Multidisciplinary professional services networks
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Multidisciplinary professional services networks are organizations formed by law, accounting and other professional services firms to offer clients new
multidisciplinary approach Interdisciplinarity or interdisciplinary studies involves the combination of multiple academic disciplines into one activity (e.g., a research project). It draws knowledge from several other fields like sociology, anthropology, psychology, ec ...
es solving increasingly complex issues. They are a type of
professional services network Professional services networks are business networks of independent firms who come together to cost-effectively provide professional services to clients through an organized framework. They are principally found in law and accounting. They may a ...
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. Their aim is to provide members involved in doing business internationally with access to experienced, tried and tested, reliable, and responsive professional advisers who know their local jurisdiction intimately as well as the intricacies of cross border business. There are 10 multidisciplinary networks. The largest are:
Alliott Group Alliott Global Alliance is an alliance of independent professional services firms including accounting firms, law firms, audit firms and other specialist services providers. The association was established in 1979 and comprises 194 member firms in ...
, MSI Global Alliance, Morison International, Geneva Group, International Practice Group, WSG - World Services Group and Russell Bedford International. 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 The American Bar Association (ABA) is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. Founded in 1878, the ABA's most important stated activities are the setting of acad ...
Commission on Multidisciplinary Practice refers to five multidisciplinary models. They are the cooperative,
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 or en ...
, ancillary practice, network and multidisciplinary partnership models.


Big Six accounting firms – multidisciplinary practices

The multidisciplinary issues first arose in the 1940s but was dealt with by the
American Bar Association The American Bar Association (ABA) is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. Founded in 1878, the ABA's most important stated activities are the setting of acad ...
prohibiting lawyers working for accounting firms to represent clients before the
IRS The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax ...
. The foundation of multidisciplinary practice began when the
Big 4 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 size re ...
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 fundamental 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 key factor among such different approaches is an internal control system within a firm.


Reaction of the legal profession

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 Andersen as a result of its association with
Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
. Sarbanes Oxley followed, which effectively ended this trend of multidisciplinary 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 was illustrated by the perfect storm created by
Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
. 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 pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated wit ...
. The primary networks are focused on tax, employment, intellectual property, insurance and immigration.


See also

* Umbrella organization *
Business networking Networking is the sharing of information or services between people, businesses, or groups. It is also a way for individuals to grow their relationships for their job or business. As a result, connections or a network can be built and useful for i ...
* 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 or en ...
* Professional services networks * Law firm network *
Accounting networks and associations An accounting network or accounting association is a professional services network whose principal purpose is to provide members resources to assist the clients around the world and hence reduce the uncertainty by bringing together a greater number ...


References

{{Reflist, 35em Professional networks Legal organizations