Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
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38 LEXPERT MAGAZINE | OCTOBER 2017 (WSG) and its 54 law firms around the globe, and e Interlex Group's 49 member firms embracing 9,320 lawyers in 155 cities spread among 60 countries. So it's no surprise that AILFN, which is dependent on member fees as its primary source of income, sees Nextlaw as a threat. According to McGarry, however, Dentons' platform is reinventing the wheel. "What networks provide is a reliable mechanism to provide clients with reliable lawyers around the world," he says. "What Dentons is doing is akin to establishing their own electrical grid, which is very inefficient because you end up spending a lot of time to put up infrastructure that already exists." AILFN, meanwhile, has risen to the emerging challenge by channeling its "association of networks" into the Locate Law Network (LLN), an online directory of 3,500 firms and 300,000 lawyers in 5,000 offices. LLN offers a comparative array of independent business law firms that are members of 45 international, regional and specialty law networks. Its coverage extends to more than 150 countries, including all Canadian provinces and 50 US states. "An association of networks is a good thing because internally a particular network might be lacking expertise, might not have members in a specific geographic location, and might encounter conflicts when trying to make referrals within its own group," McGarry says. Both AILFN and Nextlaw claim to be disruptors: McGarry calls AILFN the "Uber of the global legal profession," while Elliott Portnoy, Dentons' global CEO, calls Nextlaw the "Uber of the global referrals network industry." IT'S AN INDUSTRY that has survived the recent tumultuousness of the profes- sion very well. In 1989, there were five legal networks. Today, the 45 member firms of Locate Law Network alone account for ap- proximately 20 per cent of the global legal services market with cumulative revenues of US$120 billion. According to statistics compiled by AILFN (see sidebar), these numbers eas- ily exceed the revenues of the world's 10 largest firms, whose 20,000 lawyers in 40 countries generate US$20 billion in fees and garner 2.5 per cent of the market. e LLN also dwarfs the production of the world's seven legal vereins (including com- panies limited by guarantee, the UK's mod- el which differs to a degree from the Swiss verein), which boast 20,000 lawyers as well and generate $14 billion in fees to capture 1.75 per cent of the market. e legal arms of the Big Four accounting firms and their 4,000 lawyers account for $1 billion in an- nual fees, or 0.2 per cent of the market. Despite these statistics, McGarry says that networks have remained "largely un- recognized." But AILFN predicts that net- works' "global status" will move from lag- ging behind Big Law, vereins and the Big Four in 2015 to outstripping them all by 2018. "Law firm network membership will grow by 20 per cent to 30 per cent over the next five years," McGarry says. While these predictions appear to be somewhat speculative, McGarry's history suggests he cannot be taken lightly. In 1989, he founded Lex Mundi, growing it to 160 firms, and in 2002 he founded WSG and grew it to 150 firms. Most recently, in 2015, he initiated AILFN with the intention of enhancing the position and recognition of all legal networks, establishing common principles to maintain quality standards, providing an information exchange forum, and negotiating agreements with vendors that serve to increase the efficiency and ef- fectiveness of networks and their members. Ken Kallish of Minden Gross LLP in Toronto, who served a term as president of Meritas, a 7,548-lawyer-strong legal net- work of 182 firms in 241 global markets, believes that traditional legal networks are the driving force behind the forma- tion of Nextlaw. "e creation of Dentons' network doesn't surprise me because it's a reflection of their need to compete with strong legal alliances by stretching out their footprint," he says. What makes the case for networks more convincing is McGarry's observation that both vereins and the Big Four are variations on the networks theme — an observation that speaks to the strengths of the network model. "ere are more and more associa- tions of this kind occurring all the time," says Rob Granatstein, managing partner at Blake, Cassels & Graydon LLP, a major na- tional firm that is the exclusive member for Lex Mundi in Alberta, Ontario and Qué- bec. "Even Dentons' model of global firms incorporates a network approach." Indeed, as McGarry's comparative com- pilation of 15 features of the Big Four, legal STEPHEN MCGARRY ASSOCIATION OF INTERNATIONAL LAW FIRM NETWORKS "Under no definition of global are the global firms actually global. Once you strip away the big commercial centres where they have offices, like New York, London, Frankfurt, Singapore, Beijing, Chicago and Houston, there's a lot of the world they don't cover." | LEGAL NETWORKS |