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Vereined off: Why Swiss vereins lack true client focus

The sorry state of affairs and uncertain future at King & Wood Mallesons (KWM) provides a timely reminder of the shortcomings of the Swiss verein model and similar 'halfway house' structures.

Hieng Ling Tie

The sorry state of affairs and uncertain future at King & Wood Mallesons (KWM) provides a timely reminder of the shortcomings of the Swiss verein model and similar ‘halfway house’ structures. As is evidenced time and time again, political infighting in verein firms can blight any efforts to galvanise collaborative working and can often be the undoing of what, on paper, should be a successful merger.

There are no ties that bind the verein model into a cohesive business – something that is likely to be evidenced as the KWM saga continues, with the brand’s presence in China, Hong Kong and Australia unlikely to be culpable for the financial failings in Europe due to the flimsy nature of the verein structure. This shows how the verein model can, in some circumstances, be the worst of both worlds – giving rise to the distraction of political infighting and power struggles without the reassurance and governance that comes with being a large corporate entity or the willingness to collaborate that is characteristic of the leading networks.

The big international law firms that operate under the Swiss verein model, like Dentons, DLA Piper and Norton Rose Fulbright, present a united front to the outside world. However, verein firms are not a single corporate entity, but rather a network model representing themselves as one big law firm. Attempting to present a united, coherent face to the world – even though offices in different countries often operate pretty independently of one another – is a drain on firm time and resources that, in the end, represents an additional cost to the client. So, do clients really want to pay inflated fees to help these verein model firms address their internal infighting just to have a Big Law ‘name’ advising them?

While some verein model law firms might have the strength of leadership and culture to foster collaboration, in reality, collaboration is difficult and often forced because there isn’t the investment in the necessary infrastructure to make it work. For clients, this can impact on the consistency of service, which negates the biggest perceived benefit of buying into a single legal services provider.

While these firms have focused on a flag planting exercise of expansion, the best of the independent elite legal networks have evolved to become a viable and compelling alternative for multinational clients. Without the baggage of corporate politics, networks are able to look outwards and focus on what is important to the client: having their needs met by a locally involved and knowledgeable law firm with experience in the jurisdiction in question.

Legal networks may be in an advantageous position. They can provide the combination of established local expertise while at the same time providing their clients with access to international experts across most of the world, without the added cost of the verein model. Elite legal networks are thus able to offer something different to the global outpost service pushed by many international legal brands.

Interlaw has successfully grown to an elite global legal practice, with more than 7,000 lawyers in 140 cities, thanks to the commitment and investment of our elite member firms, combined with the strength of our selection process. In 2016, we have increased our presence in Central America with the addition of BLP - with offices in Costa Rica, El Salvador, Honduras and Nicaragua – and expanded to new territories through additions such as Rokas law firm in Greece, Tohme law firm in Lebanon, and the Taipei-based Winkler Partners – with further expansion to come in the year ahead.

Fundamentally, the perspective on collaboration is entirely different within a network – rather than focussed around billing targets, it is couched firmly in a desire by reputable independent firms to work alongside one another with the joint aim of providing the best service to clients. Most importantly though, we enjoy working together – there is no place for political infighting in a network, with member firms respecting one another’s independence. Our lawyers from member firms are invited to join special business teams where they can build contacts with other specialists in their field and share best practice. For example, we recently held our annual conference in Tokyo and the collegiate atmosphere between member firms is testament to the network model’s ability to promote collaborative working.

Rather than channelling resources in trying to create an empire, the modern network approach is entirely client-focussed. Our member firms are proud of their independence, but equally take pride in the quality mark that being part of the Interlaw network signifies. We expect to see more turmoil for large law firms in the years ahead, as best friend arrangements turn sour or mergers unravel. In the meantime, we will be continuing to invest and shape our offer to challenge the status quo and show how global networks provide a compelling alternative to international law firm brands.

For more information on Interlaw, go to www.interlaw.org

Michael Siebold is chairman of Interlaw.Thelma Rivera is a director at Interlaw.

Posted by:

Michael Siebold &
Thelma Rivera

26 January 2017

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