professional services disruption · professional services disruption 2 are not yet recognized as...

82
Professional Services Disruption Threats* & Opportunities* Stephen J. McGarry Leadership Directory Legal and Accounting Executives Page 61

Upload: others

Post on 29-Jul-2020

4 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption Threats* & Opportunities*

Stephen J. McGarry

Leadership Directory

Legal and Accounting Executives Page 61

Page 2: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

ii

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

Page 3: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

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 ………………………….

Consultants ( Treatise 2002), Stephen J. McGarry

CHAPTER 14 – Multidisciplinary Organizations (MDOs), the Competitive

Alternative to the Big 5

39

Appendix 5 - Directory of Law and Accounting Network Executives ………………………………….. 61

Page 4: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

1

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-in-the-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/single-post/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-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-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-in-the-legal-services-market/.

Page 5: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

2

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. 6 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.

Page 6: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

3

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-legal-market/?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/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/; 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/.

Page 7: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

4

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 non-

lawyers. 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. 13 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_independence_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.

Page 8: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

5

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/.

Page 9: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

6

(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), 32 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/

Page 10: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

7

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.

Page 11: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

8

(C) Accounting Networks and Associations

The market forces creating

disruption in the legal

profession34 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.

Page 12: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

9

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-of-business-and-why-it-matters/.

41

Page 13: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

10

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-we-provide/business-of-law-solutions/analyst-reports/elephants-in-the-room-the-big-4s-expansion-in-the-legal-services-market/.

Page 14: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

11

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 49 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/.

Page 15: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

12

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. 52 id 53 id

Page 16: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

13

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 Similarweb.com Collected May 28, 2018 55 See discussion at Section III, infra.

Page 17: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

14

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.57 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.

56 Jim Middlemiss, Accounting for Legal Work, CANADIAN LAWYER (April 2, 2018), http://www.canadianlawyermag.com/author/jim-middlemiss/accounting-for-legal-work-15535/. 57 Id.

Page 18: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

15

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 61 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-local-firms?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).

Page 19: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

16

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-we-provide/business-of-law-solutions/analyst-reports/elephants-in-the-room-the-big-4s-expansion-in-the-legal-services-market/.

Page 20: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

17

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%3FcontentType%3Dsecured (the AICPA published a paywall-protected directory of associations and networks). 73 Accountancy Age, October 17, 2016.

Page 21: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

18

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/.

Page 22: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

19

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 Id. 76 SIMILARWEB, available at http://www.similarweb.com (analysis conducted on May 31, 2018).

Page 23: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

20

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.

Page 24: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

21

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-great-accountant-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).

Page 25: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

22

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. 84 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-important-is-collaboration-for-lawyers/.

Page 26: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

23

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. 90 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/starting-law-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-do-cpas-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_independence_of_a_lawyer.html.

Page 27: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

24

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-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-legal-market/?slreturn=20171117172407; Global Accounting Market Research Report, IBIS WORLD (Sept. 2017), https://www.ibisworld.com/industry-trends/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/.

Page 28: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

25

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.

Page 29: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

26

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-across-silos.html.

Page 30: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

27

(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.

Page 31: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

28

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.

Page 32: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

29

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.

Page 33: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

30

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-field-for-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-4888-8ee8-b8c7452fe4f8.

Page 34: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

31

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. 112 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).

Page 35: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

32

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/2017/04/3-charts-illustrate-future-legal-industry/.

Page 36: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

33

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. 115 Nicholas Bruch, ALM Legal Compass Snapshot: The NLJ 500, LAW.COM (June 28, 2018), https://www.law.com/2018/06/28/alm-legal-compass-snapshot-the-nlj-500?et=editorial&bu=ALM%20Intelligence&cn=20180628&src=EMC-Email&pt=Analyst%20Brief.

Page 37: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

34

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.

Page 38: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

35

(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-counsel-in-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/legal-process-outsourcing-lpo-market-size.

Page 39: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

36

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.

