Multidisciplinary professional services networks
Encyclopedia
Multidisciplinary professional services networks are organizations formed by law, accounting and other professional services firms to offer clients new multidisciplinary approach
es solving increasingly complex issues. They are a type of professional services network
which operates to provide services to their members. They operate in the same way as accounting firm networks and associations
and law firm networks. They do not practice a profession such as law or accounting but provide services to members so they can serve clients needs.
There are 10 multidisciplinary networks. The largest are: MSI Global, Morison International, Geneva Group , International Practice Group and WSG - World Services Group. These networks have more than 100 member firms in as many as 90 countries in hundreds of offices. The members employ thousands of professionals.
The American Bar Association
Commission on Multidisciplinary Practice refers to five multidisciplinary models. They are the cooperative, command and control, ancillary practice, network and multidisciplinary partnership models.
prohibiting lawyers working for accounting firms to represent clients before the IRS
. The foundation of multidisciplinary practice began when the Big 4 accounting firms reached their natural growth limits. Accounting, auditing and tax services could generate only a finite amount of revenue for the Big 6. The Big 4’s concept was simple: use the extensive list of clients to market non-traditional accounting services such as legal, recruitment, risk management
, technology consulting, etc. The objective was to bring these non-traditional services “in-house” using the time tested network model.
Having reached their natural limit on growth the Big 4 branched out to become multidisciplinary in legal, technology, and employment services. Since the essential infrastructure was in place, it was thought to be relatively simple to incorporate other services into the existing network. The expansion could easily be financed using revenue from the traditional services. As a network, it was natural to create independent entities in these other professions which themselves could be part of the network. The method and structures varied from firm to firm but the fundemental premise was the sharing of revenue between lawyers and accountants.
The accounting firms were initially very successful in creating these alternative businesses. Soon a number of Big 6 firms had multi-billion dollar technology consulting businesses. Other services were more difficult to bring in-house. Some, like legal services, demanded a different approach because of ethical considerations
When the Big 6 began its expansion to the legal profession, it was met with fierce opposition from law firms and bar associations. Lawyers saw that the accounting profession would subsume the legal profession with its vast resources.
Commissions, panels and committees were established by legal and accounting firms to argue their positions. The American Bar Association established committees and taskforces to address the issue, but the problem spread outside of the United States, first to Europe but then to other countries where lawyers were not protected from this new foreign competition. Government agencies were enlisted. For more than five (5) years the debate escalated.
This movement ended abruptly with the fall of Arthur Anderson
as a result of its association with Enron
. Sarbanes Oxley followed, which effectively ended this trend of multisdisciplinary networks established by the Big 5.
. The additional services that Arthur Anderson was offering created a conflict in their role as the auditor. Multidisciplinary networks by the accounting firms were DOA. The final nail in the coffin was Sarbanes Oxley which meant that the accounting firms had to divest their consulting practices.
Today there are at least eleven networks. The largest are in the legal and accounting professions. A few of the legal and accounting networks include investment banking
. The primary networks are focus on tax, employment, intellectual property, insurance and immigration.
Multidisciplinary approach
A multidisciplinary approach to problem solving involves drawing appropriately from multiple disciplines to redefine problems outside of normal boundaries and reach solutions based on a new understanding of complex situations....
es solving increasingly complex issues. They are a type of professional services network
Professional services networks
Professional services networks are networks of independent firms who come together to cost-effectively provide services to clients through an organized framework. They are principally found in law and accounting. They may also be found in investment banking, insurance, real estate and architectural...
which operates to provide services to their members. They operate in the same way as accounting firm networks and associations
Accounting networks and associations
Accounting networks and associations are professional services networks whose principal purpose is to provide members resources to assist the clients around the world. The networks and associations operate independently of the independent members. The largest accounting networks are known as the...
and law firm networks. They do not practice a profession such as law or accounting but provide services to members so they can serve clients needs.
There are 10 multidisciplinary networks. The largest are: MSI Global, Morison International, Geneva Group , International Practice Group and WSG - World Services Group. These networks have more than 100 member firms in as many as 90 countries in hundreds of offices. The members employ thousands of professionals.
History
Multidisciplinary networks are not new but found in a number of professions. They became important during the end of the 1990s when the accounting firms began to expand to the legal profession. The history is well documented.The American Bar Association
American Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
Commission on Multidisciplinary Practice refers to five multidisciplinary models. They are the cooperative, command and control, ancillary practice, network and multidisciplinary partnership models.
