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"All they really want to know is 'How is this going to affect me personally, and will it affect the amount of money that I make,'" said Jeffrey Lowe, a legal recruiter with CenterPeak. "They're really looking more at the quality of the firm, so they're much more focused on the perception of the firm's profitability and prestige rather than the structure that they have."

The Swiss verein model for law firm combinations has benefited a handful of global firms looking to sustain growth and increase size and scale, but the fact that only a small number of firms have combined using the verein structure has experts wondering whether it is still a viable business strategy.

Large firms such as Dentons, DLA Piper and Baker McKenzie embraced the verein approach in the early part of the 21st century, using the model to place them in the upper echelons of the Am Law 100. Other recent transatlantic mergers, however, including the combination between Allen & Overy and Shearman & Sterling that created A&O Shearman and the merger between Herbert Smith Freehills and Kramer Levin Naftalis & Frankel to become HSF Kramer, have avoided the Swiss verein route, leading to questions over whether the model is losing luster.

Flexibility Is a Plus

"I think the verein structure can be very beneficial. It was for us," said Jeff Cody, global managing partner of Norton Rose Fulbright, which adopted its current identity when London-based Norton Rose, fresh from a wave of combinations, joined with U.S.-based Fulbright & Jaworski in 2013. "The flexibility of a verein, I think, was ideal for us because we had a number of very well-established firms and [we were] trying to bring them together on varying comp structures and varying markets. It gave us the flexibility to put that group together without a significant amount of disturbance … as we continue then to build the firm going forward."

The verein structure allowed Norton Rose to enter into certain geographic markets that might have been more difficult otherwise, Cody said.
"It's our desire to serve our clients as extensively and broadly as possible," he said.
There doesn't seem to be a direct correlation between revenue growth and combinations under the verein model, but that doesn't mean it isn't a viable option for firms, said Frank Ryan, global co-chair of DLA Piper.

"The firms where you're seeing the highest reported profit-per-equity partner, those are, generally speaking, firms that are less scaled, but to the extent that they have scale, it's in more limited geographies," Ryan said.

Vereins have gotten a "bad rap" as a consequence of some individuals who "didn't understand them all that well," he said.

For DLA Piper, which structured as a verein around 2005 following a three-way merger, the model has served the firm well from a strategic alignment standpoint, Ryan said.

"Some firms are only looking to achieve success in a narrow subset of geography. Others are looking to compete and do more around the world," Ryan said. "It just depends on what the firm is trying to accomplish. The structure is, honestly, from our perspective, much less important."

But some experts say it's not all upside when it comes to vereins, which is reflected by the fact that only a small number of global firms today are actually structured as Swiss vereins.

Concerns Over Culture and Conflicts

Critics of vereins note that the impression that firms who merge this way are looked at as one single global law firm is illusionary, and also that vereins open up the door to greater risks of conflict of interest for attorneys associated with verein firms.

One example of verein conflicting interests involved global firm Dentons, which had been representing a company in an international investigation for patent infringement brought by a U.S. clothing retailer, which sought to have Dentons disqualified from the case because the retailer was also a client of Dentons, according to a 2017 paper written by then-law student Gabriela Chambi of American University, Washington College of Law, who now works as a senior associate with Hudson Cook.

"Some argue that vereins are simply marketing platforms without a common culture, shared knowledge, and standardized practices that single partnerships enjoy," Chambi wrote at the time. "Financial integration is an important value for law firms because it promotes development of a 'one for all, all for one' culture in addition to supplying a system of incentives and disincentives. But, a verein sees the geographic reach of its brand as an end in itself and financial integration is to be dispensed with."

That case ultimately led to a $32 million malpractice verdict against the firm, which was ultimately upheld on appeal.

'Get Big Quickly' and Expand Globally

Swiss vereins were not originally designed for law firms, but some firms saw the model as an opportunity to "get big quickly and to expand globally," said Moray McLaren, a Madrid-based partner with law firm consultancy Lexington Consultants.

"Not only was it a very good option for global expansion quickly and to gain limited liability, it was the only way you could bring in an American firm without the risk of someone suing your American entity," McLaren said. "So, local autonomy, global expansion. Everyone gets to be their own entity and set their own objectives … and it's tax-efficient, so you get to declare your taxes under what system you want."

The verein structure serves the purpose of globalization and limited risk, but "you're not going to be a proper, true firm in the sense that a partnership typically is," McLaren said. "The question for the verein is is there clear direction globally and what [are they] trying to achieve? Are all the partners in their organizations aligned and are they committed in the same way?"

Challenges remain for those firms that combine under the verein model, one of which is that lawyers who typically work autonomously and independently, and are accustomed to developing their own client base, might experience difficulties under a verein, McLaren said.

Furthermore, partners looking to move to another firm will not necessarily consider whether a firm is structured as a verein as a determining factor when deciding to make a lateral leap, one industry expert said.

"All they really want to know is 'How is this going to affect me personally, and will it affect the amount of money that I make,'" said Jeffrey Lowe, a legal recruiter with CenterPeak. "They're really looking more at the quality of the firm, so they're much more focused on the perception of the firm's profitability and prestige rather than the structure that they have."