Page 40: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

37

Summary: 2018 - 2021

Page 41: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

38

Appendix 1 – Global Legal Market – 2000

Page 42: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

39

Appendix 2 – The Big 4 and Biglaw Online – Unique Users Per Month

(Similarweb.com)

Legal Sites of Firms and Businesses (February 2018)

Page 43: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

40

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-theyre-

better-at-meeting-the-future-needs-of-your-

clients?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-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

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-4-

accountancy-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-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

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/analyst-

reports/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)

Page 44: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

41

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-services-

market

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-Global-

Legal-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-four-

245035.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

Page 45: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

42

Appendix 4 – Multidisciplinary Practices and Partnerships – Lawyers,

Consultants and Clients, ALM (2002), Stephen McGarry

Page 46: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

43

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

Page 47: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

44

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

Page 48: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

45

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.

Page 49: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

46

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] Globalization and Localization

[2] Core Competencies and Quality

[3] Cost Effectiveness through Technology

§ 14.03 MDOs and the Big 5 — Client Relationships and Choices

§ 14.04 Multidisciplinary Organization Models

UI Independent MDO (I-MDO)

[2] Relationship MDO (R-MDO)

§ 14.05 Rules and Enforcement — Interests of the Parties

[1] Unauthorized Practice of Law by an Association

[2] Multi-Jurisdictional Practice — Unauthorized Practice by Lawyers

[3] Referral Fees

[4] Advertising Marketing Directories — Organization and Lawyers

[5] 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.

Page 50: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

47

§ 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.

Page 51: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

48

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. 124Niku, 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).

Page 52: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

49

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 peer-

127 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).

Page 53: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

50

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).

Page 54: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

51

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.

Page 55: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

52

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 non-

clients 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 5140

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.

Page 56: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

53

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-to-

peer 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.

Page 57: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

54

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 in-

house 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.

Page 58: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

55

[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.

Page 59: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

56

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.

Page 60: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

57

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).

Page 61: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

58

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.

Page 62: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

59

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).

Page 63: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

60

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).

Page 64: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

61

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 high-

quality, 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 non-

lawyer 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.”

Page 65: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

62

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.

Page 66: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

63

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/

Page 67: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

64

Founded: 2001 Firms: 51 Professionals: 908 Type: Global Ann. Prof. Services:

Emmanuel Moulin President [email protected]

ABL / Alliance of Business Lawyers c/o DGM Avocats, 2 Rue Charles-Bonnet, CH 1206 Geneva, Switzerland Telephone: +32 (0)478 96 50 83 Website: www.ablglobal.net

Founded: 1990 Firms: 95 Lawyers: 5,500 Type: Global Ann. Prof. Services:

Garry Mackay CEO and partner [email protected]

ADVOC 1 New Fetter Lane London, EC4A 1AN, England U.K. Telephone: +44 797 747 1330 Website: www.advoc.com

Founded: Firms: 200 Professionals: 6,700 Type: Global

Ann. Prof. Services: $1.2 billion

Malcolm Ward CEO [email protected]

AGN International 24 Greville Street London EC1N 8SS United Kingdom Telephone: +44 (0)20 7971 7373 Website: https://www.agn.org/

Founded: 1980 Firms: 140 Lawyers : 9,000 Type: Global Ann. Prof. Services:

Peter Rogers CEO [email protected]

ALFA International 980 Michigan Ave. Ste. 1180 Chicago, Illinois 60611 U.S. Telephone: 312 642 2532 Fax: 312 642 5346 Website: www.alfainternational.com

Page 68: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

65

Founded: 1980 Firms: 140 Lawyers : 9,000 Type: Global Ann. Prof. Services:

Emmanuel Moulin Chair [email protected]

Alliance of Business Lawyers 45 avenue Montaigne, 75 008 Paris, France Telephone: +33 1 72 00 23 72 Fax. +33 1 72 00 23 73 Website: www.ablglobal.net

Founded: Firms: 137 Professionals: 14,500 Type: Global

Ann. Prof. Services $2.5 billion

Terry Synder Chair and CEO [email protected]

Allinial Global PO BOX 49247 Atlanta, Georgia 30345 USA Telephone: (770) 279-4560 Website: www.allinialglobal.com

Founded: 1979 Firms: 169 Professionals: 5,000 Type: Global Ann. Prof. Services: $.8 billion

James Hickey Chief Executive [email protected]

