A Swiss association ("''Verein''" in
German
German(s) may refer to:
* Germany (of or related to)
** Germania (historical use)
* Germans, citizens of Germany, people of German ancestry, or native speakers of the German language
** For citizens of Germany, see also German nationality law
**Ge ...
, "association" in
French, "associazione" in
Italian
Italian(s) may refer to:
* Anything of, from, or related to the people of Italy over the centuries
** Italians, an ethnic group or simply a citizen of the Italian Republic or Italian Kingdom
** Italian language, a Romance language
*** Regional Ita ...
) is a type of
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
in
Swiss law
Swiss law is a set of rules which constitutes the law in Switzerland.
Structure and Sources
There is a hierarchy of political levels which reflects the legal and constitutional character of Switzerland.
The Federal law (german: Bundesrecht, f ...
. It is similar to the Anglo-American
voluntary association
A voluntary group or union (also sometimes called a voluntary organization, common-interest association, association, or society) is a group of individuals who enter into an agreement, usually as volunteering, volunteers, to form a body (or organ ...
. Unlike in Germany, a Swiss association does not need to be registered in order to obtain
legal personality
Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural person ( ...
,
but must be registered if it "conducts a commercial operation".
An association can serve as a non-profit organization (NPO) or non-governmental organization (
NGO
A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...
) and this form is used by several Swiss sections of international NGOs such as
Amnesty International
Amnesty International (also referred to as Amnesty or AI) is an international non-governmental organization focused on human rights, with its headquarters in the United Kingdom. The organization says it has more than ten million members and sup ...
, and the
World Wildlife Fund
The World Wide Fund for Nature Inc. (WWF) is an international non-governmental organization founded in 1961 that works in the field of wilderness preservation and the reduction of human impact on the environment. It was formerly named the Wo ...
, by business firms (see below) or by international organizations such as the
Fédération Internationale de Football Association (FIFA). The form can also be used by political parties and alliances, such as trade unions.
As the establishment of an association involves little paperwork and no registration or fees, it is an important legal form in Switzerland
and often used by groups such as sport and social clubs.
It has also become a useful form for multiparty business organizations. The only requirement is that prior to the establishment, two persons draw up bylaws and appoint the organs of the association (such as the board and the auditors).
Commercial organizations
The association can also be used as a legal form for a
business organization consisting of a number of independent offices, each of which has
limited liability
Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...
''vis-à-vis'' the others.
The form is often used by multinational professional firms so they can operate globally under one brand whilst maintaining separate profit pools (and ring-fencing liability) in each country in which they operate.
One advantage to the Verein structure is that because control of the firm is decentralized, offices are only bound by regulators in their country. For instance, non-US offices of accounting firms in a Verein structure are not bound by
Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
subpoena
A subpoena (; also subpœna, supenna or subpena) or witness summons is a writ issued by a government agency, most often a court, to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of ...
s from the United States.
Since the assets and earnings of a Swiss association are controlled by the member firms, Swiss association borrowers should provide a lender with guarantees from member firms or backup
letters of credit
A letter of credit (LC), also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exp ...
.
Several court cases against accounting firms have attempted to use
vicarious liability
Vicarious liability is a form of a strict, secondary liability that arises under the common law doctrine of agency, '' respondeat superior'', the responsibility of the superior for the acts of their subordinate or, in a broader sense, the re ...
and
veil piercing arguments to find liability for the association based on a member's activities. Only one such argument has been successful in American courts: see ''Cromer Fin., Ltd. v. Berger'', No. 00 CIV. 2284 (DLC), 2002 WL 826847, 2002 U.S. Dist. LEXIS 7782 (S.D.N.Y. May 2, 2002) (parent association may be liable for office's securities fraud based on agency doctrine). Most associations now expressly note their status on web sites, e-mails and letterhead in order to prevent future arguments based on agency.
The Swiss Verein is similar to the
European Economic Interest Grouping (EEIG), but differs in that EEIG member firms share their liabilities while Verein member firms maintain separate liabilities.
Law firms
Baker & McKenzie
Baker McKenzie is an international law firm located in Chicago, Illinois. It was founded in 1949, originally named Baker & McKenzie. It now has 77 offices in 46 countries. It employs 4,809 attorneys total, and approximately 13,000 employees tot ...
was the first major law firm to become a Swiss verein, in 2004. Since 2009, Swiss vereins have been used in several mergers of large multinational law firms, as they allow regional profit pools and their related tax, accounting and partner compensation systems to remain separate while allowing strategy, branding, information technology and other core functions to be shared between the constituent partnerships.
[''Enter the Swiss Verein: 21st-century global platform or just the latest fad?''](_blank)
By Nick Jarrett-Kerr and Ed Wesemann. The main advantage of the verein structure is that profits can be shared between constituent partnerships, incentivizing partners to share clients and work between the member partnerships.
Most law firms as vereins overcome cost sharing problem in return for work referrals, which allows for the indirect sharing of profits.
