Professional services networks
Encyclopedia
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 services. Any profession that operates locally, but has clients in multiple locations, are potential members of a network. This entry focuses on on accounting, legal, multidisciplinary and specialty practice networks. Today members of these networks employ more than one millions professionals and staff and have cummulative annual revenues that exceed $200 billion.
The accounting networks and associations
developed first to meet the requirment of the SEC of public company audits. They include the well-known accounting networks like PwC
, KPMG
, Deloitte] and E%26Y as well as more than 40 other networks and associations. The law firm network developed in the late 1980s. They include legal and law firm based multidisiplinary networks
like Lex Mundi
, World Services Group
, TerraLex, Meritas (law), and the State Capital Law Firm Group There are more 175 known networks in law,40 in accounting and 20 specialty networks. Individual networks have revenues exceeding $20 billion dollars.
like PwC
and KPMG
to law firm networks like Lex Mundi
and multidisciplinary networks
like World Services Group(WSG)
uses a “network disclaimer.” A network disclaimer states that the network members are independent firms that do not practice jointly and are not responsible for the negligence of each other. It further states that generally the network does not practice a profession or otherwise provide services to clients of the network’s members. This independence is the foundation of both network operations and governance.
of the economy. Supply and demand are no longer local but global. The price of commodities is affected by the weather half way across the world or by demand in developing countries. Production takes place wherever the assets and human resources can most effectively deploy. Professional services providers must be able to reach out globally to represent their clients everywhere in the world. Networks are the practical and cost effective method to accomplish these objectives.. Members of a networks have access to other members who understand their economic, legal and political factors.
From a theoretical point of view, networks are an effective model and a powerful system of enhancing services. The members and the networks are different parts of the resource equation for providing members seamless, high quality, local and global services. There is no real limit of what can be accomplished through a network when the network and its membership work in combination with each other. This collaboration is at the heart of the network.
Networks do not practice a profession or provide the services that their members provide to their clients. Networs do not provide accounting or legal services. They operate for the benefit of the members by supporting their operations. The network can combine the resources of the individual members without risking the loss of their personal identities or financial independence.
A network is more than a support organization or collaborative framework in which the members can meet clients’ needs. It is an entity that has a common corporate identity or brand. The network name can represent a standard that is required of all its members. The logo and brand
are owned by the network, not the members. Membership can create a global corporate identity. The objective of this identity is network participation that will translate into business for the individual independent members.
For a company to internally develop a global and local presence would take decades and billions of dollars. For a company/firms to start a network that develops the same market penetration may take a decade and cost only millions of dollars. However, these costs are allocated among the full membership so the cost per member is low. The cost for future members to gain direct and immediate access to these resources is de minimis.
. Each network is formed for a different reason. There are different motivations for starting networks. The members and potential members are attracted to networks in which they can pursue their own individual objectives. While networks clearly do have things in common, each must be viewed in the context of its uniqueness. A successful network is one that meets the expectations of all of its members.
The objective of a network is to create a framework which can allow the members to expand their services. Within the network they can operate to pursue their interests. These interests can include referrals, joint venturing, access to expertise, developing regional expertise, publishing articles for clients, branding, technical information exchange, market positioning, pro bono services, etc. The scope of these interests is defined not by the members but by the network.
Network organizations are defined by their purpose, structure and process. The purpose of a network is different from that of a company or professional firm in that it is limited to specific activities that will benefit its members and enhance its performance. The network’s structure reflects the activities it seeks to promote and the underlying cultures of the members. Accounting
, legal, multidisciplinary and specialty networks will each be different. The process is defined by how the are governed and operate.
Networks are created around common specialized assets, joint control, and a collective purpose. The specialized assets reflect the defined activities of the network. In order to have joint control of the assets, there needs to be collaborations among members. The collaboration necessitates a commonly understood purpose or purposes. A professional services network is neither a mere extension of the members nor only a support organization for independent professional services firms, but is rather an independent organization. It is also a business, and very different from professional associations such as bar
, accounting and other associations whose membership is generally open to all qualified professionals.
