This Research Bulletin has been published in Geoforum, 38 (5), (2007), 925-940 under the title 'Relational Networks of Knowledge Production in Transnational Law Firms'.
Please refer to the published version when quoting the paper.
Debate surrounding the ‘knowledge economy’ (Department for Trade and Industry, 1998; Leadbeater, 1999; OECD, 2000) has highlighted the importance of strategies to effectively create, manipulate and exploit knowledge within firms to drive competitiveness. For geographers, this has renewed the urgency of deliberations about the socio-spatial characteristics of learning and knowledge (Amin and Cohendet, 2004; Bunnel and Coe, 2001) with studies of manufacturing (Sturgeon, 2003), advertising services (Grabher, 2002) and retail (Wrigley and Currah, 2004) identifying the importance of globally stretched practices of knowledge production and circulation. This links to wider discussions within the social sciences of knowledge management in organizations (see Skymre, 1999) that investigate the way firms ensure practices are in place that, crudely defined, allow employees to learn from one-another’s insights and ideas (knowledge production) and retranslate and reinterpret the knowledge of colleagues working overseas (knowledge circulation).
These discussions are particularly pertinent in relation to professional service firms (PSFs) and especially the increasingly important breed of global PSFs where effective knowledge creation and leverage defines success (Jones, 2005; UNCTAD, 2004). As Morris and Empson (1998, 612) suggest, “[t]he knowledge base represents both an input and an output of the PSF. It is an input in terms of the expertise residing in the firm and it is an output in the form of products or services generated to solve client problems”. Consequently, it is logical that for global legal PSFs the office network must act as a strategic tool for the creation and circulation of knowledge:
Economic geographers have a number of valuable conceptual lenses that can facilitate the study of such knowledge production and circulation in global PSFs. For example, recent attempts to ‘open the black box’ used to represent firms (Taylor and Asheim, 2001) have revealed the socially and culturally inflected spatial networks of organizations and the way these affect decision making, efficiency and productivity (Schohenberger, 1997). Drawing on this approach might allow in-depth accounts to be provided of the forms of social practice and interaction needed to produce and circulate knowledge across a firm’s global organizational network. In addition, analysis of the ‘relational economic geographies’ (Boggs and Rantisi, 2004; Bathelt and Glucker, 2003) and ‘global production networks’ (Dicken et al, 2001; Henderson et al, 2002) provides us with further theoretical frameworks that can assist in the development of more intricate analyses of the spatial characteristics of ‘knowledge networks’ in global organizations. We can take heed from Amin (2002; 386) when he argues that the processes of globalization require “a different interpretation, one which emphasises a topology marked by overlapping near – far relations and organisational connections that are not reducible to scalar spaces” and explore both the existence of relational networks and their cultural, political and social embeddedness to get to grips with the ways economic activities are enacted through space (Dicken et al, 2001).
This paper argues, however, that whilst the important relational networks of global PSFs have been previously recognised (Beaverstock et al, 1999; Jones, 2002; 2005), the theoretical frameworks outlined above have not been fully developed to understand the geographies of learning in such firms. The aim of this paper is, therefore, to draw on the intersecting vantage points offered in these literatures in order to analyse the way the globalization of London and New York’s legal professional service firms (PSFs) “allows the firms to benefit from ‘decentralised specialisation’ by coupling islands of localised knowledge” (Amin and Cohendet, 1999, 94). In doing this it takes on board the need to explode the black box used to represent firms, as well as the need for critical appraisal of the dynamics and architectures of global organizations, and uses original empirical material to investigate the socio-spatial constitution of the networks and practices involved in the global stretching of knowledge in global legal PSFs.
The rest of the paper develops this idea over three further sections. Section two explores how extant literatures analysing the architectures of knowledge production in global firms and ‘global relational and production networks’ can inform our analysis of global knowledge production and circulation in legal PSFs. Section three then presents the findings of an interview-based analysis of this process that highlights the architectures of the knowledge producing and circulating networks, their social embeddedness and the power exercised through the networks. Section four discusses the significance of these findings and how it develops our understanding of the constitution and form of global organizational networks and their socio-spatial dynamics.
