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At a time when big law firms are scooping up smaller practices at record speed, some midsize firms flouting the merger trend are using consortium networks to expand their reach and help compete with the giants. Lex Mundi, Meritas, International Lawyers Network and TAGLaw are just a few of the networks that law firms use to swap services with other firms outside of their home turf. They can cost thousands of dollars to join, may operate on an invitation-only basis and have rigorous requirements for continued membership. These affiliations can bring in referral work while also allowing midsize firms to maintain their independence in an increasingly consolidated legal market. However, despite the advantages, some warn that firms should curb their expectations about a network’s benefits. The attorneys at Carter Ledyard & Milburn, a New York firm with about 130 attorneys, see their new network membership as a way to contend with huge firms that they say are becoming unwieldy amid a market of continued law firm expansion in the United States and abroad. “It is a great way for a firm of our size to compete and provide better legal service than having offices in every city,” said managing partner Judith Lockhart. The attorneys at Carter Ledyard, which also has an office in Washington, have no intention of merging right now. They joined Meritas, a network of 165 business law firms, at the beginning of the year and expect a fair amount of business from other member firms for the thousands that it pays annually to belong. Since it joined, Carter Ledyard — whose clients include the American Stock Exchange, Playtex and Tofutti Brands — has referred about 10 matters to other Meritas members, and has received about three referrals, Lockhart said. AN ALTERNATIVE TO ‘HUGE’ “It’s an alternative to becoming a huge firm,” she said, adding that the network’s screening process and continued quality control of member firms takes some of the worry out of referring her clients to other attorneys. Firms with varied practices in major cities like Carter Ledyard are attractive to networks, which can use the membership of key firms in strategic locations to recruit members in other parts of the country. Full-service firms in big cities generally pay more to belong to networks, since they usually receive more referrals than members in other parts of the country. Smaller firms in less-populated regions say they like the service because it gives them a connection to reputable firms in other jurisdictions and can send business their way. “We know that they’ll be responsive and provide access to quality legal services,” said Jimmy Goodman, president of 111-attorney Oklahoma City-based Crowe & Dunlevy, which is a member of Lex Mundi and other networks. Goodman said that “once or twice a week” his firm will receive a new client or at least a “networking opportunity” with a potential client because of Crowe & Dunlevy’s network memberships. “It’s a quick promise of quality help,” he said. But despite the benefits that these firms say networks provide, law firms need to recognize their limitations, said Joel Henning, vice president and general counsel for Hildebrandt International, a law firm consultancy. Henning said he has worked with several networks and spoken at numerous network-member meetings. “If [law firms] have very modest expectations, they won’t be disappointed,” he said. “If they truly think it’ll add significantly to their bottom line, forget about it.” What’s more, not all practices lend themselves to the a network strategy. John Keker, a partner with the 24-attorney litigation boutique Keker & Van Nest in San Francisco, said that the firm is not a member of any network and, instead, finds contacts informally. Bartlit Beck Herman Palenchar & Scott, a 62-attorney litigation and corporate law boutique based in Chicago, takes the same approach. “We do better by looking to see who best fits the bill,” said partner Mark Ferguson. “We haven’t needed to have any kind of formal association.” Before firms sign on, Henning said, they should consider instead whether to focus their resources on competing and making money where their offices already are located. Finding a network that matches or complements a firm’s specific practices also is important, he said. Methods for controlling the quality of representation and what happens if firms merge are other considerations. The fees and the time it takes to meet other members also are major concerns, according to Henning. Membership fees, which are often negotiated through individual arrangements between a firm and the network, can exceed $25,000 for strong firms in key cities. At International Lawyers Network, for example, fees range from $3,500 to $13,000, according to its executive director, Alan Griffiths. The network includes about 4,500 lawyers in 61 countries. In addition, network meetings, although they give members an opportunity to get to know each other, frequently are held at pricey vacation resorts. Law firms should balance the cost of those excursions with the true effect on their revenues, Henning cautioned. “Sometimes you’ll find that you have members in it for the exotic travel, the wine, food and good fellowship,” he said. “That’s OK, but that’s not going to be an effective way to compete with larger aggressive firms.” Lockhart said that the money and time Carter Ledyard spends on network fees and meetings is the cost of doing business.”The question is how you spend your business-development dollars,” she said. “You just weigh it as part of business development.” But perhaps the true test of a network’s worth is whether the midsize firm’s important clients are willing to stick with the firm and use its referrals when they need services beyond its jurisdiction. Matthew Small said he likes the network idea. He is general counsel for Blackboard Inc., a 500-employee, Washington-based educational software company. “It’s nice when they have a referral at hand,” Small said, adding that the legal work at his company often involves trademark matters in many jurisdictions. “No one can have offices in every city,” he said. One of the greatest advantages networks offer clients is cost-saving, said Peter Appleton-Jones, founder of the network TAGLaw. “In an age when more and more corporations are looking to keep their legal budgets down, they can go to a midsize firm in a network instead of a megafirm,” he said. TAGLaw, founded in 1999, started with four law firms and has grown to 135 law firms in 78 countries. Law firms have plenty of networks to choose from, and though the number of networks has “held its own,” Henning said, their membership appears to be rising. Some networks acquire their members on an invitation-only basis, and a few require their members to have exclusive agreements prohibiting them from joining other consortiums at the same time. International Lawyers Network invites firms to join based on recommendations by other members, Griffiths said. Its membership has grown by about 70 percent, to 4,500 lawyers, in the last five years, Griffiths said. The organization conducts two surveys each year to get members’ input on how their referrals were handled. If a firm receives a poor rating, the network meets with the attorneys who were in charge of the matter. The organization eventually may remove the firm from its list, he said. ABUNDANT CHOICES The choices of networks for law firms are abundant and offer differing benefits depending on the firm’s size, location and practice areas. Lex Mundi, for example, is the largest network with 15,000 lawyers from 161 law firms in 99 countries. Membership is limited to one firm per jurisdiction, a common restriction of networks. The second-largest network is Terralex, with 10,000 lawyers in 93 countries. Membership in that group is by invitation. Carter Ledyard’s decision to go with Meritas was based, in part, on its size. “You need to know the people,” Lockhart said. “If it gets too big, that becomes almost impossible.” Other networks include, but are not limited to: Globalaw: a nonexclusive network of 70 firms in 60 jurisdictions. Most members are midsize firms. Mackrell International: an association of 55 law firms in 32 countries. Its membership focuses on domestic and international commercial law. Multilaw: also nonexclusive, it has 4,500 lawyers in 130 commercial centers. It also offers an “academy” for beginning lawyers wanting to learn about practicing on a global basis.

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