Faced with unceasing pressure to hold down legal costs, in-house lawyers are increasingly turning to law-firm networks for reliable, cost-efficient service.
Martindale-Hubbell lists some 125 national and international law-firm such networks, most of them either U.S.-based or international organizations with U.S. member firms. The number of participating firms is believed to be growing.
Law-firm networks often provide one-stop shopping when far-flung or multi-jurisdictional matters arise. And the price tag is usually lower than using a large law firm, according to general counsel who frequently use networks.
For law firms, a membership premium ensures access to referrals and usually geographic exclusivity. The managing entities for these networks are often law firms themselves. They emphasize high standards for membership, ongoing legal education and information exchange for members, as well as periodic performance reviews.
Rick Hooper, chief counsel at Shaw Industries, a flooring manufacturer in Dalton, Ga., has referred work to member firms of ALFA International for more than 10 years.
“I’m not paying a large hourly rate to get the work done,” Hooper said.
ALFA members tend to be smaller firms that charge lower rates compared to larger national and international law firms.
But the lower fees don’t mean a sacrifice in quality, Hooper said. “I can count on one hand the bad experiences I’ve had with ALFA firms.”
Other networks, such as Lex Mundi, seek big firms as members and coverage spanning nearly the entire globe.
Carl E. Anduri Jr., a San Francisco-based lawyer who is president of Lex Mundi, said corporations who call on his organization frequently have matters involving multiple jurisdictions. Lex Mundi member firms, he said, are well-versed in forming appropriate geographical teams in response to clients’ needs.
Lex Mundi has a member firm in each state and in each Canadian province, and another 100 firms around the world. The two most recent additions last year were Magister & Co., a 100-plus-lawyer firm in Ukraine and Selih, Remec & Janezic, a small firm in Slovenia.
“Our long-term policy is to have member firms anywhere in the world where our clients need them,” he said. “Clients everywhere are becoming more international.”
Despite the fact that Lex Mundi firms tend to be large, Anduri contended the rates they charge for network-referred work are somewhat lower than their normal rates. He also said Lex Mundi prohibits its members from charging each other referral fees.
Like Lex Mundi, ALFA International points to its global reach as a selling point.
According to Michael Hawkins, a partner in the Cincinnati firm of Dinsmore & Shohl and chairman of ALFA International, the organization now numbers 130 law firms – 85 of which are in the U.S.
“A lot of our clients call us and say something like, ‘We have an issue in Brazil or China or Russia. Can you put me in touch with counsel there?’” he said.
ALFA International member firms pay dues ranging from about $2,500 to $25,000 per year. He said firms must pass an “extremely thorough” application process for membership, which emphasizes a strong professional reputation and breadth of practice. Malpractice and/or disciplinary issues are also taken into consideration, he said.
Another well-known network, Primerus Law Firms, requires its member firms to have high overall ratings from Martindale-Hubbell. Scott Roland, senior vice president of membership at Primerus, said the organization also uses a rigorous screening process involving questionnaires sent to clients, as well as attorneys and judges in the candidates’ jurisdictions.
“The big advantage of networks is the amount of due diligence that goes into it,” said Roland.
Like ALFA International, Primerus law firm members are usually smaller, from sole practitioners up to about 65 attorneys, according to Roland.
He said many in-house lawyers prefer to work with smaller firms because they’re less apt to assign inexperienced associates to do the work.
He said they often want to find that kind of firm when a far-flung matter comes along.
“We get queries all the time from in-house counsel wanting to know, ‘Who do you have in such and such a location?’” Roland said.
For Hooper, the chief counsel at Shaw Industries, ALFA responds rapidly when matters arise. He oversees all of Shaw’s litigation, which often involves its large truck fleet delivering products to distribution centers and dealers.
“When an accident happens, there’s not a lot of time,” Hooper said. “You get the phone call, and you need to find an accident reconstruction person, someone like an adjuster, and a lawyer.”
ALFA has a transportation practice group, and he can usually find all of those role players by going to the ALFA website and turning to the transportation group’s “go-to” directory.
Curt Paulsen, general counsel at ThyssenKrupp Safway, Inc., a scaffolding manufacturing company in Waukesha, Wis., pointed to another advantage of law-firm networks: They offer in-house counsel the opportunity to attend legal-education events along with the lawyers in network firms.
“Because I go to their events, I know a lot of their guys,” he said. “So when I call, I think it immediately gets their attention. I feel that I get service-plus.”
Hawkins, of ALFA International, said 75 percent of the speakers at their seminars are in-house counsel.
“It’s very interesting and telling them for them to talk about their own experiences,” he said. “It’s a very secure and candid environment for them to share their experiences. It creates a comfort level.”