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Smart networking considers the risks

Smart networking considers the risks

Networking can prove a risky business, writes Alistair Little, and it pays to ensure the firm's brand and image is maintained when making new associations Networking comes with its own risks.…

Networking can prove a risky business, writes Alistair Little, and it pays to ensure the firm's brand and image is maintained when making new associations

Networking comes with its own risks. Take US-based law firm Coudert Brothers, for instance, which had to close its doors after 152 years in business. The firm had a network of international offices with a common name and a level of integration, but the whole network unravelled when key members decided to leave. Head office made the decision to dissolve the firm, leaving partners around the world with potential liabilities.

The fate of Coudert Brothers shows the importance of retaining a firm's branding independence when joining any network, because that helps lower any potential liability.

Professional services firms are by nature risk-averse, so it is with a great deal of caution that most assess the potential benefits and risks of moving outside their jurisdictions, particularly overseas. However, their clients often want to expand overseas and that can provide impetus to join a network or association.

Bearing in mind the risks of networking, the right kind of network is crucial for firms and their clients, particularly when venturing overseas. Opening offices or building a business in China, for example, is fraught with problems unless you have the right contacts. One Australian clothes designer found out the hard way when going into production in that country. Overnight their top-quality design had been ripped off by the factory they contracted with when it started to manufacture identical garments with cheaper materials.

Clothing manufacture in China is big business for many Australian designers, so it is vital to have appropriate licensing structures with Chinese partners and to find suppliers that are reputable and reliable. In cases such as this, law firms which belong to a network can refer clients to someone on the ground with a great deal of confidence. A local law firm will have knowledge of local laws and local businesses which outsiders can never match.

Many successful professional firms have joined one form of network or another, with many law firms becoming involved in the late 1990s. But there are networks and networks. Some are simply a list of names comprised of members who never truly interact.

However, others, such as global legal network ALFA International, invite firms to join only after a strict analysis and a vetting process is carried out on the firm. ALFA International member firms interact on a regular basis and the board's review process continues after firms have joined to ensure that they are providing the right level of service. Peer review then determines whether a firm is able to stay as a member. If standards drop, the association's board will make the decision to remove the firm from the network. This means that the network continues without risk to its members and service standards are maintained.

Bearing in mind the risk-averse nature of professionals, referring valued clients to unknown lawyers outside their own jurisdictions - particularly overseas - can leave a lawyer with angst. However, by being part of an effective network, firms have worldwide coverage and the confidence that they that can sort out their clients' problems with a phone call to a lawyer that they know personally - one they know has the level of legal skills and service standards that the client requires.

Being a member of an international network has been an important source of referral work which has continued to flow even during the economic downturn. TressCox Lawyers receives several dozen referrals each year from other Australian and international firms - particularly from the US, the UK and Europe. The work sent in is diverse, with many intellectual property, employment law, property law and corporate law referrals. Membership of ALFA International has been financially rewarding for TressCox as well as enabling the firm to tap into the expertise of lawyers around the world and find out how they are grappling with emerging national and international legal issues.

While many professional firms are members of networks of one sort or another, being part of the right network is key to making sure that members of the firm are not exposed to unnecessary risk and that a firm's clients receive the level of service they require.

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