLex, and Meritas. Statistics: Accounting/Advisory Networks and Associations176 176 AccountancyAge, November 2017 https://www.accountancyage.com/rankings/top-20-international-networks-2017/ 63 Professional Services Disruption ABL / Alliance of Business Lawyers Emmanuel Moulin President Founded: 2001 Firms: 51 Professionals: 908 Type: Global Ann. Prof. Services: e.moulin@mmlaw.fr c/o DGM Avocats, 2 Rue CharlesBonnet, CH 1206 Geneva, Switzerland Telephone: +32 (0)478 96 50 83 Website: www.ablglobal.net ADVOC Garry Mackay CEO and partner Founded: 1990 Firms: 95 Lawyers: 5,500 Type: Global Ann. Prof. Services: 1 New Fetter Lane London, EC4A 1AN, England U.K. g.mackay@ashfords.co.uk Telephone: +44 797 747 1330 Website: www.advoc.com AGN International Malcolm Ward CEO Founded: Firms: 200 Professionals: 6,700 Type: Global Ann. Prof. Services: mward@agn.org 24 Greville Street London EC1N 8SS United Kingdom Telephone: +44 (0)20 7971 7373 Website: https://www.agn.org/ $1.2 billion ALFA International Peter Rogers CEO Founded: 1980 Firms: 140 Lawyers : 9,000 Type: Global Ann. Prof. Services: progers@alfainternational.com 64 980 Michigan Ave. Ste. 1180 Chicago, Illinois 60611 U.S. Telephone: 312 642 2532 Fax: 312 642 5346 Website: www.alfainternational.com Professional Services Disruption Alliance of Business Lawyers Founded: 1980 Firms: 140 Lawyers : 9,000 Type: Global Ann. Prof. Services: Emmanuel Moulin Chair 45 avenue Montaigne, 75 008 Paris, France e.moulin@mmlaw.fr Telephone: +33 1 72 00 23 72 Fax. +33 1 72 00 23 73 Website: www.ablglobal.net Allinial Global Founded: Firms: 137 Professionals: 14,500 Type: Global Ann. Prof. Services $2.5 billion PO BOX 49247 Atlanta, Georgia 30345 USA Terry Synder Chair and CEO tsnyder@allinialglobal.com Telephone: (770) 279-4560 Website: www.allinialglobal.com Alliott Group Founded: 1979 Firms: 169 Professionals: 5,000 Type: Global Ann. Prof. Services: $.8 billion James Hickey Chief Executive james@alliottgroup.net Lydum House 12 The High Street Petersfield Hampshire. GU32 3JG, England U.K. Telephone: +44 203 3300 111 Website: www.alliottgroup.net Ally Law Founded: 2,000 Firms: 61 Professionals: 2,250 Type: Global Ann. Prof. Services: Wendy Horn Executive Director team@ally-law.com 527 Marquette Ave. South, Ste. 1925 Minneapolis, MN 55402 U.S. Telephone: +1.612.770.6046 Fax: 612 435 2054 Website: www.ally-law.com ALN African Legal Network Founded: Firms: 10 Lawyers: 60 Type: Regional Ann. Prof. Services: Dr. Cheick Modibo Diarra Chairman alnhg@africalegalnetwork.com Anjarwalla, Collins & Haidermota, Dubai, UAE Saaha Offices, Block C, Office 501 A, The Palace, Downtown Dubai Tel: (+971) 4 452 9091 Fax: (+971) 4 452 9078 Website: www.africalegalnetwork.com 65 Professional Services Disruption Ars Legis Pierre-Roger Preussler Partner Founded: Firms: 52 Professionals: 500 Type: Global Ann. Prof. Services: office@pg-law.it Studio Legale Dr. Preussler & Dr. Gruber Via Palade n. 97 Telephone: +39 0473 490 900 Fax: +39 0473 490 901 Website: www.arslegis.eu Association of European Lawyers Founded: 1989 Firms: 40 Lawyers: 4,200 Type: Regional Ann. Prof. Services: Ben Smith EC Member ben.smith@crsblaw.com Charles Russell 8-10 New Fetter Lane London EC4A 1RS U.K. Telephone: +44 207 203 5000 Fax: +44 207 203 0200 Website: www.europeanlawyers.org Baker Tilly Founded: 1988 Firms: 126 Professionals: 22,600 Type: Global Ann. Prof. Services: $3.3 billion Ted Verkade CEO ted.verkade@bakertillyinternational.c om New Bridge