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Texas megafirms are prompting small to midsize firms — those with fewer than 50 attorneys — to turn to networks to keep from getting swallowed up by the giants. The networks function mainly as a way for firms to refer clients to attorneys in other jurisdictions while remaining independent and unexposed to the malpractice liability of the firms they’ve sent clients to. By networking, smaller firms are able to meet client demand and keep the cost of their services down. James M. Neel’s six-member Houston firm got into networking as a way to compete with the huge firms. His firm, Neel, Hooper & Kalmans, chose the Worklaw Network, a group of 318 nationwide labor and employment lawyers who represent employers exclusively. “Law firms are merging, and their selling point is, ‘Look, we’ve got law firms all over the country,’ ” he says. “ Networking is just a marketing device that we thought could be of more assistance to our clients to pool research and team up to be a force in the marketplace.” Neel uses his network’s Internet database to access research and briefs from lawyers all over the country. He also gets and gives referrals through the group, often staying on to supervise a case that’s been referred out. Neel says his clients like having the option of using a member firm because they can avoid accruing extra costs, such as the expense of flying lawyers to other jurisdictions. “It makes a lot of clients more comfortable knowing that there are not just six lawyers working on their case,” he says. There are 318 network attorneys available to work on their case, “so there’s not a job that’s too big that one of the firms can’t handle because they have plenty of backup.” IT’S TRENDY By the mid-1990s there were 50 or 60 networks nationwide, according to Houston legal consultant Bill Cobb. But today there are at least 300, he says. “I am seeing more of this because the technologies are there to enable it,” says Cobb. “And I think people are finally realizing that they cannot be all things to all people and provide service at a rate their clients are willing to pay.” With numbers showing the biggest firms getting bigger, the smaller firms have had to find ways not to be left in the dust, Cobb says. Last year, Texas firms grew 8.5 percent. The pairing of Dallas-based Akin, Gump, Strauss, Hauer & Feld with Los Angeles-based Troop Steuber Pasich Reddick & Tobey is one example of such growth. The merger caused Akin to swell by 11 percent. The firm now offers its clients more than 1,000 attorneys and has 11 offices in the United States and three overseas. The networking idea is not a new one. Cobb says he’s been telling smaller firms to network for years. But it’s just now becoming trendy. The “virtual law firm” is the only way to go if you’re a smaller firm, he says. “It’s easy for a Vinson & Elkins, Fulbright, Akin or Bracewell to say, ‘We can do this job’ and then you’re out of the loop because now it’s their client. A ‘virtual law firm’ looks like a law firm but it’s not. You feel like you’re dealing with a law firm, but you’re really dealing with different law firms tied together.” Depending on the network, the cost of membership is typically several thousands dollars per year. For example, the cost of maintaining a membership with Commercial Law Affiliates, a network of 184 business law firms, is based on the size of the city and number of lawyers in the firm. “If you are in a small city like Beaumont and you have three lawyers your annual dues would be about $1,100,” says Wendy Horn, president of CLA. “If you were in a city the size of Houston and had 50 lawyers your fees would be about $10,000 per year.” Members typically must pass a screening check as well. The Harmonie Group, a network of insurance defense attorneys, requires their lawyers to be “AV rated” by Martindale-Hubbell and show that they maintain memberships in various industry and legal organizations. Networks also may bind their members to organizational rules. For example, CLA requires its members to return all client calls, e-mails and faxes within 24 hours and “demonstrate a consistent record of client satisfaction.” PROS AND CONS Before jumping to join a network, however, small firms should make sure the group is the right fit for them. Austin legal consultant Julie Eichorn recommends that small firms first poll their clients to see if they think a network connection would be beneficial. She also advises small firms to do their homework to be sure the network has enough presence in the marketplace before joining, because she’s seen at least a half-dozen networks go under during the past year. “What happens is some of these are put together by entrepreneurs who’ve seen a perceived need in a marketplace by small law firms to get more work,” she says. “They make promises to these small firms but they don’t have contacts or the [law firm's] clients don’t see it as beneficial.” But many practitioners, such as CLA member Tom Fritz, say they are pleased with the network experience. “It’s a wonderful tool for us,” says Fritz, managing partner of Fritz, Byrne & Head, an 11-member Austin firm. “I see it as a significant attribute and believe that our ability to attract a certain level of client would be diminished without it.” Dallas attorney Dwayne Hermes, whose 25-member Dallas firm, Hermes Sargent Bates, is a member of the Harmonie Group, concurs. “It’s been a very productive and positive professional relationship for our firm and our clients,” he says. “It’s given us a national network and presence while really being just a North Texas-based firm.” Related Chart: Making It in the Boutique Biz

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