Alliott Group Lydum House 12 The High Street Petersfield Hampshire. GU32 3JG, England U.K. Telephone: +44 203 3300 111 Website: www.alliottgroup.net

Founded: 2,000 Firms: 61 Professionals: 2,250 Type: Global

Ann. Prof. Services:

Wendy Horn Executive Director [email protected]

Ally Law 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

Founded: Firms: 10 Lawyers: 60 Type: Regional Ann. Prof. Services:

Dr. Cheick Modibo Diarra Chairman [email protected]

ALN African Legal Network 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

Page 69: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

66

Founded: Firms: 52 Professionals: 500 Type: Global Ann. Prof. Services:

Pierre-Roger Preussler Partner [email protected]

Ars Legis Studio Legale Dr. Preussler & Dr. Gruber Via Palade n. 97 Telephone: +39 0473 490 900 Fax: +39 0473 490 901 Website: www.arslegis.eu

Founded: 1989 Firms: 40 Lawyers: 4,200 Type: Regional Ann. Prof. Services:

Ben Smith EC Member [email protected]

Association of European Lawyers 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

Founded: 1988 Firms: 126 Professionals: 22,600 Type: Global

Ann. Prof. Services: $3.3 billion

Ted Verkade CEO [email protected]

Baker Tilly New Bridge Street House, 30-34 New Bridge Street, London, EC4V 6BJ, United Kingdom

Telephone: 44-7249-4100 Website bakertillyinternational.com

Founded: Firms: 164 Professionals: 10,700 Type: Global

Ann. Prof. Services: $1.4 billion

Maureen Schwartz CEO

[email protected]

BKR International 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

Founded: 1963 Firms: 114 Professionals: 53,000 Type: Global

Ann. Prof. Services: : $7.6 billion

Keith Farlinger CEO Global [email protected]

BDO Global Blue Tower Avenue Louise 326 bus 30 1050 Brussel Telephone: +32 (0)2 640 07 96 Website: www.bdo.com

Page 70: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

67

Founded: 1995 Firms: 40 Professionals: 1,000 Type: Global Ann. Prof. Services:

Peter Munday President [email protected]

Cicero League of International Lawyers Pinewood Lodge Warren Lane Oxshott Surrey KT22 0ST United Kingdom Telephone: (00 44) (0) 1372 843078 Facsimile: 07710 900359 Website: www.ciceroleague.com

Founded: Firms: 60 Lawyers: Type: International Ann. Prof. Services:

Caroline Chetrit Managing Director [email protected]

Consulegis EWIV Elisabethstrasse 9 D-80796 Munich / Germany Phone: +49 89 30 70 50 20 Fax: +49 89 30 70 67 29 Website: www.consulegis.com

Founded: 1942 Firms: 189 Professionals: 3,900 Type: Global

Ann. Prof. Services: $3.8 billion

David Mellor CEO [email protected]

Crowe One Carey Lane, Third Floor ondon , None EC2V 8AE United Kingdom Telephone: +44 (0)203 457 6700 Website: www.crowe.com/global

Founded: 1962

Firms: 214

Professionals: 8,700

Type: Global

Ann. Prof. Services: $1.2 billion

Martin Sharp Executive Director [email protected]

DFK International Room 120, Temple Chambers 3-7 Temple Avenue London EC4Y 0HP Telephone: +44 (0) 20 7436 6722 Website: https://www.dfk.com/

Founded: 2000 Firms: Professionals: 3,000 Type: Global Ann. Prof. Services:

Stephen Hirschfeld CEO [email protected]

Employment Law Alliance 727 Sansome St. San Francisco, CA 94111 U.S. Telephone: 415 835 9011 Fax: 414 834 0443 Website: employmentlawalliance.com

Page 71: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

68

Founded: Firms: 27 Lawyers: 700 Type: Regional

Dr. Thomas Voller President [email protected]

Euro CollectNet 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

Founded: 1989 Firms: 28 Professionals: 950+ Type: Regional Ann. Prof. Services:

Christian Steden President [email protected]

European Law Firm EEIG European Law Firm Registered Office Beukentaan 46, Postbus 63 EINDHOVEN, 5600 AB Netherlands Telephone: + 44 (0) 333 006 0330 Website: www.european-law-firm.com