CONCEPTUALISING RELATIONAL KNOWLEDGE NETWORKS IN LEGAL PSFS
Geographers have long been interested in producer services (Daniels, 1993) and most recently have endeavoured to analyse the organizational forms of global firms. Extant studies (Beaverstock et al, 1999; 2000; Warf, 2001) provide important foundations for our understanding of global legal PSFs, in particular highlighting the dominance of US and UK corporate law firms1. However, they rarely provide detail studies of the practices of transnational business and, in the context of this paper, full exploration of if, and how, such firms engage in globally stretched knowledge production and circulation. As Jones’ (2005, 179, original emphasis) cutting edge research reminds us, there is a pressing need to focus upon the “ practices of transnational business (which explodes the firms as a black-box concept) rather than the quantifiable measures of the outcomes of global business activity” in order to better theorise the way producer/professional service firms operate as global businesses. This means going beyond mapping and rationalising the global activities of such firms and, instead, developing detailed, rich and contextualised examinations of the way firms engage in transnational business.
Solice can be partially found in the work of Beaverstock (2004) who illustrates the important role of expatriation in this process and the way global legal PSFs operate, construct transnational networks and produce and circulate knowledge in and between key international financial centres. However, beyond this we are forced to turn to studies of other industries such as retail (Currah and Wrigley, 2004) or more generic examinations of the global geographies of innovation (Bunnel and Coe, 2001) and the global architectures of knowledge (Amin and Cohendet, 2004) in order to glean understanding. This is not to say these studies are not instructive as to how legal PSFs might engage in global knowledge management. For example they all agree upon the importance of:
It is therefore possible to draw upon and develops these ideas to analyse the relational knowledge production networks in global legal PSFs and the role of these networks in the construction of transnational legal PSFs. Three additional bodies of work can further help this cause.
Architectures of Knowledge Production in Global Organizations
Studies of strategic organizational forms (Nohria and Ghoshal, 1997) are useful in developing our understanding of the way knowledge is produced and circulated in global organizations. Most recently the transnational organizational architecture has been trumpeted as most valuable because of its ability to create a matrix of knowledge interconnections. First proposed by Bartlett and Ghoshal (1998), the transnational form allows ‘knowledge diffusion and development worldwide’ by integrating and connecting all parts of a global firm’s network, thus allowing the synergism of ideas, insights and experiences. Bunnell and Coe (2001, 570) therefore argue that effective innovation “involve[s] a complex and evolving integration, at different levels, of local, national and global factors [not] exclusively at one particular scale but instead across various spatial scales simultaneously”. According to their studies, TNCs act “as conduits for transferring tacit expertise” (Ibid, 580), therefore requiring studies that allow “a qualitative shift away from work which focuses on particular scales…towards that which gives more credence to relationships operating between and across different scales” (Ibid, 570).
Central to studies of this transnational form have been examinations of various forms of ‘transnational community’ and their role in the stretching of knowledge and its production (Amin and Cohendet, 2004; Bunnel and Coe, 2001; Morgan, 2001; Wenger et al, 2000). This work illuminates two related issues. First, the literature identifies the modes of interconnectivity that allow community members to communicate. Here the rise of, and improvements in, information and communications technologies have been noted and their ability to support the construction of the communities that allow knowledge production and circulation. Technologies ranging from the telephone to the Internet and videoconferencing have been shown to mean that there are “many ways in which distant [cultures and communities] can suddenly be close” (Hannerz, 1996, 4). Amin and Cohendet (2004,110) therefore draw our attention to how knowledge production and circulation “includes, yes, face-to-face meetings, sociality, and casual contact…but it also draws on distant objects such as drawings faxed between offices around the world, global travel to form temporary project teams, and daily internet/telephone/video conversations”. Consequently, they argue for recognition of relational geographies of learning that are determined by the successful management of the interconnecting architectures that allow knowledge production and flow across space. Grabher’s (2002) work on the architectures of project teams in PSFs reinforces this view, highlighting the value of consolidated inter-personal networks for organizational learning.