Street House, 30-34 New Bridge Street, London, EC4V 6BJ, United Kingdom Telephone: 44-7249-4100 Website bakertillyinternational.com BKR International Founded: Firms: 164 Professionals: 10,700 Type: Global Ann. Prof. Services: Maureen Schwartz CEO bkr@bkr.com 19 Fulton Street Suite 401 New York, NY 10038, U.S.A. Telephone: 1-212-964-2115 Fax: 1-212-964-2133 Telephone: Website: www.bkr.com $1.4 billion BDO Global Founded: 1963 Firms: 114 Professionals: 53,000 Type: Global Ann. Prof. Services: : $7.6 billion Keith Farlinger CEO Global keith.farlinger@bdointernational.com 66 Blue Tower Avenue Louise 326 bus 30 1050 Brussel Telephone: +32 (0)2 640 07 96 Website: www.bdo.com Professional Services Disruption Cicero League of International Lawyers Peter Munday President Founded: 1995 Firms: 40 Professionals: 1,000 Type: Global Ann. Prof. Services: mail@ciceroleague.com Pinewood Lodge Warren Lane Oxshott Surrey KT22 0ST United Kingdom Telephone: (00 44) (0) 1372 843078 Facsimile: 07710 900359 Website: www.ciceroleague.com Consulegis EWIV Caroline Chetrit Managing Director Founded: Firms: 60 Lawyers: Type: International Ann. Prof. Services: consulegis@consulegis.com Elisabethstrasse 9 D-80796 Munich / Germany Phone: +49 89 30 70 50 20 Fax: +49 89 30 70 67 29 Website: www.consulegis.com Crowe Founded: 1942 Firms: 189 Professionals: 3,900 Type: Global Ann. Prof. Services: $3.8 billion David Mellor CEO One Carey Lane, Third Floor ondon , None EC2V 8AE United Kingdom david.Mellor@crowehorwath.com Telephone: +44 (0)203 457 6700 Website: www.crowe.com/global DFK International Martin Sharp Executive Director Founded: 1962 Firms: 214 Professionals: 8,700 Type: Global Ann. Prof. Services: Room 120, Temple Chambers 3-7 Temple Avenue London EC4Y 0HP msharp@dfk.com Telephone: +44 (0) 20 7436 6722 Website: https://www.dfk.com/ $1.2 billion Employment Law Alliance Founded: 2000 Firms: Professionals: 3,000 Type: Global Ann. Prof. Services: Stephen Hirschfeld CEO shirschfeld@chklawyers.com 727 Sansome St. San Francisco, CA 94111 U.S. Telephone: 415 835 9011 Fax: 414 834 0443 Website: employmentlawalliance.com 67 Professional Services Disruption Euro CollectNet Founded: Firms: 27 Lawyers: 700 Type: Regional Dr. Thomas Voller President info@eurocollectnet.com Voller Rechtsanwaelte Main Airport Center (MAC) Unterschweinstiege 2-14 60549 Frankfurt am Main Germany Telephone: +0049 69 63 15 070 Fax: +0049 69 63 15 066 Website: www.eurocollectnet.com European Law Firm EEIG Founded: 1989 Firms: 28 Professionals: 950+ Type: Regional Ann. Prof. Services: Christian Steden President steden@kaergel.com European Law Firm Registered Office Beukentaan 46, Postbus 63 EINDHOVEN, 5600 AB Netherlands Telephone: + 44 (0) 333 006 0330 Website: www.european-lawfirm.com Geneva Group International (GGI) Founded: 1995 Firms: 566 Professionals: 27,000 Type: Global Ann. Prof. Services: $5.6 Michael Reiss von Filski Global CEO reiss@ggi.com Schaffhauserstrasse 550 P.O. Box 286 8052 Zurich Switzerland Telephone: +41 (0)44 256 18 18 Fax: +41 (0)44 256 18 11 Website: www.ggi.com Billion Globaladvocaten Founded: Firms: 23 Professionals: 800 Type: Regional Ann. Prof. Services: Christoph Roos Chairman chairman@globaladvocaten.com 68 Theaterarkaden – Oper Kapuzinerstraße 11 D-53111 Bonn Telephone: +49 (0) 228 908 728 0 Website: globaladvocaten.com Professional Services Disruption Globalaw MAIO Legal, Calle Acala 75,2d Fl, Madrid , Spain Founded: 1994 Firms: 94 Professionals: 5,000 Type: Global Ann. Prof. Services: Marco Bolognini President Telephone: +34 91 577 50 20 Website: www.globalaw.net mbolognini@maiolegal.com Grant Thornton Founded: 1924 Firms: 137 Professionals: 37,000 Type: Global Ann. Prof. Services: $5.1 billion Peter Bodin CEO 110 Bishopsgate, London EC2N 4AY, UK Peter.bodin@gti.gt.com Telephone: +44 20 7383 5100 Website:www.grantthornton.com Harmonie Group 4248 Park Glen Road Minneapolis, MN 55416 Founded: 1972 Firms: 99 Lawyers: 5,000 Type: International Ann. Prof. Services: Timothy Violet, Esq. Executive Director tviolet@harmonie.org Telephone: 612-875-7744 Website: www.harmonie.org HLB International Founded: 1969 Firms: 270 Professionals: 16,000 Type: International Ann. Prof. Services: $ 2.37 billion Marco Donzelli Chief Operating Officer marcodonzelli@hotmail.com 69 21 Ebury Street London SW1W 0LD, UK Telephone: + 44 (0)20 7881 1100 Fax: + 44 (0)20 7881 1109 Website: https://www.hlbi.com/ Professional Services Disruption IAPA Martin Clapson Vice Chair martinc@pricebailey.co.uk Founded: Firms: 174 Professionals: 5,900 Type: Global Ann. Prof. Services: $.6billion First Floor, Sequel House, The Hart, Farnham, Surrey, GU9 7HW, United Kingdom Telephone: + 44 (0)1252 267880 Website: www.iapa.net IMMLAW Founded: Firms: 24 Professionals: 24 Type: Regional Ann. Prof. Services: Jay Solomon Partner jay.solomon@agg.com 900 Circle 75 Parkway, Ste. 1350, Atlanta, GA 30339-3095 U.S. Telephone: 770 955 1055, Website: www.immlaw.com Insuralex Jean Lawler Partner Founded: Firms: 33 Professionals: 33 Type: Global Ann. Prof. Services: JLawler@murchisonlaw.com 801 South Grand Avenue, 9th Floor Los Angeles, California 90017 U.S . Telephone: 213-630-1019 Fax: 213-623-6336 Website: www.insuralex.com Interlaw Founded: 1982 Firms: 66 Lawyers: 5,000+ Type: Global Ann. Prof. Services: Michael Siebold Chairman m.siebold@asd-law.com 1900 Avenue of the Stars Seventh Floor Los Angeles, CA 90067 U.S. Telephone: 310 459 2905 Website: www.interlaw.org Interlex Group Founded: 1973 Firms: 45 Lawyers: 10,500 Type: Global Ann. Prof. Services: Lawrence Swibel President lswibel@fslc.com 70 200 West Madison Street, Ste. 3000 Chicago, IL 60606 U.S. Telephone: 312 224 1214 Fax: 312 224 1201 Website: www.interlexgroup.com Professional Services Disruption International Business Law Consortium Founded: Firms: 95 Lawyers: 2400 Type: International Ann. Prof. Services: Christian Campbell Secretariat Member christian.campbell@iblc.com Matzenkopfgasse 19 520 Salzburg Austria Phone: +43 662 835399 Fax: +43 662 835399 09 Email: www.iblc.com International Law Firms Founded: Firms: 70 Professionals: Type: Global Ann. Prof. Services: Lutz Kaiser Chairman chairman@ilflaw.com 3, rue Montée Clausen ILF – International Law Firms (a.s.b.l.) 1343 Luxembourg Luxembourg Telephone: + 49 7221 992390 Fax: + 49 7221 992391 Website: www.ilflaw.com International Lawyers Netwo Founded: 1988 Firms: 91 Lawyers: 5,000 Type: Global Ann. Prof. Services: $2.5 Billion Lindsay Griffiths Director of Global Relationship Management lindsaygriffiths@iln.com 11B Opal Court Barnegat, NJ 08005 Telephone: 201 594 9430 Fax: 201 740 9765 Website: www.iln.com IUS Laboris Founded: Firms: 43 Professionals: 2,500 Type: Global Ann. Prof. Services: Sam Everatt Executive Director exdi@iuslaboris.com 71 280 Boulevard du Souverain 1160 Brussels Belgium Telephone: +32 2 761 46 10 Fax: +32 2 761 46 15 Website: www.iuslaboris.com Professional Services Disruption Kreston International Founded: Firms: 218 Professionals: 18,200 Type: Global Ann. Prof. Services: Liza Robbins CEO liza@kreston.com Springfield Lyons Business Centre Springfield Lyons Approach Chelmsford, Essex England, CM2 5LB Telephone: +44 .