Founded: 1995 Firms: 566 Professionals: 27,000

Type: Global

Ann. Prof. Services: $5.6 Billion

Michael Reiss von Filski Global CEO [email protected]

Geneva Group International (GGI) 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

Founded: Firms: 23 Professionals: 800 Type: Regional Ann. Prof. Services:

Christoph Roos Chairman [email protected]

Globaladvocaten

Theaterarkaden – Oper Kapuzinerstraße 11 D-53111 Bonn Telephone: +49 (0) 228 908 728 0 Website: globaladvocaten.com

Page 72: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

69

Founded: 1994 Firms: 94 Professionals: 5,000 Type: Global Ann. Prof. Services:

Marco Bolognini President [email protected]

Globalaw MAIO Legal, Calle Acala 75,2d Fl, Madrid , Spain Telephone: +34 91 577 50 20 Website: www.globalaw.net

Founded: 1924 Firms: 137 Professionals: 37,000 Type: Global

Ann. Prof. Services: $5.1 billion

Peter Bodin CEO [email protected]

Grant Thornton 110 Bishopsgate, London EC2N 4AY, UK Telephone: +44 20 7383 5100 Website:www.grantthornton.com

Founded: 1972 Firms: 99 Lawyers: 5,000 Type: International Ann. Prof. Services:

Timothy Violet, Esq. Executive Director [email protected]

Harmonie Group

4248 Park Glen Road Minneapolis, MN 55416 Telephone: 612-875-7744 Website: www.harmonie.org

Founded: 1969

Firms: 270 Professionals: 16,000 Type: International

Ann. Prof. Services: $ 2.37 billion

Marco Donzelli Chief Operating Officer [email protected]

HLB International 21 Ebury Street London SW1W 0LD, UK Telephone: + 44 (0)20 7881 1100 Fax: + 44 (0)20 7881 1109 Website: https://www.hlbi.com/

Page 73: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

70

Founded: Firms: 174 Professionals: 5,900 Type: Global

Ann. Prof. Services: $.6billion

Martin Clapson Vice Chair [email protected]

IAPA First Floor, Sequel House, The Hart, Farnham, Surrey, GU9 7HW, United Kingdom

Telephone: + 44 (0)1252 267880 Website: www.iapa.net

Founded: Firms: 24 Professionals: 24 Type: Regional Ann. Prof. Services:

Jay Solomon Partner [email protected]

IMMLAW 900 Circle 75 Parkway, Ste. 1350, Atlanta, GA 30339-3095 U.S. Telephone: 770 955 1055, Website: www.immlaw.com

Founded: Firms: 33 Professionals: 33 Type: Global Ann. Prof. Services:

Jean Lawler Partner [email protected]

Insuralex 801 South Grand Avenue, 9th Floor Los Angeles, California 90017 U.S . Telephone: 213-630-1019 Fax: 213-623-6336 Website: www.insuralex.com

Founded: 1982 Firms: 66 Lawyers: 5,000+ Type: Global Ann. Prof. Services:

Michael Siebold Chairman [email protected]

Interlaw 1900 Avenue of the Stars Seventh Floor Los Angeles, CA 90067 U.S. Telephone: 310 459 2905 Website: www.interlaw.org

Founded: 1973 Firms: 45 Lawyers: 10,500 Type: Global Ann. Prof. Services:

Lawrence Swibel President [email protected]

Interlex Group 200 West Madison Street, Ste. 3000 Chicago, IL 60606 U.S. Telephone: 312 224 1214 Fax: 312 224 1201 Website: www.interlexgroup.com

Page 74: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

71

Founded: Firms: 95 Lawyers: 2400 Type: International Ann. Prof. Services:

Christian Campbell Secretariat Member [email protected]

International Business Law Consortium Matzenkopfgasse 19 520 Salzburg Austria Phone: +43 662 835399 Fax: +43 662 835399 09 Email: www.iblc.com

Founded: Firms: 70 Professionals: Type: Global Ann. Prof. Services:

Lutz Kaiser Chairman [email protected]

International Law Firms 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

Founded: 1988 Firms: 91 Lawyers: 5,000 Type: Global

Ann. Prof. Services: $2.5 Billion

Lindsay Griffiths Director of Global Relationship Management [email protected]

