The Story
Over the past decade, many of the major cross-border mergers have adopted a structure called a Swiss verein. It’s a structure that has made many firms – including DLA Piper, Dentons, Hogan Lovells, KWM, Norton Rose Fulbright – who they are today.
A Swiss verein allows for rapid international expansion. Firms ‘merge’ in the sense that they combine under the same brand, however they keep the finances and liabilities separate within each office or region.
Importantly, they may adopt the same strategy and IT systems, but they don’t share profit pools.
Impact on Businesses and Law firms
But what does this really mean for you?
Firms that use the Swiss verein often have a substantial international presence. The structure allows for flexible and quick international mergers. If firms don’t have to share profits, they can worry less about diluting the overall profit pool when merging with less profitable firms. They can also keep the cultures of the firms independent.
It’s those benefits that have helped Dentons pursue aggressive international expansion (around 40 combinations between 2013 and 2018). And, as a lawyer, this likely means plenty of international work, as well as potential opportunities for secondments in a broader range of jurisdictions.
But you might want to consider the wider impact of ringfencing a firm. A Swiss verein means if partners refer work to the other entities within their network, that work won’t contribute to their profit pool. Now, this doesn’t mean partners won’t still refer work, but the disincentive leads to the question: how does a verein impact law firm culture? If offices are financially and legally separate, are the offices genuinely integrated? Do international offices work together as ‘one firm’?
Now, vereins aren’t all the same. You just may not know whether you’re speaking to a Hogan Lovells (a widely successful use of the verein) or a SJ Berwin/King & Wood Mallesons (a disaster).
By Jaysen Sutton