Studies have also highlighted the composition of transnational communities and the forces binding members and allowing learning to be stretched across space. In particular, the vital gelling agent for such communities has been shown to be shared domains of interest emerging from shared work and professional practices. So Wenger et al (2002, 25) note that “[w]hat allows members to share knowledge is not the choice of a specific form of communication (face-to-face as opposed to Web-based, for instance) but the existence of a shared practice – a common set of situations, problems and perspectives”. Consequently, the spatial distribution of communities becomes irrelevant. Instead, shared practice binds communities together and creates a form of relational proximity that ensures learning is successful (Blanc and Sierra, 1999).
Embedded and Relational Geographies
The turn in economic geography towards a relational analysis of global organizations provides us with a complementary conceptual backdrop to situate our understanding of the global production and circulation of knowledge. In these literatures, a scale-transcending approach is used to highlight the existence of network forms that interconnect spatially separated actors within organizations and create relational spaces of economic action (Bathelt and Glucker, 2003; Boggs and Rantisi, 2003). Interactions stretched across organizational networks mean “[f]irms have become circulatory networks…flow and mobility are increasingly assumed into the system, with elaborate schemes in place to ensure the rapid transfer of people, goods, money and information around the world” (Amin, 2002, 394). The challenge, then, is to understand how the network architectures of knowledge production in global PSFs are constructed in order to transcend the boundedness often associated with the geographies of knowledge, resulting in relational networks of learning (Jones, 2005). The relational/network approach can facilitate this by linking the discussion in the previous section of the paper about the characteristics of knowledge producing networks and spaces to analysis of organizational forms.
Scholars have also been reminded, however, that to meet this challenge they must also study the economic, cultural, political and social constitution of these relational networks. So Dicken et al (2001, 94) argue that “network relationships should be understood as being both structural and relational. Networks are structural, in that the composition and inter-relation of various networks constitute structural power relations, and they are relational because they are constituted by the interactions of variously powerful social actors”. Yeung (2005, 38) argues there is a need to explore the ‘relational geometries’, not just the existence of network relations, to understand “the spatial configurations of heterogeneous relations among actors and structures through which power and identities are played out and become efficacious”. This returns us to our initial discussion of the importance of ‘exploding the black box’ used to represent firms when analysing the globalization of organizations.
Embeddedness and the Reproduction of Legal Practices
All of these discussions can be further contextualised in relation to global legal PSFs through extant studies of the economic sociology of the legal profession. This highlights the fact that the defining characteristics, strategies and organizational forms of global legal PSFs are influenced by the effective construction of the type of embedded relational networks described above. Studies of the partnership system of governance used in all law firms have shown that a form of ‘clan’ collegiality based on embedded relationships between partners is essential for the control and management of firms (Greenwood et al, 1990). Even in the more beaurocratic managed professional businesses that have emerged in recent years it is “networking and corporate culture [that] ensure[s] the integration of activities” (Ferner et al, 2001, 343).
In the context of this paper, the ways such networks are used to engage in global knowledge production and circulation and they way this affects the management of global legal PSFs and the type of legal service provided to clients is particularly significant. Previous studies suggest this requires us to tell the “story of the growing dominance of a particular mode of production of law which began in the United States” (Trubek et al, 1994, 420). The leading global law firms (table 1) and their organizational characteristics are the result of the development, during the mid part of the twentieth century, of a form of legal practice that is often referred to as ‘Cravathism’ and ‘mega-lawyering’ (Spar, 1997; Trubek et al, 1994). Under such a schema, lawyers provide commercially sensitive advice to clients with the aim of bringing positive business outcomes that smooth the operation of global organizations and the cross-border transaction they engage in. In particular, it means avoiding posturing about legal positionalities and academic-style debates about legislation with, instead, focus placed upon finding the most effective way to apply, and operate within, the law whilst meeting the client’s commercial needs2.
Table 1 . They top 10 global law firms by number of overseas offices.
Source : The lawyer (2004) and Fieldwork.