International Lawyers Network 11B Opal Court Barnegat, NJ 08005 Telephone: 201 594 9430 Fax: 201 740 9765 Website: www.iln.com

Founded: Firms: 43 Professionals: 2,500 Type: Global Ann. Prof. Services:

Sam Everatt Executive Director [email protected]

IUS Laboris 280 Boulevard du Souverain 1160 Brussels Belgium Telephone: +32 2 761 46 10 Fax: +32 2 761 46 15 Website: www.iuslaboris.com

Page 75: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

72

Founded: Firms: 218 Professionals: 18,200 Type: Global

Ann. Prof. Services: $2.2 billion

Liza Robbins CEO [email protected]

Kreston International Springfield Lyons Business Centre Springfield Lyons Approach Chelmsford, Essex England, CM2 5LB Telephone: +44 .(0)1245 462882

Website: www.kreston.com

Founded: Firms: 23 Lawyers: 1,500 Type: Global Ann. Prof. Services:

Jeroen Douwes, MBA Executive Director [email protected]

L & E Global Avenue Louise 221 B 1050 Brussels Belgium Telephone: +32 2 64 32 633 Website: leglobal.org

Founded: Firms: Professionals: Type: Global Ann. Prof. Services:

Anthony Kirwan Executive Director [email protected]

Law Firm Network Prados Sur 555 Lomas de Chapultepec, Del. Miguel Hidalgo México D.F. C.P. 11000 Telephone: +52 (55) 91773320 Website: www.networkedlaw.com

Founded: 1995 Firms: 105 Lawyers: 3,500 Type: Global Ann. Prof. Services:

Lorri Salyards Executive Director [email protected]

Lawyers Associated Worldwide 2823 McKenzie Point Rd. Minneapolis, MN 55391 U.S. Telephone: 952 404 1546 Fax: 952 404 1796 Website: www.lawyersworldwide.com

Page 76: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

73

Founded: Firms: 220 Professionals: 17,800 Type: Global

Ann. Prof. Services: $3.2 billion

Karen Kehl-Rose President [email protected]

LEA leaglobal.com Telephone: Fax: 621 Cedar Street St. Charles, IL 60174 Phone: +1 630.513.9814 Fax: +1 630.524.9014 Website: www. leaglobal.com/

Founded: 2012 Firms: 65 Lawyers: 5,000 Type: Global Ann. Prof. Services:

Thomas Mudd Partner [email protected]

Legal Network International Argentinska 286/38 CZ-17000 Prague 7 CZECH REPUBLIC Telephone: +420 224 812 301 Website: www.lninternational.com

Founded: Firms: 60 Lawyers: 3000 Type: Regional Ann. Prof. Services:

Maria de Sa Nogueira Legalink CAO [email protected]

Legalink Rua da Mesquita, Casa dos Areasis 2705-352 Colares Portugal Telephone: +351 91 234 9755 Website: www.legalink.ch

Founded:

Firms: 75 Professionals: ~2,500 Type: Global Ann. Prof. Services:

Sandra Boyer President [email protected]

Legus 3135 S. State St., Ste. 103 Ann Arbor, MI 48108 U.S. Telephone: 734 929 6948 Fax: 734 929 6952 Website: www.leguslaw.com

Founded: Firms: 30 Lawyers: 900 Type: Regional Ann. Prof. Services:

Daniël Van der Mosen Chairman [email protected]

LEI-nternational 9 Mill Lane, Shoreham by Sea West Sussex BN43 5AG, England, U.K. Telephone: +44 1273 455753 Website: www.law-europe.com

Page 77: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

74

Founded: 1993 Firms: 22 Lawyers: 400 Type: Regional Ann. Prof. Services:

Pieter Steyn Chairman [email protected]

Lex Africa 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

Founded: 1989 Firms: 160 Lawyers: 21,000 Type: Global Ann. Prof. Services:

Carl Anduri President [email protected]

Lex Mundi 2100 West Loop South, Ste. 1000 Houston, Texas 77027 U.S. Telephone: 713 626 9393 Fax: 713 626 9933 Website: www.lexmundi.com

