Networks help practices extend their reach:

June 30, 2008

Outside of Indiana, the local law firm of Bose McKinney & Evans LLP has a nominal presence in Washington, D.C., and Raleigh, N.C.

Yet, the midsize practice with roughly 130 lawyers in Indianapolis is handling an immigration issue for a fellow firm in India and is encouraged about prospects in Argentina, Colombia and Puerto Rico.

Global gigs typically are reserved for larger rivals with an international scope. But scores of firms that want to expand their reach, without the risk of opening additional offices or finding a merger partner, instead are turning to legal networks.

Bose McKinney, for instance, is a member of ALFA International, which boasts 125 law firms in 49 states, as well as in Canada, Mexico, Europe, South America, the Pacific Rim and Africa.

"I've never been one to say we need a Chicago office," said Bob Clemens, a partner at Bose McKinney. "ALFA is headquartered in Chicago. That works for us."

It is the oldest legal network in the nation and was founded in 1980 by a group of defense firms whose clientele in the insurance industry was spread across the country.

ALFA International and similar organizations such as Lex Mundi, Meritas and the International Lawyers Network link members with others around the world so when a firm in, say, Hong Kong or even Denver needs a lawyer in Indianapolis, it knows whom to contact. The idea is that the firm receiving the referral ultimately will reciprocate.

Annual dues in any legal network can range from $1,500 for a small practice in a developing country to $50,000 for a large firm in a big city. Firms are purchasing, in part, exclusive rights to be the only member in a city or region.

The key to maximizing the return on investment is participating in the conferences and, of course, networking, said Richard Hetke, CEO of ALFA International.

"As loyal as some of our attorneys are to the organization," he said, "they're not going to refer a client unless they know the lawyers."

Globalization factor

To that end, every firm that joins a legal network is not going to remain with it forever. But several local ones, including Bose McKinney, have been members of the organizations for many years and support their efforts.

Krieg DeVault LLP has been affiliated with Meritas in Minneapolis since its inception in 1990. Meritas' membership includes 170 firms in 60 countries.

Midwestern companies make up the bulk of Krieg DeVault's clientele. Yet, the rapid pace of globalization and increased size of emerging foreign markets is causing some of its manufacturing clients to explore moving assembly operations to China or Vietnam, said firm partner Brad Fuson.

So instead of affiliating with a firm in China or jumping through hoops to establish an Asian presence, Krieg DeVault sought counsel from a non-U.S. firm in China-a Meritas member that has been practicing there for years.

Through Meritas, the 109-lawyer Krieg DeVault essentially becomes the largest law firm in the world, minus the bureaucracy and lofty bills, Fuson asserted.

"For us, it is the most efficient, most effective way to respond to the needs of our clients without trying to open up offices and be all things to all people," he said.

Any apprehension clients might have about being referred to another firm quickly is alleviated, Fuson said, once they learn Krieg DeVault is not charging a referral fee.

Harrison & Moberly LLP is another local law firm that has forwarded referrals to network colleagues, and received work as well. The 29-lawyer practice is a member of New Jersey-based International Lawyers Network, which counts 90 firms in 70 countries as members.

The organization is small enough that most know one another, said David Russell, a partner at Harrison & Moberly. What also appeals to Russell is that the firms are similar in size, and the $5,500 annual fee his firm pays is not "outrageous."

In the three years Harrison & Moberly has been a member, the largest amount of work it has received stems from its appointment as local counsel in securities litigation matters involving financial services firm ING.

Russell attended ILN's annual conference this year in Prague and thinks the trips are worth the expense.

"Looking eyeball to eyeball with someone that you trust, that gives you the human aspect," he said. "We still believe that people hire lawyers, not law firms."

Still, Mike McConnell, a former legal consultant who chairs the Indiana Education Employment Relations Board, remains skeptical of the advantages.

"For the most part, it looks nice on the letterhead, but I'm not sure how valuable they are," he said. "I think it depends on the firm and the organization they're with."

Larger firms see value

Even so, Baker & Daniels LLP, one of the largest law firms in the city, belongs to two global organizations-Houston-based Lex Mundi and St. Petersburg, Fla.-based TAGLaw (The Appleton Group).

The firm joined Lex Mundi in 1989 and TAG in 1999, and is a charter member of both. In the 20 years since its inception, Lex Mundi has grown to include 160 firms with more than 560 offices in 99 countries.

Its membership is composed of larger and more prominent firms and is much more than a referral network, offering professional development and training programs, and boasts an active client advisory counsel, said Thomas C. Froehle Jr., Baker & Daniels' managing partner. TAG, conversely, attracts smaller firms.

Through its TAG affiliation, Baker & Daniels is using a law firm in Saudi Arabia to help a client establish a presence in the Middle East, and helped a client in Panama recover $500,000 as a result of a banking issue.

In addition, Baker & Daniels has staffed an office in China since 1998, including the past five years in Beijing. Revenue for the office of four U.S.-educated lawyers grew 40 percent in 2007 and is projected to increase 15 percent this year, according to the firm.

The firm's involvement in the two networks has been lucrative as well.

Said Froehle: "We certainly believe it has been or we wouldn't keep doing it."
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