They also join for intangible reasons. In today’s world, change is a constant and is accelerating. Therefore, having access to other members from around the world can be important. A network can reduce the uncertainty by bringing together a greater number of resources to work on a problem. Network members also minimize possible losses through being able to share a burden. Membership is a proactive way to profit from change and at the same time to conserve resources. Membership can enhance the prestige of the member by being associated with prestigious firms that the client is already using.
The purpose of a network is to create an organization that can provide these tangible and intangible interests of each member. The benefits may be provided by the network, by other members within the framework of the network, or both.
Networks achieve these objectives in a way that is very different corporate structures in which executives have command and control. Networks rely on the reputation, commitment, and trust of each member. In networks there is collaboration between members and with the staff. It is these personal motivations that move the network forward in its development. However, these same qualities can also impede development of the network.
The accounting 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...
developed first to meet the requirment of the SEC of public company audits. They include the well-known accounting networks like PwC
PwC
PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
, KPMG
KPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
, Deloitte] and E%26Y as well as more than 40 other networks and associations. The law firm network developed in the late 1980s. They include legal and law firm based multidisiplinary networks
Multidisciplinary professional services networks
Multidisciplinary professional services networks are organizations formed by law, accounting and other professional services firms to offer clients new multidisciplinary approaches solving increasingly complex issues. They are a type of professional services network which operates to provide...
like Lex Mundi
Lex Mundi
Lex Mundi is a professional services network. It is the largest law firm networks. The network was established in 1989. As of 2011 it had 160 member firms which have 21,100 attorneys...
, World Services Group
World Services Group
WSG, also branded as World Services Group, is a multidisciplinary professional services network of independent law, accountng and investment banking firms. It ranks as one of the largest professional services networks in the world...
, TerraLex, Meritas (law), and the State Capital Law Firm Group There are more 175 known networks in law,40 in accounting and 20 specialty networks. Individual networks have revenues exceeding $20 billion dollars.
Recognizing a Network – The Disclaimer
Every network from accounting networksAccounting 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...
like PwC
PwC
PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
and KPMG
KPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
to law firm networks like Lex Mundi
Lex Mundi
Lex Mundi is a professional services network. It is the largest law firm networks. The network was established in 1989. As of 2011 it had 160 member firms which have 21,100 attorneys...
and multidisciplinary networks
Multidisciplinary professional services networks
Multidisciplinary professional services networks are organizations formed by law, accounting and other professional services firms to offer clients new multidisciplinary approaches solving increasingly complex issues. They are a type of professional services network which operates to provide...
like World Services Group(WSG)
World Services Group
WSG, also branded as World Services Group, is a multidisciplinary professional services network of independent law, accountng and investment banking firms. It ranks as one of the largest professional services networks in the world...
uses a “network disclaimer.” A network disclaimer states that the network members are independent firms that do not practice jointly and are not responsible for the negligence of each other. It further states that generally the network does not practice a profession or otherwise provide services to clients of the network’s members. This independence is the foundation of both network operations and governance.
Why a Network rather than a Company
One of the major factors influencing the need for networks is the globalizationGlobalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
of the economy. Supply and demand are no longer local but global. The price of commodities is affected by the weather half way across the world or by demand in developing countries. Production takes place wherever the assets and human resources can most effectively deploy. Professional services providers must be able to reach out globally to represent their clients everywhere in the world. Networks are the practical and cost effective method to accomplish these objectives.. Members of a networks have access to other members who understand their economic, legal and political factors.
From a theoretical point of view, networks are an effective model and a powerful system of enhancing services. The members and the networks are different parts of the resource equation for providing members seamless, high quality, local and global services. There is no real limit of what can be accomplished through a network when the network and its membership work in combination with each other. This collaboration is at the heart of the network.
Networks do not practice a profession or provide the services that their members provide to their clients. Networs do not provide accounting or legal services. They operate for the benefit of the members by supporting their operations. The network can combine the resources of the individual members without risking the loss of their personal identities or financial independence.
