Professional services network

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Growth professional services networks based upon review of directories of law and accounting networks and associations Professional services networks growth.PNG
Growth professional services networks based upon review of directories of law and accounting networks and associations
Table of largest professional services networks based upon the number of partners from survey conducted in 2011 of 200 legal and accounting networks from sources above. The table does not reflect the level of development of the network. Accounting networks are far more developed. Professional services networks largest.PNG
Table of largest professional services networks based upon the number of partners from survey conducted in 2011 of 200 legal and accounting networks from sources above. The table does not reflect the level of development of the network. Accounting networks are far more developed.

Professional services networks are business networks of independent firms who come together to provide professional services to clients through an organized framework. [1] They are notably found in law and accounting. Any profession that operates in one location, but has clients in multiple locations, may provide potential members for a professional network. This entry focuses on accounting, legal, multidisciplinary and specialty practice networks. According to statistics from 2010, members of these networks employ more than one million professionals and staff and have cumulative annual revenues that exceed $200 billion. [2]

Contents

The accounting networks 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, Deloitte, Ernst & Young and KPMG (also known as the Big 4 Audit Firms) as well as more than 30 other accounting networks and associations. [3] 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, Alliott Group, World Services Group, TerraLex, Meritas, IR Global and the State Capital Group.

There are more than 175 known networks in law, [4] 40 in accounting, and 20 specialty networks. [5] Individual networks have revenues exceeding $20 billion. [6]

Recognizing a network – the disclaimer

Every network from accounting networks like PwC [7] and KPMG [8] to law firm networks like Lex Mundi, [9] Multilaw, and multidisciplinary networks like World Services Group (WSG) [10] 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

A major factor influencing the need for networks is the globalization of the economy. [11] Supply and demand 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 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. [12] 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. [13] 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. [14] 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. 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. [15]

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. [16] 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. 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.

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. [17] They may also want to exchange knowledge that can reduce risks in their own firm's operations, or gain access to other resources. [18] Network members also minimize possible losses by spreading risks. [19] 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.

See also

Related Research Articles

The Big Four are the four largest professional services networks in the world: Deloitte, EY, KPMG, and PwC. They are the four largest global accounting networks as measured by revenue. The four are often grouped because they are comparable in size relative to the rest of the market, both in terms of revenue and workforce; they are considered equal in their ability to provide a wide scope of professional services to their clients; and, among those looking to start a career in professional services, particularly accounting, they are considered equally attractive networks to work in, because of the frequency with which these firms engage with Fortune 500 companies.

<span class="mw-page-title-main">KPMG</span> Multinational professional services and accounting company firm

KPMG International Limited is a multinational professional services network, and one of the Big Four accounting organizations, along with Ernst & Young (EY), Deloitte, and PwC. The name "KPMG" stands for "Klynveld Peat Marwick Goerdeler". The initialism was chosen when KMG merged with Peat Marwick in 1987.

<span class="mw-page-title-main">PwC</span> Multinational professional services brand

PricewaterhouseCoopers International Limited is a multinational 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 accounting firms, along with Deloitte, EY, and KPMG.

Pro bono publico, usually shortened to pro bono, is a Latin phrase for professional work undertaken voluntarily and without payment. The term traditionally referred to provision of legal services by legal professionals for people who are unable to afford them. More recently, the term is used to describe specialist services provided by any professional free of charge to an individual or community.

<span class="mw-page-title-main">Audit</span> Independent examination of an organization

An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon." Auditing also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditors consider the propositions before them, obtain evidence, roll forward prior year working papers, and evaluate the propositions in their auditing report.

<span class="mw-page-title-main">Financial audit</span> Type of audio

A financial audit is conducted to provide an opinion whether "financial statements" are stated in accordance with specified criteria. Normally, the criteria are international accounting standards, although auditors may conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organization. In providing an opinion whether financial statements are fairly stated in accordance with accounting standards, the auditor gathers evidence to determine whether the statements contain material errors or other misstatements.

Management consulting is the practice of providing consulting services to organizations to improve their performance or in any how to assist in achieving organizational objectives. Organizations may draw upon the services of management consultants for a number of reasons, including gaining external advice and accessing consultants' specialized expertise regarding concerns that call for additional oversight.

Deloitte Touche Tohmatsu Limited, commonly referred to as Deloitte, is a multinational professional services network. Deloitte is the largest professional services network by revenue and number of employees in the world and is considered one of the Big Four accounting firms, along with EY, KPMG, and PwC.

A consulting firm or simply consultancy is a professional service firm that provides expertise and specialised labour for a fee, through the use of consultants. Consulting firms may have one employee or thousands; they may consult in a broad range of domains, for example, management, engineering, and so on.

A Swiss association is a type of corporation in Swiss law. It is similar to the Anglo-American voluntary association. Unlike in Germany, a Swiss association does not need to be registered in order to obtain legal personality, 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) and this form is used by several Swiss sections of international NGOs such as Amnesty International, and the World Wildlife Fund, by business firms 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.