This issue is not unique to vereins, as some firms structured as a single partnership maintain multiple profit centers so as to limit profit sharing within the partnership. In many cases, this works like a corporate structure, where the Swiss verein is the holding company and the member firms are the subsidiaries, making the centralization, profit and fund management more efficient.
Vereins are usually consolidated as single firms in law firm revenue and headcount rankings such as ''
The American Lawyer
''The American Lawyer'' is a monthly legal magazine and website published by ALM Media. The periodical and its parent company, ALM (then American Lawyer Media), were founded in 1979 by Steven Brill.[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 bu ...]
and informal "best friends" alliances are usually not consolidated for this purpose. However, some law firm vereins such as
DLA Piper
DLA Piper is a multinational law firm with offices in over 40 countries throughout the Americas, Asia Pacific, Europe, Africa, and the Middle East. In 2021, it had a total revenue of US$3.47 billion, an average profit per equity partner of U ...
have minimal financial integration and primarily serve as referral relationships.
The cost sharing between verein members often has the economic effect of splitting fees between member firms in cases where work is referred between them, although revenue sharing between such member firms is often prohibited (this restriction being one of the major considerations underlying the verein structure). The details of cost sharing are not always clearly disclosed to clients and may result in higher fees than what would be charged outside of the verein relationship.
Vereins can also give rise to conflicts of interest. For example, the US arm of Dentons advised a plaintiff in suing
Gap Inc.
The Gap, Inc., commonly known as Gap Inc. or Gap (stylized as GAP), is an American worldwide clothing and accessories retailer. Gap was founded in 1969 by Donald Fisher and Doris F. Fisher and is headquartered in San Francisco, California. The c ...
, a longstanding client of the Canadian arm, which a US administrative court found created a conflict despite the fact that the two arms were operationally separate.
As of 2014, there are six major law firms structured as Swiss vereins, each averaging 3,100 attorneys and 46 offices in 33 countries (Dentons being the largest law firm worldwide by lawyer headcount):
*
Baker & McKenzie
Baker McKenzie is an international law firm located in Chicago, Illinois. It was founded in 1949, originally named Baker & McKenzie. It now has 77 offices in 46 countries. It employs 4,809 attorneys total, and approximately 13,000 employees tot ...
(numerous national partnerships)
*
Dentons
Dentons is the largest multinational law firm in the world. Dentons was ranked as the world's 4th- largest law firm by revenue, with $2.9B gross revenue by Global 200 ranking in the fiscal year 2021. The firm is called Dentons in all languages o ...
(Canadian, Chinese, European, UK and US partnerships)
*
DLA Piper
DLA Piper is a multinational law firm with offices in over 40 countries throughout the Americas, Asia Pacific, Europe, Africa, and the Middle East. In 2021, it had a total revenue of US$3.47 billion, an average profit per equity partner of U ...
(US and international partnerships)
*
King & Wood Mallesons
King & Wood Mallesons (KWM) is the largest global law firm in Asia. It has 30 offices and more than 3,500 legal professionals in Europe, North America, Asia and the Middle East. Its predecessor firms include ''SJ Berwin'' of the United Kingdom's ...
(Australian, Chinese, Hong Kong and European partnerships—though the European branch collapsed in 2017)
*
Norton Rose Fulbright
Norton Rose Fulbright is a British-American multinational law firm. It is the second largest law firm in the United States and one of the ten largest in the world, by both lawyers and revenue. In 2017–18, Norton Rose Fulbright had total reven ...
(US and international partnerships)
*
Squire Patton Boggs
Squire Patton Boggs is an international law firm with 42 offices in 20 countries. It was formed in 2014 by the merger of multinational law firm Squire Sanders with Washington, D.C. based Patton Boggs. It is one of the 30 largest law firms in the ...
(US, UK and Australian partnerships)
The model is also used by some smaller international firms such as the employment law specialist
Littler Mendelson
Littler Mendelson P.C. is a U.S.-based law firm that handles labor and employment litigation as well as global mobility and immigration issues. The firm has competencies in Mexico, Canada, Germany and Venezuela. The firm has offices in Colombia ...
or full service law firms a
GRATA International
The Anglo-Canadian law firm
Gowling WLG
Gowling WLG is a multinational law firm formed by the combination of Canada-based Gowlings and UK-based Wragge Lawrence Graham & Co in February 2016, in the first multinational law firm combination co-led by a Canadian firm. Gowling WLG ranks at ...
, formed by a merger in February 2016, uses a variant of the Swiss Verein structure in which the firm's two partnerships are members of an English
company limited by guarantee.
[ ]
Accounting firms
Accounting firms structured as Swiss associations include:
*
Crowe Horwath International
Crowe Global, commonly referred to as Crowe, previously Crowe Horwath International, is a multinational professional services network. It is the 9th largest global accounting network in the world by revenue. The network consists of more than 220 ...
*
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 ...
(until July 31, 2010)
*
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 ...
See also
*
Société coopérative
A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-control ...
References
{{Portal bar, Switzerland, Law
Law of Switzerland
Legal entities
de:Verein#Schweiz