(0)1245 462882 Website: www.kreston.com $2.2 billion L & E Global Founded: Firms: 23 Lawyers: 1,500 Type: Global Ann. Prof. Services: Avenue Louise 221 B 1050 Brussels Belgium Jeroen Douwes, MBA Executive Director jeroen.douwes@leglobal.org Telephone: +32 2 64 32 633 Website: leglobal.org Law Firm Network Founded: Firms: Professionals: Type: Global Ann. Prof. Services: Anthony Kirwan Executive Director tkirwan@netoverseas.com Prados Sur 555 Lomas de Chapultepec, Del. Miguel Hidalgo México D.F. C.P. 11000 Telephone: +52 (55) 91773320 Website: www.networkedlaw.com Lawyers Associated Worldwide Founded: 1995 Firms: 105 Lawyers: 3,500 Type: Global Ann. Prof. Services: Lorri Salyards Executive Director lsalayards@lawyersworldwide. com 72 2823 McKenzie Point Rd. Minneapolis, MN 55391 U.S. Telephone: 952 404 1546 Fax: 952 404 1796 Website: www.lawyersworldwide.com Professional Services Disruption LEA leaglobal.com Founded: Firms: 220 Professionals: 17,800 Type: Global Ann. Prof. Services: $3.2 billion Karen Kehl-Rose President Telephone: Fax: 621 Cedar Street St. Charles, IL 60174 kkr@the-lea.com Phone: +1 630.513.9814 Fax: +1 630.524.9014 Website: www. leaglobal.com/ Legal Network International Founded: 2012 Firms: 65 Lawyers: 5,000 Type: Global Ann. Prof. Services: Thomas Mudd Partner thomas.mudd@zeinerlaw.cz Argentinska 286/38 CZ-17000 Prague 7 CZECH REPUBLIC Telephone: +420 224 812 301 Website: www.lninternational.com Legalink Founded: Firms: 60 Lawyers: 3000 Type: Regional Ann. Prof. Services: Maria de Sa Nogueira Legalink CAO mariasanogueira@legalink.ch Rua da Mesquita, Casa dos Areasis 2705-352 Colares Portugal Telephone: +351 91 234 9755 Website: www.legalink.ch Legus 3135 S. State St., Ste. 103 Ann Arbor, MI 48108 U.S. Founded: Firms: 75 Professionals: ~2,500 Type: Global Ann. Prof. Services: Sandra Boyer President sandra.boyer@leguslaw.com Telephone: 734 929 6948 Fax: 734 929 6952 Website: www.leguslaw.com LEI-nternational Founded: Firms: 30 Lawyers: 900 Type: Regional Ann. Prof. Services: Daniël Van der Mosen Chairman dvandermosen@buylelegal.eu 73 9 Mill Lane, Shoreham by Sea West Sussex BN43 5AG, England, U.K. Telephone: +44 1273 455753 Website: www.law-europe.com Professional Services Disruption Lex Africa Founded: 1993 Firms: 22 Lawyers: 400 Type: Regional Ann. Prof. Services: Pieter Steyn Chairman psteyn@werksmans.com Werksmans Lawyers P.O. Box 927 Johannesburg 2000 Republic of South Africa Telephone: +27 11 488 0000 Fax: +27 11 484 3100/3200 Website: www.lexafrica.com Lex Mundi Founded: 1989 Firms: 160 Lawyers: 21,000 Type: Global Ann. Prof. Services: 2100 West Loop South, Ste. 1000 Houston, Texas 77027 U.S. Carl Anduri President canduri@lexmundi.com Telephone: 713 626 9393 Fax: 713 626 9933 Website: www.lexmundi.com Lexwork International Founded: Firms: 48 Professionals: 2,100 Type: Global Ann. Prof. Services: Forbes Sargent Chairman cfsargent@sherin.com 111 East Wacker Dr., Ste. 2800, Chicago, IL 60601 U.S. Telephone: 617 646 2189 Website: www.lexwork.net Mackrell International Founded: 1995 Firms: 94 Lawyers: 4,500 Type: Global Ann. Prof. Services: $2 billion Clive Mieville Executive Director clive.mackrell@sfr.fr 21-25 Church Street West Woking Surrey, GU21 6D, England U.K. Telephone: +44 1483 755609 Fax: +44 1483 755818 Website: www.mackrell.net Meritas Founded: 1990 Firms: 177 Lawyers: 7,006 Type: Global Ann. Prof. Services: Tanna Moore President tmoore@meritas.org 74 800 Washington Ave. North, Ste. 600 Minneapolis, MN 55401 U.S. Telephone: 612 604 0080 Fax: 612 337 5783 Website: www.meritas.org Professional Services Disruption Moore Stephens Founded: 1907 Firms: 276 Professionals: 21,400 Type: Global Ann. Prof. Services: $2.8 billion Richard Moore Chair Moore Stephens richard.moore@moorestephens.com 150 Aldersgate Street London EC1A 4AB England Telephone (0) 20 7334 9191 Website: www.moorestephens.com Morison KSi CEO Founded: Firms: 157 Professionals: 9,200 Type: Global Ann. Prof. Services: $1.1 billion 6th Floor, 2 Kingdom Street Paddington London W2 6BD United Kingdom Telephone: +44 (0)20 7638 4005 Website: www.morisonksi.com/ MSI Global Alliance Tim Wilson Chief Executive twilson@msiglobal.org Founded: 1990 Firms: 240 Professionals: 10,552 Type: Global Ann. Prof. Services: $ 1.4 billion 147-149 Temple Chambers 3-7 Temple Avenue London, EC4Y 0DA, England U.K. Telephone: +44 20 7583 7000 Fax: +44 20 7583 7577 Website: www.msiglobal.org Multilaw Founded: 1990 Firms: 80 Lawyers: 8,500 Type: Global Ann. Prof. Services: $4.2 billion 125 Wood St, London EC2V 7AW, United Kingdom Adam Cooke Executive Director secretariat@multilaw.com Telephone: +44 20 7410 9269 Fax: +44 20 7410 9270 Website: www.multilaw.com Network of Trial Law Firms Founded: 1995 Firms: 24 Lawyers: 6,500 Type: Regional Ann. Prof. Services: Felice Wagner Executive Director felice@trial.com 303 South Broadway, Ste. 222 Tarrytown, NY 10591 U.S. Telephone: 914 332 4400 Fax: 914 332 1671 Website: www.trial.com 75 Professional Services Disruption Nexia Founded: Firms: 246 Professionals: 20,400 Type: Global Ann. Prof. Services: $3.2 billion Kevin Arnold CEO karnold@nexia.com Nexia International - Secretariat 71 Kingsway, London, WC2B 6ST, UK Telephone: +44 (0)20 7436 1114 Fax: +44 (0)20 7436 1536 Website: www.nexia.com PKF Founded: 1969 Firms: 218 Professionals: 15,610 Type: Global Ann. Prof. Services: $1.3 billion John Sim CEO john.sim@pkf.com 12 Groveland Court, London, EC4M 9EH UK Telephone: +44 203 691 2500 Fax: Website: www.pkf.com PLG International Lawyers E.E.I.G. Founded: Firms: 24 Professionals: 1,300 Type: Regional Ann. Prof. Services: Luís Moreira Cortez President 41, Avenue de Sumatra 1180 Brussels Belgium luis.cortez@cralaw.com Telephone: +32 2 374 88 46 Fax: +32 2 374 90 61 Website: www.plg.eu.com Pragma Founded: Firms: 53 Professionals: Type: Global Ann. Prof. Services: Michel Lacroix Chairman m.lacroix@pragma-fr.com 25, Rue Faidherbe, BP 249 59002 LILLE Cedex France Telephone: +33 03 20 12 05 84 Fax: +33 03 20 55 62 60 Website: www.pragma-eu.com Praxity Graeme Gordon CEO/Executive Director Founded: Firms: 66 Professionals: 31,800 Type: Global Ann. Prof. Services: $5.2 billion ggordon@praxity.com Suite 2, Beechwood 57 Church Street Epsom, Surrey KT17 4PX United Kingdom Telephone: +44 (0) 1372 738 190 Website: www.praxity.com 76 Professional Services Disruption Prime Global Founded: Firms: 300 Professionals: 14,200 Type: Global Ann. Prof. Services: $1.2 billion Tim Davidson Chair tim.davidson@fortunity.com.au 3235 Satellite Boulevard Bldg 400 Suite 300 Duluth, GA 30096 Telephone: 1 678-417-7730 Website: www.primeglobal.net Primerus Law Firms Founded: 1992 Firms: 200 Professionals: Type: Global Ann. Prof. Services: John C. “Jack” Buchanan President