<span class="mw-page-title-main">RSM International</span> Multinational network of accounting firms

RSM International, branded RSM since 2015, is a multinational network of accounting firms forming the sixth-largest accountancy professional services network in the world by revenue. RSM's member firms are independent accounting and advisory businesses, each of which practices in its own right and is unified as part of the network.

A law firm network is a membership organization consisting of independent law firms. These networks are one type of professional services networks similar to networks found in the accounting profession. The common purpose is to expand the resources available to each member for providing services to their clients. Prominent primary law firm networks include CICERO League of International Lawyers, First Law International, Alliott Group (multidisciplinary), Lex Mundi, World Services Group (multidisciplinary), TerraLex, Meritas, Multilaw, The Network of Trial Law Firms, Inc., the State Capital Group, and Pacific Rim Advisory Council. Some of the largest legal networks span the globe, boasting over 10,000 attorneys spread across hundreds of offices worldwide.

<span class="mw-page-title-main">Company limited by guarantee</span> Type of corporation

A company limited by guarantee (CLG) is a type of corporation where the company has no share capital. Members instead act as guarantors of the company's liabilities: each member undertakes to contribute an amount specified in the articles in the event of insolvency or of the winding up of the company.

Mitchell & Titus, LLP is an independent member firm of BDO Alliance USA and the largest accounting firm in the United States owned by a minority social group. Headquartered in New York City, the company provides professional services in assurance, tax, and advisory to Fortune 1000 companies, entrepreneurial enterprises, not-for-profit organizations, financial services firms, government entities, and high-net-worth individuals. Mitchell & Titus maintains six offices across six states in New York, New Jersey, Pennsylvania, Maryland, District of Columbia, and Illinois.

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 of resources to work on a problem. The networks and associations operate independently of the independent members. The largest accounting networks are known as the Big Four.

<span class="mw-page-title-main">Multidisciplinary professional services networks</span>

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 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.

<span class="mw-page-title-main">World Services Group</span> Business professional services network

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 in the world. WSG members are independent law, accounting, and investment banking firms. According to the organization's website as of 2021, WSG was formed in 2002 as a multidisciplinary network comprising over 120 member firms in 150 jurisdictions and 23,000 professionals. Its global headquarters are located in Houston, Texas.

ALFA International The Global Legal Network Inc., commonly known as ALFA International, is a global legal network consisting of 140 independent law firms, including 80 U.S. law firms and 60 member firms in other countries. As with other types of professional services networks, the organization serves as a business referral and resource pooling network between member law firms.

PLMJ is a Portuguese law firm with its headquarters in Lisbon.

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 220 member firms in 300 cities across 95 countries.

References

  1. ↑ Networks and Organizations, N. Nohria and R.G. Eccles, Harvard Business School Press (1993)
  2. ↑ Accounting Networks – The Big Chill Accountancy Age, 27 May 2010, 11. Loxton, Liz, Accountancy Magazine, June 2011,
  3. ↑ Accountancy Age – 35 Accounting Networks and Associations June 11, 2011
  4. ↑ Chambers and Partners
  5. ↑ " 60 Largest Legal and Accounting Networks
  6. ↑ Accounting Age Archived 2 October 2013 at the Wayback Machine
  7. ↑ "PricewaterhouseCoopers" and "PwC" refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL). Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm's professional judgment or bind another member firm or PwCIL in any way."
  8. ↑ "International Cooperative ("KPMG International"), is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm."
  9. ↑ Lex Mundi members are not affiliated in the joint practice of law; each member firm is an independent law firm and renders professional services on an individual and separate basis.
  10. ↑ WSG's members are independent firms and are not affiliated in the joint practice of professional services. Each member exercises its own individual judgments on all client matters
  11. ↑ Baskerville, Hat “Globalization of professional accounting: The Big 8 entering New Zealand” Archived 23 December 2012 at archive.today , (June 2007)
  12. ↑ Sheth, Jagdish (1994). "Strategic Importance of Information Technology". Advances in Telecommunications Management. 4: 3–16.
  13. ↑ Perera, H.A. Rahman and S. Cahan (2003). "Globalization and the Major Accounting Firms". Australian Accounting Review. 13 (1): 27–37. doi:10.1111/j.1835-2561.2003.tb00217.x.
  14. ↑ Cyrus Freidheim, The Trillion Dollar Corporation How the Alliance Revolution Will Transform Global Business, Perseus Books (1999) ISBN   1841120308
  15. ↑ Ring, P.S. and A.H. Van de Ven (1992). "Structuring Cooperative Relationships Between Organizations". Strategic Management Journal. 13 (7): 483–498. doi:10.1002/smj.4250130702.
  16. ↑ Silver, C. “Globalization and the U.S. Legal Market in Legal Services – Shifting Identities” 31 L & Poly in Int’l bus. 1127–29 (2000)
  17. ↑ Law firm network
  18. ↑ Peters, T. Liberation Management: Necessary Disorganization for the Nanosecond Nineties New York: Alfred A. Knopf (1992) ISBN   0394559991
  19. ↑ Van Alstyne, M. (1997). "The State of Network Organizations: A Survey of Three Frameworks". Journal of Organizational Computing. 7 (3).
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