Founded: Firms: 48 Professionals: 2,100 Type: Global Ann. Prof. Services:

Forbes Sargent Chairman [email protected]

Lexwork International 111 East Wacker Dr., Ste. 2800, Chicago, IL 60601 U.S. Telephone: 617 646 2189 Website: www.lexwork.net

Founded: 1995 Firms: 94 Lawyers: 4,500 Type: Global

Ann. Prof. Services: $2 billion

Clive Mieville Executive Director [email protected]

Mackrell International

21-25 Church Street West Woking Surrey, GU21 6D, England U.K. Telephone: +44 1483 755609 Fax: +44 1483 755818 Website: www.mackrell.net

Founded: 1990 Firms: 177 Lawyers: 7,006 Type: Global Ann. Prof. Services:

Tanna Moore President [email protected]

Meritas

800 Washington Ave. North, Ste. 600 Minneapolis, MN 55401 U.S. Telephone: 612 604 0080 Fax: 612 337 5783 Website: www.meritas.org

Page 78: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

75

Founded: 1907 Firms: 276 Professionals: 21,400 Type: Global

Ann. Prof. Services: $2.8 billion

Richard Moore Chair Moore Stephens [email protected]

Moore Stephens 150 Aldersgate Street London EC1A 4AB England Telephone (0) 20 7334 9191 Website: www.moorestephens.com

Founded: Firms: 157 Professionals: 9,200 Type: Global

Ann. Prof. Services: $1.1 billion

CEO

Morison KSi

6th Floor, 2 Kingdom Street Paddington London W2 6BD United Kingdom Telephone: +44 (0)20 7638 4005 Website: www.morisonksi.com/

Founded: 1990 Firms: 240 Professionals: 10,552

Type: Global

Ann. Prof. Services: $ 1.4 billion

Tim Wilson Chief Executive [email protected]

MSI Global Alliance 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

Founded: 1990 Firms: 80 Lawyers: 8,500 Type: Global

Ann. Prof. Services: $4.2 billion

Adam Cooke Executive Director [email protected]

Multilaw 125 Wood St, London EC2V 7AW, United Kingdom Telephone: +44 20 7410 9269 Fax: +44 20 7410 9270 Website: www.multilaw.com

Founded: 1995 Firms: 24 Lawyers: 6,500 Type: Regional Ann. Prof. Services:

Felice Wagner Executive Director [email protected]

Network of Trial Law Firms 303 South Broadway, Ste. 222 Tarrytown, NY 10591 U.S. Telephone: 914 332 4400 Fax: 914 332 1671 Website: www.trial.com

Page 79: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

76

Founded: Firms: 246 Professionals: 20,400 Type: Global

Ann. Prof. Services: $3.2 billion

Kevin Arnold CEO [email protected]

Nexia 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

Founded: 1969 Firms: 218 Professionals: 15,610 Type: Global

Ann. Prof. Services: $1.3 billion

John Sim CEO [email protected]

PKF 12 Groveland Court, London, EC4M 9EH UK Telephone: +44 203 691 2500 Fax: Website: www.pkf.com

Founded: Firms: 24 Professionals: 1,300 Type: Regional Ann. Prof. Services:

Luís Moreira Cortez President [email protected]

PLG International Lawyers E.E.I.G.

41, Avenue de Sumatra 1180 Brussels Belgium Telephone: +32 2 374 88 46 Fax: +32 2 374 90 61 Website: www.plg.eu.com

Founded: Firms: 53 Professionals: Type: Global Ann. Prof. Services:

Michel Lacroix Chairman [email protected]

Pragma 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

Founded: Firms: 66 Professionals: 31,800 Type: Global

Ann. Prof. Services: $5.2 billion

Graeme Gordon CEO/Executive Director [email protected]

Praxity Suite 2, Beechwood 57 Church Street Epsom, Surrey KT17 4PX United Kingdom Telephone: +44 (0) 1372 738 190 Website: www.praxity.com

Page 80: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

77

Founded: Firms: 300 Professionals: 14,200

Type: Global Ann. Prof. Services: $1.2 billion

Tim Davidson Chair [email protected]

