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Global business is no longer (and, for a number of years, has not been) the sole province of Fortune 1,000, 5,000 or even 10,000 companies. Rapid advances in technology and communications have reduced the world to a manageable size even for the smallest companies and individual entrepreneurs. Small and midsize enterprises around the world, with annual revenues ranging from less than $1 million to several hundred millions of dollars, are discovering and exploiting the vast resources offered by suppliers, manufacturers, service providers and markets beyond their own backyards. Executives and business managers also are keenly aware that survival often means pinpointing new revenue streams and minimizing production costs throughout the enterprise. As these companies explore opportunities outside of jurisdictional and national borders, local, effective legal guidance is a must-have. To address these potentially far-flung legal needs, the first impulse of many businesses might be to identify a large, international law firm with attorneys and offices on several continents. They often assume that such firms are the only place they will find the resources, the skills and the contacts required to conduct business in unfamiliar regions of an expanding business world. The process of identifying and selecting a multinational law firm or megafirm may place the senior managers of a small business outside of their comfort zone. Executives of a smaller business may be used to working closely with a smaller or regional law firm, with whose lawyers they have positive, long-established relationships. However, many of them have been led to believe that selecting a megafirm is their only option when moving forward in an unfamiliar market. But is this really the case? Are global law firms, with their many locations, thousands of attorneys and costly brand campaigns always the right service fit for small to midsize companies? When a small or midsize company is preparing to take the world by storm (or even one new market), will it receive the appropriate attention and service it requires? As a growing business cultivates opportunities across the United States and abroad, will a multinational law firm, with many well-established Fortune 1,000 clients, be willing to provide the level of service and communication that this business has grown accustomed to, and play a supportive, cooperative and cost-effective role on its business and legal team? Perhaps. But it is clear that a well-established local business law firm, located in any global commercial center, although smaller in size and often a member of a legal network, can serve as a proven alternative. Although they may vary in size, range or type of legal services and geographic coverage, most legal networks are associations of between 30 and 150 independent firms with local member practices in different states or countries. These firms have joined forces to provide coordinated, comprehensive services to clients across multiple jurisdictions. By virtually every measure, an international network of respected, smaller, local business law firms can and does provide all of the capabilities, skills and resources offered by a multinational law firm, along with several key advantages to business owners and executives. In fact, it is often these very top-level owners, managers and in-house counsel who are the strongest advocates of legal networks. Basic economics Let’s start with the bottom line. Virtually every business decision-whether focused on a profit center or a cost center-is based on expense, expected returns or savings, resource requirements and timing, all of which ultimately have an effect on profitability. No matter the formal written mission of the company, it is unlikely to achieve its objectives if it is losing money. Many small and midsize companies have no in-house legal staff, or else have a small, dedicated and knowledgeable department that already is stretched too thin. This shortcoming is magnified considerably as a business begins exploring business opportunities farther afield. And as growth compounds complexity, the core issue remains the same: How does the company meet the legal needs of distant operations and build meaningful business and legal relationships without incurring excessive and unnecessary costs? Leaders of small and midsize businesses are quite clear about what they want under these circumstances: quality legal service X in location Z. Nothing more and nothing less. They do not want to contribute to the overhead of offices on another continent that megafirms may integrate into their billing rates. They do not want to help a law firm meet its per-partner revenue objectives, especially when those partners are in no way related to their specific concerns or service requirements. Simply put, they do not want to subsidize the operations, growth and training of attorneys and offices from which they do not receive representation-not now and not in the future. When negotiating fees with smaller law firms belonging to legal networks, clients are better able to correlate fees and costs reflecting the true local, real-market value of the services they are receiving. Although there is not a hard and fast guarantee that prices will be lower as compared to the larger global law firms, there certainly is a traceable connection between the cost of legal counsel, the services provided and the resources available to the client. This is basic overhead economics at work: A 15-attorney, single-office law firm in Prague, Czech Republic, for example, has a very different business model than the Prague office of a large, far-flung, multinational law firm with headquarters in London. Another important consideration is client service, otherwise defined as responsiveness, communication and attention. It is absolutely fair for a business to ask a firm, “Where do I fit in your client food chain? How important am I to you?” No one needs to remind small and midsize businesses that they are not blue-chip, A-list clients at large, multinational law firms. They simply don’t generate the fees. And while such firms may protest that each client is important, no matter the size, few executives of small and midsize companies are na�ve enough to believe that their relative position on the list of annual billings has no effect on the client outreach they receive. In addition to knowing that they will not get lost in the shuffle, businesses can take comfort in the fact that high-quality service is not just a slogan or tagline within smaller law firms-it is an imperative. Smaller firms that are members of legal networks cannot afford to offer anything less than their absolute best, as each of their clients represents a larger proportion of their overall earnings, and can have a