This is the fourth and final article in a series of posts that consider the future of professional services networks. It investigates the links between law firm networks and law firm strategy.
Previous posts in this series have examined the obvious traditional benefits of professional services networks: the external value that they can deliver in terms of new clients, new instructions, and an expanded visibility and market presence. We focused on three specific components of external value: real synergy, referral potential, and competitive loyalty.
We have also considered internal value, a concept that many professional services networks and their members overlook, but which will become increasingly important in the near future.
The final questions that law firm networks and their members, as well as prospective members, should consider are these:
- Will membership in a law firm network materially support the achievement of our firm's strategic objectives?
- If so — and for many law firms that best answer will be "no" — which network will be the best investment for our firm?
These are difficult questions, because many -- and I personally believe most -- of the current law firm networks cannot provide credible answers to these questions. This does not augur well for future of such networks as anything more than cordial organizations that occasionally produce interesting conferences in pleasant locations.
As part of our firm's strategic consultation with law firms, we advise them to consider network membership as a strategic tactic, rather than a strategy by itself. In other words, how would participation in a network materially support the achievement of a specific strategic goal for the firm? If the firm has not defined strategic objectives that are specific, measurable, realistic, agreed by all the partners, and defined by time limits, the decision to join a network will be little more than wishful thinking, and the the selection of a network will be little more than guesswork.
In some instances, developing a "custom made" network of strong bilateral relationships can do more to advance a law firm's strategic goals than joining a traditional network. In my experience, which is not necessarily representative of all law firms in the world, when a competitive law firm is not a member of a network, it is usually the result of a conclusion that a network would not produce a material return on the investment.
More specifically, can participation in a network help a law firm to establish a differentiating competitive advantage over its rivals? Merely belonging to a network -- even a "big name" network like Lex Mundi -- does not confer by itself significant competitive advantage on a law firm. To be blunt, the "brand value" of most networks is over-rated.
Questions that should be considered include:
- Who are the members of the network and what is the probability that the other members can add external value to our firm?
- Will the network deliver competitive loyalty to our firm and our goals; or will it undermine our competitive position?
- What internal synergy is there within the network? In other words, do groups of members of the network routinely produce business results together, or is the collaboration largely aspirational -- a slogan more than a reality?
- What internal value can the network add to our firm?
- Which network configuration will produce the best return on investment: a global network; a multi-disciplinary network; a regional network; a practice specific network; an industry sector focused network; or a combination of these?
- What is the investment that our firm must make in order to achieve the desired results, especially the investment of time; and to what extent are our partners committed to making that investment for a long enough period to produce those results?