jcb@buchananfirm.com 171 Monroe Avenue NW, Suite 750 Grand Rapids, Michigan 49503 Telephone: 616-454-9939 Website: www.primerus.com RSM Founded: 1964 Firms: 120 Professionals: 31,500 Type: Global Ann. Prof. Services: $4.9 billion Jean Stephens Executive Director jean.stephens@rsmi.com 50 Cannon Street, London, EC4N 6JJ, UK Telephone: +44 207 601 1080 Website: www.rsm.global SCG Legal Founded: 1990 Firms: 145 Professionals: 11,400 Type: Global Ann. Prof. Services: David Poisson CEO dpoisson@scglegal.com 1717 Pennsylvania Ave. NW, Ste. 1200 Washington, DC 20006 U.S. Telephone: 202 659 6601 Fax: 202 659 6641 Website: www.scglegal.com State Law Resources Founded: 1994 Firms: 48 Professionals: 4,900 Type: Regional Ann. Prof. Services: Erin Murphy Executive Director emurphy@statelaw.org 77 1155 15th St. NW, Ste. 500 Washington DC 2005 U.S. Telephone: 202 495 3120 Fax: 202 530 0659 Website: www.statelaw.org Professional Services Disruption TAGAlliances Richard Attisha President a Founded: 1999 Firms: 160 Professionals: 9,700 Type: Global Ann. Prof. Services: $4.503 richard@taglaw.com The Attisha Group Enterprises, Inc. (TAG Alliances) 2590 West King Edward Avenue Vancouver, BC Canada V6L1T6 Telephone: +1 727 895 3720 Fax: +1 727 895 3722 Website: www.tagalliances.com billion Taxand Founded: Firms: 50 Tax Advisors: 2,000 Type: Global Ann. Prof. Services: Frederic Donnedieu de Vabres Partner frederic.donnedieu@arsenetaxand.com Giancario Agace Chairman Founded: Firms: 122 Professionals: 700 Type: Regional Ann. Prof. Services: info@telfa.be 1B Heinenhaff L-1736 Senningerberg Luxembourg 32 Telephone: +33 01 70 38 88 01 Fax: +33 01 70 38 88 10 Website: www.taxand.com TELFA - Trans European Law Firms Alliance Avenue Louise 208 B-1050, Brussels Belgium Telephone: +32 2 642 27 59 Fax: +32 2 642 27 93 Website: www.telfa.org TerraLex Founded: 1991 Firms: 155 Lawyers: 19,000 Type: Global Ann. Prof. Services: Terri Pepper Gavulic Executive Director tgavulic@terralex.org 8350 NW 52nd Terrace, Suite 410, Miami, FL Telephone: 305 858 8825 Fax: 305 858 8986 Website: www.terralex.org USLaw Network Founded: 2001 Firms: 110 Lawyers: 7,000 Type: Global Ann. Prof. Services: Roger Yaffe Executive Director roger@uslaw.org 78 5905 NW 54th Circle Coral Springs, FL 33067 U.S. Telephone: 800 231 9110 Fax: 800 231 9110 Website: www.uslaw.org Professional Services Disruption Warwick Legal Network Founded: 1995 Firms: 26 Professionals: 500 Type: Regional Ann. Prof. Services: Stuart Miller Chairman miller@warwicklegal.com VDB Advocaten Notarissen Eindhovenseweg 126 NL-5582 HW Waalre Netherlands Telephone: +44 20 7553 9936 Website: www.warwicklegal.com World Law Group Founded: 1988 Firms: 51 Professionals: 19,000 Type: Global Ann. Prof. Services: Stuart Young Secretary Stuart.Young@gowlingwlg.com 4 More London Riverside London SE1 2AU Telephone: +44 (0)20 3636 7968 Website: www.theworldlawgroup.com Worklaw Network Founded: 1989 Firms: 31 Lawyers: 350 Type: Global Ann. Prof. Services: Millicent Sanchez President msanchez@swerdlowlaw.com 9401 Wilshire Boulevard, Suite 828 Beverly Hills, California 90212 Telephone. (310) 288-3980 x8203 Fax: (310) 733-1727 Website: www.worklaw.com World Services Group Founded: 2002 Firms: 141 Lawyers: 19,000 Type: Global Ann. Prof. Services: Maricarmen Trujillo Chief Operating Officer mtrujillo@worldservicesgroup.com 79 2777 Allen Pkwy., Ste. 622 Houston, TX 77019 U.S. Telephone: 713 650 0333 Fax: 713 650 5566 Website: www.worldservicesgroup.com