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Debunking the myths of pay-to-play networks

Written by: The Lawyer
Published on: 29 May 2016

Debunking the myths article

Last week the chairman of the legal referral network Interlaw, Michael Siebold, wrote in his opinion piece ‘Pale imitation of a network’ that “imitation is the sincerest form of flattery”.

I agree, which is why at Dentons we seek not to imitate but reinvent the old-fashioned pay-to-play, territorial legal referral networks.

Dentons understands the pros and cons of these networks. The legacy firms that have combined to form Dentons have been a part of some of the best of them, including Interlaw. But those experiences led us to appreciate the existing networks’ inherent weaknesses, which have nothing to do with the high quality of the member firms but the structural flaws of referral networks.

Nextlaw Global Referral Network is not an endorsement of the network model that Interlaw represents, but a repudiation. Nextlaw is the beginning of the end for the existing model. If the current status quo does not change, today’s legal networks simply will not be able to compete with either integrated global firms like Dentons or a new model of referral network like Nextlaw.

Flaws of the network

While Siebold is a leader of a very good firm, and Interlaw is made up of many very good firms, the traditional referral network model is inherently structurally flawed. The simple problem is that Interlaw, like other networks, is a ‘pay-to-play’ system where the network represents to clients that it will offer the highest quality firms. The truth, however, is the network is comprised of the highest quality firms that are willing to pay to belong to the network.

Second, because firms have to pay to join, they naturally demand some sort of geographic exclusivity, further limiting the quality of the legal service a client receives in any jurisdiction.

Nextlaw is fundamentally different. It offers the benefits that Interlaw claims without the structural limitations. It offers the advantages of a global firm and a global referral network, rather than seeing the two as competitors.

    “Let’s see how long the status quo lasts without their expensive fees and territorial exclusivity”

Dentons’ point is simple. We’re being honest and candid with our clients. We recognise that no firm, not even the world’s largest, may have the specific lawyer with the specific expertise in the specific jurisdiction for each individual client need. Further, we recognise that existing networks are similarly restricted.

If networks limit themselves to a single firm for a city, region, or a national jurisdiction, and then limit themselves further to only those firms willing to pay to belong to the exclusive network, the networks have limited the ability to connect the client to the lawyers with the expertise the client truly needs. In short, they are putting the economic interests of the network ahead of the best interests of the client.

Clients’ best interest

Lawyers should deal with facts. Yet, without any factual basis at all, Siebold asserts that Dentons’ approach is likely to ‘create little more than a digital directory of firms’ when all of the attributes of Interlaw that he touts – collaboration, seamless quality offerings, in-person meetings, shared learning, specialist teams, and continuous vetting – are all not only part of the Nextlaw Global Referral Network but are easier to accomplish with a network whose only criteria for membership is the quality of the firm, not a fee or an exclusive agreement. As soon as networks put limitations on quality, whether economic or geographic, you are not serving clients first.

By any measure – economic, client quality rankings, lawyer quality rankings, service rankings or brand favouritism – Dentons is a tremendous success. What seems to most upset those with an interest in not having things change is that we challenge the status quo by asking first, what is good for the client? We believe that existing law firm referral networks that are pay-to-play are simply not in the best interest of clients. If they were, then the majority of the existing networks would release all of their members from their exclusivity contracts and allow them to also join the one network whose structure places the client first: the Nextlaw Global Referral Network.

If they were so confident in their pay-to-play model, why wouldn’t they simply allow all of their members to belong to multiple referral networks?  Let’s see how long the status quo lasts without their expensive fees and territorial exclusivity. Let them try to imitate Nextlaw for what is in the clients’ best interest.