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The ties that bind

The ties that bind

Global legal associations provide more than just an opportunity to earn frequent flyer points. Justin Whealing investigates the networks local law firms have joined and whyStrength in numbers…

Global legal associations provide more than just an opportunity to earn frequent flyer points. Justin Whealing investigates the networks local law firms have joined and why

Strength in numbers has always been the reason why groups exist, and when it comes to law firms joining large global legal associations, that principle rings true. The idea of such associations first emerged in North America in the 1980's. At that time, firms were encouraged to join under the pretence of receiving work from an international client referred to it by a fellow association member, and the hope that such an initial referral may retain the client for future Australian work.

If such an alliance can provide a one-off foray into a foreign market from the international client, a law firm hopes, at the very least, - that it receives a glowing report from the client back to the referral firm, thus ensuring more work in the future. Three decades later, such hopes of long-term international work have materialised, with many Australian law firms seeing firsthand the competitive advantage that joining global legal associations can offer.

Australians who network

One such firm is Cowell Clark, who joined the 145-member Alfa International in 1995.

"We developed a strategy in the early 1990's of expanding our client base from international sources, rather than just from the domestic market," says Brett Cowell, the chairman of partners at Cowell Clark. "Our membership of Alfa International was a key component of that strategy."

Since joining Alfa, Cowell has been active within the organisation, serving two terms on the international board of directors. He is currently a member of the International Membership Committee, which has responsibility for all members outside North America.

Cowell says that as an Adelaide-based firm, being an active member of Alfa has helped to establish Cowell Clarke's bona fides with respect to its international client base. "The ability to have clients looked after around the world is crucial," he says.

The membership of global associations has also assisted the expansion and international strategy of Melbourne firm, Madgwicks. Managing partner Peter Kennedy is straight to the point when he talks about the benefits that being a member of Meritas, another international legal association, has provided his firm. "It has helped us to gain clients, retain clients and learn from other firms," he says.

Madgwicks, with 10 partners and 25 additional lawyers, has been a Meritas member since 1997. The firm is the Association's Melbourne representative, joining numerous other small and medium sized law firms across the globe, including six Australian members.

Kennedy says his firm "does more exporting than importing" receiving around five to ten pieces of work per month from fellow member firms, and in turn referring around two to three clients to other Meritas members per month.

"Being a member of Meritas has provided the firm with a competitive point of difference in the domestic marketplace," Kennedy says.

Not surprisingly, larger firms have also climbed aboard the association bandwagon.

Clayton Utz was one of seven founding members of the Pacific Rim Advisory Council (PRAC) in 1984 and was later invited to join Lex Mundi, the largest network of independent law firms in the world.

Although these associations do not bind members to exclusive referral arrangements, Simon Truskett, a partner with the firm's corporate group and a member of Lex Mundi's Board of Directors, says that his firm has received "hundreds of instances of work" as a result of its membership of Lex Mundi.

One notable deal Truskett worked on came via a referral from Canadian firm, Blake Cassels & Graydon, a fellow Lex Mundi member. Truskett acted for Colt Engineering (a Canadian based engineering consortium) on its sale to Worsley Parsons for $1.13billion in 2007.

"We receive a very strong flow of work from referrals, and also regularly refer our clients to Lex Mundi member firms," he says. "However, if another firm from outside Lex Mundi or PRAC was a better fit, we would refer the client to that firm."

Another top tier firm carrying membership of a legal network is Minter Ellison - a member of The World Law Group (WLG), which comprises 50 members from 38 countries. The current President of the WLG is Ian Davis, a senior partner with Minters corporate advisory group.

The WLG invites members to join from major commercial centres and jurisdictions, with the exception of London or New York based firms, which Davis says are kept as "open cities".

Davis says that since the global financial crisis, legal associations and the relationships that run through them have become of paramount importance.

"After the global financial crisis the market for quality legal advice and the complexity surrounding certain issues increased significantly," he says. "There are lots of good firms out there, but it is not just about what advice you can provide [the clients] it is also about how it can be delivered.

"By having strong relationships with international firms, we can deliver outcomes when clients have enquiries covering multiple jurisdictions."

The give and take

Like many groups, new members of legal associations have to prove they can cut it and earn the respect of established players when joining.

In addition to proving their worth, there are also cultural challenges for firms involved in joining an association, including the need to learn to negotiate around myriad sub-committees and relationships that develop.

"We have had a reasonable flow of work since we joined TerraLex in 2007," says Middletons national managing partner Nick Nichola. "But we very much see our membership as a long-term investment and it will be after around five years that we will be able to properly judge whether joining TerraLex has proved to be successful."

In March this year, Nichola hosted a dinner in Melbourne for TerraLex members from the Asia-Pacific. He says that it was clear from discussions amongst the 30-35 partners present that it was important to establish good personal relationships to gain a foothold in the association.

"Not surprisingly, that takes time, and to make the most of an association it is important that you have both a good professional and personal relationship with those you deal with," he says.

The initial experience of Middletons in joining an association mirrors that of TressCox lawyers.

Alistair Little, a litigation and dispute resolution partner with TressCox, was elected to the board of directors of Alfa International in October 2009. He says that when his firm joined Alfa International in 1996, referrals didn't start flowing in immediately

"For the first two to three years of our membership, we found that there wasn't a lot of work coming through the door, and we really had to work hard on building relationships and contacts," he says.

Strength in collaboration

While the initial reason firms join an association is to pick up more work and clients from international sources, member firms are increasingly talking to each other about strategic and general business issues.

In addition to the many different practice group seminars, legal updates published online and regular regional conferences and events, associations frequently share business and strategic information.

For instance, Lex Mundi has committees with regard to law firm technology, marketing, pro bono, professional development and women and the law.

John Shirbin, a senior partner and infrastructure specialist with Clayton Utz, is one of the firm's two partner representatives with the Pacific Rim Advisory Council (PRAC). This association only has 32 members from countries around the Pacific Rim.

Shirbin cites three main benefits associated with the firm's membership of PRAC.

"Firstly, we have a good flow of information with regard to the development of the law in different jurisdictions and with regard to business development issues, such as ideas in firm management or retention and recruitment issues," he says. "We also get regular referral work and know that when we refer clients, they are in safe hands."

TressCox has also seen the benefits of its membership extend beyond merely providing a forum to gain more work.

"We have found that we are in regular contact with member firms across a range of issues, such as knowledge management and human resources matters," says Little. He also notes that regular contact via partner forums and three international meetings per year provide a good opportunity for lawyers to bounce ideas off each other.

The Australian representative partners from Alfa also meet three times each year, with Cowell saying these meetings provide a forum for "open dialogue on a range of matters".

Alfa, along with many of the associations, also facilitates the transfer of lawyers between member firms on secondment.

So, even if the promise of added work does not flow through, law firms can always lap up other advantages that international friends can offer - be it business advice, the opportunity to workshop ideas or even just the comfort of having some contacts at the next holiday destination.

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