A network is more than a support organization or collaborative framework in which the members can meet clients’ needs. It is an entity that has a common corporate identity or brand. The network name can represent a standard that is required of all its members. The logo and brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
are owned by the network, not the members. Membership can create a global corporate identity. The objective of this identity is network participation that will translate into business for the individual independent members.
For a company to internally develop a global and local presence would take decades and billions of dollars. For a company/firms to start a network that develops the same market penetration may take a decade and cost only millions of dollars. However, these costs are allocated among the full membership so the cost per member is low. The cost for future members to gain direct and immediate access to these resources is de minimis.
The Formation of a Network
Professional service networks are sui generisSui generis
Sui generis is a Latin expression, literally meaning of its own kind/genus or unique in its characteristics. The expression is often used in analytic philosophy to indicate an idea, an entity, or a reality which cannot be included in a wider concept....
. Each network is formed for a different reason. There are different motivations for starting networks. The members and potential members are attracted to networks in which they can pursue their own individual objectives. While networks clearly do have things in common, each must be viewed in the context of its uniqueness. A successful network is one that meets the expectations of all of its members.
The objective of a network is to create a framework which can allow the members to expand their services. Within the network they can operate to pursue their interests. These interests can include referrals, joint venturing, access to expertise, developing regional expertise, publishing articles for clients, branding, technical information exchange, market positioning, pro bono services, etc. The scope of these interests is defined not by the members but by the network.
Network organizations are defined by their purpose, structure and process. The purpose of a network is different from that of a company or professional firm in that it is limited to specific activities that will benefit its members and enhance its performance. The network’s structure reflects the activities it seeks to promote and the underlying cultures of the members. Accounting
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...
, legal, multidisciplinary and specialty networks will each be different. The process is defined by how the are governed and operate.
Networks are created around common specialized assets, joint control, and a collective purpose. The specialized assets reflect the defined activities of the network. In order to have joint control of the assets, there needs to be collaborations among members. The collaboration necessitates a commonly understood purpose or purposes. A professional services network is neither a mere extension of the members nor only a support organization for independent professional services firms, but is rather an independent organization. It is also a business, and very different from professional associations such as bar
Bar association
A bar association is a professional body of lawyers. Some bar associations are responsible for the regulation of the legal profession in their jurisdiction; others are professional organizations dedicated to serving their members; in many cases, they are both...
, accounting and other associations whose membership is generally open to all qualified professionals.
Why firms join networks
When asked why they joined, members usually state that they joined for tangible reasons: to receive referrals from other members, to have reliable firms to which they can refer, to maintain independence, to meet clients’ needs, to retain existing clients by being able to provide services in other states or countries, and to obtain new clients in their market who know of the membership.. They may also want to exchange knowledge that can reduce risks in their own firm's operations, or gain access to other resources.They also join for intangible reasons. In today’s world, change is a constant and is accelerating. Therefore, having access to other members from around the world can be important. A network can reduce the uncertainty by bringing together a greater number of resources to work on a problem. Network members also minimize possible losses through being able to share a burden. Membership is a proactive way to profit from change and at the same time to conserve resources. Membership can enhance the prestige of the member by being associated with prestigious firms that the client is already using.
The purpose of a network is to create an organization that can provide these tangible and intangible interests of each member. The benefits may be provided by the network, by other members within the framework of the network, or both.
Networks achieve these objectives in a way that is very different corporate structures in which executives have command and control. Networks rely on the reputation, commitment, and trust of each member. In networks there is collaboration between members and with the staff. It is these personal motivations that move the network forward in its development. However, these same qualities can also impede development of the network.
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
- 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...
- Multidisciplinary professional services networksMultidisciplinary professional services networksMultidisciplinary professional services networks are organizations formed by law, accounting and other professional services firms to offer clients new multidisciplinary approaches solving increasingly complex issues. They are a type of professional services network which operates to provide...