The Big Six Accounting Firms - Multidisciplinary Practices
The multidisciplinary issues first arose in the 1940s but was dealt with by the American Bar AssociationAmerican Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
prohibiting lawyers working for accounting firms to represent clients before the IRS
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
. The foundation of multidisciplinary practice began when the Big 4 accounting firms reached their natural growth limits. Accounting, auditing and tax services could generate only a finite amount of revenue for the Big 6. The Big 4’s concept was simple: use the extensive list of clients to market non-traditional accounting services such as legal, recruitment, risk management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
, technology consulting, etc. The objective was to bring these non-traditional services “in-house” using the time tested network model.
Having reached their natural limit on growth the Big 4 branched out to become multidisciplinary in legal, technology, and employment services. Since the essential infrastructure was in place, it was thought to be relatively simple to incorporate other services into the existing network. The expansion could easily be financed using revenue from the traditional services. As a network, it was natural to create independent entities in these other professions which themselves could be part of the network. The method and structures varied from firm to firm but the fundemental premise was the sharing of revenue between lawyers and accountants.
The accounting firms were initially very successful in creating these alternative businesses. Soon a number of Big 6 firms had multi-billion dollar technology consulting businesses. Other services were more difficult to bring in-house. Some, like legal services, demanded a different approach because of ethical considerations
The Legal Profession's Reaction
The initial to expand to legal services focus was on the United States which represented the largest potential market for these services. In Europe and South America the bar rules were not as developed as in the United States, and therefore did not restrict the sharing of revenues. The basis for this expansion was the law firm network that established under the umbrella of the Big Six. The issues were sharing profits with accountants and other professionals and the possible conflicts of interest.When the Big 6 began its expansion to the legal profession, it was met with fierce opposition from law firms and bar associations. Lawyers saw that the accounting profession would subsume the legal profession with its vast resources.
Commissions, panels and committees were established by legal and accounting firms to argue their positions. The American Bar Association established committees and taskforces to address the issue, but the problem spread outside of the United States, first to Europe but then to other countries where lawyers were not protected from this new foreign competition. Government agencies were enlisted. For more than five (5) years the debate escalated.
This movement ended abruptly with the fall of Arthur Anderson
Arthur Anderson
Arthur Anderson may refer to:*Arthur Anderson , Scottish businessman and co-founder of the Peninsular and Oriental Steam Navigation Company *Arthur E. Andersen , founder of Chicago-based accounting firm...
as a result of its association with Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
. Sarbanes Oxley followed, which effectively ended this trend of multisdisciplinary networks established by the Big 5.
Enron and Sarbanes Oxley
There was, however, a fatal flaw in the multidisciplinary network concepts of the Big 6. The raison d’etre of the Big 6 was to audit public companies. Each service which is provided to an audited client contained an inherent conflict of interest. This conflict could not have been better illustrated than by the perfect storm created by EnronEnron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
. The additional services that Arthur Anderson was offering created a conflict in their role as the auditor. Multidisciplinary networks by the accounting firms were DOA. The final nail in the coffin was Sarbanes Oxley which meant that the accounting firms had to divest their consulting practices.
Multidisciplinary Networks Today
The multidisciplinary network model was not dead but transformed to account for the issues. If the member firms were themselves independent, there was no prohibition on having a multidisciplinary network. This was recognized by the ABA.Today there are at least eleven networks. The largest are in the legal and accounting professions. A few of the legal and accounting networks include investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
. The primary networks are focus on tax, employment, intellectual property, insurance and immigration.
See also
- Umbrella organizationUmbrella organizationAn umbrella organization is an association of institutions, who work together formally to coordinate activities or pool resources. In business, political, or other environments, one group, the umbrella organization, provides resources and often an identity to the smaller organizations...
- Business networkingBusiness networkingBusiness networking is a socioeconomic activity by which groups of like-minded businesspeople recognize, create, or act upon business opportunities. A business network is a type of social network whose reason for existing is business activity...
- Organizational StudiesOrganizational studiesOrganizational studies, sometimes known as organizational science, encompass the systematic study and careful application of knowledge about how people act within organizations...
- Command and Control
- Professional services networksProfessional services networksProfessional services networks are networks of independent firms who come together to cost-effectively provide services to clients through an organized framework. They are principally found in law and accounting. They may also be found in investment banking, insurance, real estate and architectural...
- Law firm network
- Accounting networks and associationsAccounting networks and associationsAccounting networks and associations are professional services networks whose principal purpose is to provide members resources to assist the clients around the world. The networks and associations operate independently of the independent members. The largest accounting networks are known as the...