significant impact on their reputation-which, in turn, leads to future business and referrals. Even more important, smaller law firms that are members of global legal networks, and thus rely on a strong cross-border referral structure, are well aware that the quality and service they provide to a referred client is the basic foundation of success within and across legal networks. No member of any legal network can afford to provide less than impeccable legal service to a client referred by a fellow member. If that should occur, that firm will never have repeat business from that client, and the referring firm will also suffer. A larger law firm might shrug off bad service; a smaller law firm cannot. Reputation within the entire network and in the marketplace is always on the front line for a small firm member. Grown-up attorneys The training of law firm associates is another major cause of concern for many companies. In an understandable twist on the “not in my backyard” philosophy, most clients would prefer not to serve as the training ground for their firm’s newer attorneys. Since larger law firms tend to have a higher proportion of associates relative to small and midsize firms (which often are dominated by seasoned attorneys and partners), their clients often enjoy less control as to who actually will be handling their matters, and the rates that will be charged for these associate services. Middle-market and smaller business also understand that they share many of the same concerns as their law firms. Some of these businesses may have grown up and matured alongside their local business law firm. A successful law firm blends both legal and business acumen. Every dollar counts as a law firm attempts to position its services in front of prospective clients. Its principals understand what it takes to succeed in the local market, as well as on a national stage while competing with national and international providers. While it may be easy to dismiss this unique connection based on organizational size and small and midsize company perceptions, it can and does play a role as choices are made. The client and the law firm have walked a similar path within a very crowded and competitive business community. Businesses that apply due diligence in the selection of a law firm in a new jurisdiction don’t have to worry about quality or performance standards when dealing with reputable network member firms. The best legal networks set high standards for membership. Due diligence is the cornerstone of any well-managed legal network in identifying new member firms. Candidate firms generally are required to undergo thorough reviews and interviews, to provide access to existing clients and to demonstrate extensive experience and capabilities in their areas of practice. These firms have not followed clients into a particular geographic or metropolitan area; they are well-established, well-networked firms that provide services to local businesses as well as new companies in the marketplace. Another issue for clients of multinational law firms is the discovery that their attorneys are unable to provide legal counsel on specific matters because of conflicts of interest. Local attorneys are forced to step aside because their counterparts in another city or country are already providing services to a competitor. This happens less frequently with a smaller law firm, leaving one less obstacle for a middle-market business executive to worry about. Who benefits? Small and midsize businesses often are lured to multinational law firms through presentations of cutting-edge technology. For example, many large firms boast that they offer client-based intranet, extranets, electronic-docket tracking, automated billing systems and the like. But how many of these firms and clients really make the most effective use of this technology? And how often are these systems purchased and implemented for the firm’s benefit, rather than as a means of helping clients achieve their own objectives? Clients of small and midsize firms generally can be assured that the firm’s technology budgets are being invested in services and systems that provide real value, rather than a marketing tactic. Member firms tend to direct resources where resources are needed most. Rather than maintaining expensive conference rooms and event facilities, small firms direct their infrastructure spending in areas that will improve client service. When a particular matter requires more extensive-but temporary-technology or services, these firms can easily lease or obtain these facilities and resources as needed. They avoid the costs of maintaining these resources over the long term, or passing them along to their other clients through higher fees. The best legal networks are committed to client education. As active members of the local legal community, network firms often sponsor seminars and programs that relate to specific legal concerns and business issues within their own jurisdictions. Firms collaborate with other network law firms to host and sponsor periodic client meetings and international symposia that deal with cross-border trade, employment and other client concerns. Many develop legal handbooks, newsletters and other publications that offer information regarding international legal and business issues. Business and legal matters rarely come in neat packages. They often require attorneys with experience and skills in diverse areas of legal knowledge. With the combined resources of the legal network, virtually every client matter can be addressed by the local member firm, or by another member firm that concentrates in the particular area of law or business-from antitrust to white-collar crime and everything in between. Returning to the original question: Are legal networks good for small to midsize businesses? In many, many cases, the answer is yes. As Goldilocks once said when referring to that bowl of porridge, “This is just right.” From the perspective of many small and midsize businesses, especially those that are beginning or are continuing to expand their reach across the globe, the representation and services available through a smaller, local business law firm provides a perfect fit. It is their connection to an established legal network, comprising similar, small independent firms from around the world, that allows these well-established and well respected legal service providers to be able to offer the unique alignment of client, firm and network interests that is often unmatched by the larger, international law firms. Richard L. Hetke is the chief executive officer of ALFA International, a law firm network with headquarters in Chicago. He began his legal career in private practice before assuming in-house positions at Kraft Foods Inc. and Ameritech Corp.

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