Adventure of Strategy

Dennis Howlett at AccMan has a side bet going that PriceWaterhouseCoopers is going to be the first of the current "Big 4" accounting firms to collapse, precipitated by the Satyam debacle. Quinn Forensics seems to have the same view. At the centre of the question of their survival, it seems, is the degree to which the rest of PWC's member firms across the globe can and/or will be held liable for the actions of the Indian firm's partners.

This is the point that I wish to focus on:

At a conference in London recently on law firm alliance and networking arrangements, one of the participants was Phil Carlton, CEO of the well known law firm network State Capital Global Law Group. Phil was at great pains to explain how seriously his network took making it very clear that the member firms were entirely separate when it came to the practice of law. It is evenly explicitly stated on their business cards. If an organization of member firms holds itself out to be a single entity, he said, then as a single entity they would most likely be viewed if things went wrong with one of the member firms. "If something walks like a duck and quacks like a duck," said Phil, "then the courts will most likely hold that it is a duck."

All this has significant implications for global law firms, many of whom take great pride in holding themselves out to be "one-firm-firms." How does one balance the need for risk management and for insulating the overall firm from misdeeds committed by partners in a far-flung office, with reaping the benefits of being able to portray the firm as a single entity with common systems, standards and even teams of lawyers across the globe?

Will PWC be able to convince the courts that they were a "duck" only for marketing purposes, and that the liability firewalls between the member offices / firms transcend that? Let's see what happens ....

Thanks for the information.
Rocky
Accounting Firm Toronto