Prime Global 3235 Satellite Boulevard Bldg 400 Suite 300 Duluth, GA 30096 Telephone: 1 678-417-7730 Website: www.primeglobal.net

Founded: 1992 Firms: 200 Professionals:

Type: Global Ann. Prof. Services:

John C. “Jack” Buchanan President [email protected]

Primerus Law Firms 171 Monroe Avenue NW, Suite 750 Grand Rapids, Michigan 49503

Telephone: 616-454-9939

Website: www.primerus.com

Founded: 1964 Firms: 120 Professionals: 31,500 Type: Global

Ann. Prof. Services: $4.9 billion

Jean Stephens Executive Director [email protected]

RSM 50 Cannon Street, London, EC4N 6JJ, UK Telephone: +44 207 601 1080 Website: www.rsm.global

Founded: 1990 Firms: 145 Professionals: 11,400 Type: Global Ann. Prof. Services:

David Poisson CEO [email protected]

SCG Legal 1717 Pennsylvania Ave. NW, Ste. 1200 Washington, DC 20006 U.S. Telephone: 202 659 6601 Fax: 202 659 6641 Website: www.scglegal.com

Founded: 1994 Firms: 48 Professionals: 4,900 Type: Regional Ann. Prof. Services:

Erin Murphy Executive Director [email protected]

State Law Resources 1155 15th St. NW, Ste. 500 Washington DC 2005 U.S. Telephone: 202 495 3120 Fax: 202 530 0659 Website: www.statelaw.org

Page 81: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

78

Founded: 1999 Firms: 160 Professionals: 9,700 Type: Global

Ann. Prof. Services: $4.503 billion

Richard Attisha President a [email protected]

TAGAlliances 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

Founded: Firms: 50 Tax Advisors: 2,000 Type: Global Ann. Prof. Services:

Frederic Donnedieu de Vabres Partner [email protected]

Taxand 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

Founded: Firms: 122 Professionals: 700 Type: Regional Ann. Prof. Services:

Giancario Agace Chairman [email protected]

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

Founded: 1991 Firms: 155 Lawyers: 19,000 Type: Global Ann. Prof. Services:

Terri Pepper Gavulic Executive Director [email protected]

TerraLex 8350 NW 52nd Terrace, Suite 410, Miami, FL

Telephone: 305 858 8825 Fax: 305 858 8986 Website: www.terralex.org

Founded: 2001 Firms: 110 Lawyers: 7,000 Type: Global Ann. Prof. Services:

Roger Yaffe Executive Director [email protected]

USLaw Network 5905 NW 54th Circle Coral Springs, FL 33067 U.S. Telephone: 800 231 9110 Fax: 800 231 9110 Website: www.uslaw.org

Page 82: Professional Services Disruption · Professional Services Disruption 2 are not yet recognized as part of the legal profession.5 Formal integration and recognition of the Big Four

Professional Services Disruption

79

Founded: 1995 Firms: 26 Professionals: 500 Type: Regional

Ann. Prof. Services:

Stuart Miller Chairman [email protected]

Warwick Legal Network VDB Advocaten Notarissen Eindhovenseweg 126 NL-5582 HW Waalre Netherlands Telephone: +44 20 7553 9936 Website: www.warwicklegal.com

Founded: 1988 Firms: 51 Professionals: 19,000 Type: Global Ann. Prof. Services:

Stuart Young Secretary [email protected]

World Law Group 4 More London Riverside London SE1 2AU Telephone: +44 (0)20 3636 7968 Website: www.theworldlawgroup.com

Founded: 1989 Firms: 31 Lawyers: 350 Type: Global Ann. Prof. Services:

Millicent Sanchez President [email protected]

Worklaw Network 9401 Wilshire Boulevard, Suite 828 Beverly Hills, California 90212 Telephone. (310) 288-3980 x8203 Fax: (310) 733-1727 Website: www.worklaw.com

Founded: 2002 Firms: 141 Lawyers: 19,000 Type: Global Ann. Prof. Services:

Maricarmen Trujillo Chief Operating Officer [email protected]

World Services Group 2777 Allen Pkwy., Ste. 622 Houston, TX 77019 U.S. Telephone: 713 650 0333 Fax: 713 650 5566 Website: www.worldservicesgroup.com