iStock_000017016084XSmall-300x168The legal industry has undergone transformative changes over the last few decades, due largely to the “internationalization” of business. The unbridled growth of globalized business and the worldwide financial system have necessitated a parallel globalization of legal services. Traditional “big law” firms have succeeded on the premise that they offer cross-border “one stop” shopping to their multinational clients.

While this model succeeds for a small fraction of large firms well-entrenched in the markets they serve, medium-sized and boutique firms struggle as clients increasingly expect access to foreign legal counsel at all times and prefer their trusted domestic firm to oversee the cross-border legal services. Consequently, the rise of International Law Firm Networks is the result of changing client needs globally and a direct response to the mass expansion of multinational firms.

Far from being loose associations of uncoordinated firms, law firm networks have become a business linchpin in many markets. “They are both necessary and desirable,” said Robert Peres, a Frankfurt and Washington-based Business Development & Communications Consultant and founder of LEXPertise.

“Law firm networks are necessary for those law firms who don’t have the resources to expand to other countries and still need reliable, high-quality law firm contacts in other jurisdictions who can handle specific needs of their clients,” he said. They’re similarly desirable for clients of smaller and medium-sized firms who may not have ubiquitous legal needs, but may require foreign representation on occasion or for certain milestone transactions.”

Attorneys whose firms participate in legal networks note its clear advantages. Peter Gardos, a partner at Budapest-based Gárdos Füredi Mosonyi Tomori Law Office, a member firm of ADVOC, points to the inevitability of working alongside foreign attorneys if a firm intends to serve foreign clients in Hungary or serve its Hungarian client abroad.

“Such connection is simple in the case of international law firms as they have offices in several jurisdictions, thus they can serve their clients ’internally,’” he said. “Other firms need to find foreign attorneys who can be involved in the matter. Finding such attorneys on an ad hoc basis is difficult and the result is often unpredictable. Networks of independent law firms help solve such problems.”

While benefits for joining a network may abound, Peres notes that one of the biggest challenges of networks is to maintain a steady level of quality. “Some networks lack either the will or the tools to properly examine the expertise and client orientation of their members. That will lead to problems both for the client and the recommending attorney. Another challenge is presented by the typical exclusivity of membership within a network,” he said. That is, the clients’ best interests may not be served best by the foreign legal services that specific law firm network offers. However, exclusivity sometimes is circumvented by attorneys who keep their own international contacts and refer clients to better suited firms outside of a given network.

As indispensable as they networks have become, there does not seem to be a “one size fits all” model for recruiting and vetting membership. While most of have admission committees who convene regularly to examine applications and possible complaints, the threshold pedigree level can vary.

Some networks, like World Law Group, try to ensure quality by admitting only firms that are highly ranked in reputable directories such as Chambers. Others may just require a certain size and good overall standing. Likewise, some networks like LexMundi only take on one highly reputed law firm per jurisdiction and require them to be independent, not linked to one of the global firms. These firms provide a good indication of the overall high quality of the network firms in the 100+ countries they are represented. Others, such as TAGLaw is a multidisciplinary network comprising legal and accounting professionals from across Europe, the Americas, Asia-Pacific and the Middle East, offering a more specialized focus.

There are also increasingly more networks of single attorneys or small firms, who project a unified image and communication platform. This is how the recently formed regional network CEE Attorneys is structured in Prague, under the leadership of Zdenek Tomíček, a partner at Tomíček Legal.

“For us the model is based in exclusivity; if you want to be a part of CEE Attorneys you have to use the same brand, which includes using the same e-mail and operating as our sole partner in the jurisdiction. We have a lot of contacts in all jurisdictions, so we ask former colleagues for recommendations. From there, we have minimum quality standards, which every office in our network has to meet, which include reference checks, qualifications, and reputation. We want to ensure that the name of the clients that offer the services are the top level on the market.”

It also helps firms to capitalize on the regional needs of clients where they are based without charging big law fees. “There’s a huge gap in the market for obtaining new clients,” said Tomíček, “but we have been successful so far because we are a name firm in Prague where many of our clients are based. We provide service quickly and efficiently with fees that are similar to other Czech firms, but now we are also able to project a growing international image.”

The clients of CEE attorneys — which also operates in Slovakia and hopes to expand soon to Poland and Hungary — have discovered they can forego fees of an international law firm and still demand and expect the same quality of services. This is particularly important because the landscape in CEE has seen a porous entry and exit of big international players over the last two years.

Michal Martinák, a partner at CEE Attorneys’ Slovak firm Fox Martens, notes, “the main attribute we’re looking for is the same vision that we have. Also we are focusing on mid-sized firms, similar to our offices. Still, if we want to approach different clients who work internationally or have businesses in the Central Eastern Europe region we need to provide all the necessary legal services in other jurisdictions as well.”

Regardless of the model, developing close relationships is the key for firms who expect both to profit from steady business referrals from other jurisdictions and to likewise refer clients to trusted contacts elsewhere. “At the end of the day,” Peres said, “lawyering is people’s business and you get referrals from people who know and trust you. A successful model is one that provides platforms and opportunities for lawyers to meet, compare notes and share knowledge.”

One thing is for sure: the existence of the law firm networks has challenged existing firms on their own territory in a way that has heightened the bar for service and business development across the board.

“Working in groups, sharing knowledge and referring clients is traditionally difficult for lawyers,” Peres said. “Networks provide a good field to advance in these areas and successful law firms take advantage of it. Seeking international business is a necessity for lawyers today, as their own domestic markets are contracting and market shares shrinking, firms will market themselves more directly to the international law clientele with stronger business development efforts and more customized products and solutions.”

Ellen Hayes can be reached at ellen.hayes@gcgrapevine.com