HOME

TheInfoList



OR:

Professional services networks are business networks of independent firms who come together to cost-effectively provide
professional services Professional services are occupations in the service sector requiring special training in the arts or sciences. Some professional services, such as architects, accountants, engineers, doctors, and lawyers require the practitioner to hold prof ...
to clients through an organized framework. They are principally found in law and accounting. They may also be found in investment banking,
insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
,
real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more genera ...
and architectural services. Any profession that operates locally, but has clients in multiple locations, are potential members of a network. This entry focuses on accounting, legal, multidisciplinary and specialty practice networks. Today members of these networks employ more than one million professionals and staff and have cumulative annual revenues that exceed $200 billion. The accounting networks and associations developed first to meet the US Securities and Exchange Commission's requirement for public company audits. They include the well-known accounting networks like
PwC PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounti ...
,
Deloitte Deloitte Touche Tohmatsu Limited (), commonly referred to as Deloitte, is an international professional services network headquartered in London, England. Deloitte is the largest professional services network by revenue and number of professio ...
,
Ernst & Young Ernst & Young Global Limited, trade name EY, is a multinational professional services partnership headquartered in London, England. EY is one of the largest professional services networks in the world. Along with Deloitte, KPMG and Pricewat ...
and
KPMG KPMG International Limited (or simply KPMG) is a multinational professional services network, and one of the Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, although incorporated in London, England, KPMG is a net ...
(also known as the Big 4 Audit Firms) as well as more than 30 other accounting networks and associations. They are highly structured entities. The law firm network developed in the late 1980s. They include legal and law firm based multidisciplinary networks like
Lex Mundi Lex Mundi is a professional services network. It is the oldest and largest law firm network. The network was established in 1989, incorporating in Delaware. The association was founded by Stephen McGarry of Minneapolis to help individuals and b ...
, Alliott Group,
World Services Group World Services Group (WSG) is a global multidisciplinary professional services network composed of independent law, accounting and investment banking firms. It ranks as one of the largest among the more than 200 professional service networks i ...
, TerraLex, Meritas, IR Global and the State Capital Group. There are more than 175 known networks in law, 40 in accounting, and 20 specialty networks. Individual networks have revenues exceeding $20 billion.


Recognizing a network – the disclaimer

Every network from accounting networks like
PwC PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounti ...
and
KPMG KPMG International Limited (or simply KPMG) is a multinational professional services network, and one of the Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, although incorporated in London, England, KPMG is a net ...
to law firm networks like
Lex Mundi Lex Mundi is a professional services network. It is the oldest and largest law firm network. The network was established in 1989, incorporating in Delaware. The association was founded by Stephen McGarry of Minneapolis to help individuals and b ...
, Multilaw, and multidisciplinary networks like
World Services Group World Services Group (WSG) is a global multidisciplinary professional services network composed of independent law, accounting and investment banking firms. It ranks as one of the largest among the more than 200 professional service networks i ...
(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.


Why a network rather than a company

One of the major factors influencing the need for networks is the
globalization Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...
of the economy.
Supply and demand In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...
are no longer local but global. The price of commodities is affected by the weather halfway across the world or by demand in developing countries. Production takes place wherever the assets and
human resources Human resources (HR) is the set of people who make up the workforce of an organization, business sector, industry, or economy. A narrower concept is human capital, the knowledge and skills which the individuals command. Similar terms includ ...
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 networks have access to other members who understand the local economic, legal and political factors. From a theoretical point of view, networks are an effective model of enhancing services. The members and the networks are different parts of the resource equation for providing members quality, reliable, 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. Networks do not provide accounting or
legal services In its most general sense, the practice of law involves giving legal advice to clients, drafting legal documents for clients, and representing clients in legal negotiations and court proceedings such as lawsuits, and is applied to the professio ...
. 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 A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create an ...
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 generis, and each network is formed for a different reason. Current 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 they are governed and operated. 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 or BAR may refer to: Food and drink * Bar (establishment), selling alcoholic beverages * Candy bar * Chocolate bar Science and technology * Bar (river morphology), a deposit of sediment * Bar (tropical cyclone), a layer of cloud * Bar ( ...
, accounting and other associations whose membership is generally open to all qualified professionals.


Reasons for joining 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. Network members also minimize possible losses by spreading risks. Membership is a proactive way to profit from change and at the same time to conserve resources. Membership can also enhance the prestige of the member by being associated with prestigious firms that the client is already using. Networks achieve these objectives through different corporate structures in which executives have
command and control Command and control (abbr. C2) is a "set of organizational and technical attributes and processes ... hatemploys human, physical, and information resources to solve problems and accomplish missions" to achieve the goals of an organization o ...
.


See also

*
Professional services Professional services are occupations in the service sector requiring special training in the arts or sciences. Some professional services, such as architects, accountants, engineers, doctors, and lawyers require the practitioner to hold prof ...
* Umbrella organization * Business networking * Organizational studies *
Command and control Command and control (abbr. C2) is a "set of organizational and technical attributes and processes ... hatemploys human, physical, and information resources to solve problems and accomplish missions" to achieve the goals of an organization o ...
* Law firm network * Accounting networks and associations **
Big Four accounting firms The Big Four are the four largest professional services networks in the world, the global accounting networks Deloitte, Ernst & Young (EY), KPMG, and PricewaterhouseCoopers (PwC). The four are often grouped because they are comparable in s ...
*
Big Three (management consultancies) The Big Three or MBB refers to the name colloquially given to the three large strategy consulting firms. They are considered to be the most prestigious firms in the management consulting industry. In terms of employees, McKinsey & Company is the ...
* Multidisciplinary professional services networks


References

{{DEFAULTSORT:Professional Services Networks Professional networks Legal organizations