* Now DLA Piper Rudnick Gray Carry
After emerging in New York’s law firms (Smigel, 1965), such a system quickly spread to the UK as corporate clients increasingly demanded more commercially orientated legal advice3. As a result, The Economist (1996) suggested US and UK global legal PSFs ‘rapped red tape around the World’ and effectively created a captive market for corporate legal services, a market based on the principle of the Cravath, mega-law, approach. This culminated in, and was reinforced by, the changes associated with the so-called ‘legal big bang’ of 1990 which allowed non-UK qualified lawyers to practice in the UK. By this stage, such were the similarities that lawyers qualified in US corporate law were permitted to take brief transfer tests to prove their ability to practice UK corporate law (Cullen-Mandikos and MacPherson, 2002) . In contrast, other civil law European jurisdictions (e.g. France, Germany and Italy) have been slower to adapt to mega-lawyering practices (MacDonald, 1990). Where it has occurred, however, the propagation in global legal PSFs of ‘mega-lawyering’ can only be understood by examining the organizational structures of the law firms involved and the way they facilitate the circulation of the knowledge and ideas ‘mega-lawyering’ is based upon (Nelson and Trubek, 1992). As Flood (1995, 160) suggests, “it may be preferable to talk of the export of American techniques that are adapted to local cultures and become local knowledge”.
TRANSNATIONAL LEARNING AND ORGANIZATIONAL NETWORKS IN LEGAL PSFS
This paper draws on the frameworks outlined in section 2 of the paper to analyse empirical material exploring the way global legal PSFs operating in London and New York engage in ‘knowledge diffusion and development worldwide’. Specifically, it investigates: the way relational networks are constructed in these firms to allow such a practice; the way these networks operate as embedded social and cultural constructions; and the affects of this embeddedness on the way global firms produce and manage knowledge at the global scale. First, however, it is important to explore the methodology and context of this investigation.
Methodology and Context
The empirical material analysed in this paper was collected through 29 semi-structured interviews conducted between September 2003 and June 2004. Interviewees held various positions in global legal PSFs operating in London and New York ranging from associate (the most junior rank) to managing partner (the most senior rank). The lawyers interviewed had between six and thirty years experience (fifteen years on average) and had worked for between one and four firms (two on average). All specialised in either corporate or finance law. An interview schedule was used that explored the practices involved in stretching learning across global law firms office networks, the nature of such interconnection and interaction and the influences upon this process. Following the logic of ‘new economic geography’ (Yeung, 2003) the intention was to let interviewees ‘speak for themselves’ and openly describe the practices and processes relevant to the issues being researched. Interviews lasted between 40 and 90 minutes (55 minutes on average) and were tape recorded. Quotes representing key issues and ideas were then extracted from the transcripts produced using the grounded theory method (Glaser and Strauss, 1967). To maintain the anonymity of interviewees only interviewee number is provided in this analysis. Where relevant, the position of the interviewee within the firm is identified.
The firms from which interviewees were recruited were selected based on an extended version of table 1 which identified the top twenty global law firms based on number of employees outside of the home office. These firms had between 11 and 69 offices worldwide, employed between 573 and 3,053 lawyers and had global revenues of between £174m and £950m (The Lawyer, 2004). All of the firms operated as integrated global partnerships with direct presence in several countries.
Networks of Stretched Knowledge Production and Circulation
An important rationale, and benefit, of being a global organization was, for all interviewees, the advantages that could be gained from learning with and from overseas colleagues about globally uniform legal challenges. This occurred across intra-organizational networks that take the form of inter-personal, transactional and non-transactional, relationships. As two interviewees described the way they engaged in globally stretched knowledge production and circulation:
These quotes provide a number of insights. They reveal that: (a) lawyers use their relational networks to benefit from knowledge production and circulation (i.e. developing new understanding based on the synergism of experiences, ideas and passing on extant knowledge so that it can be adopted, adapted and reconstituted by overseas colleagues); and (b) that the creation of the architectures (Amin and Cohendet, 2004), connections (Tsoukas, 1996) and networks (Skymre, 1999) that facilitate this knowledge production and circulation process is critical. In particular, they reveal how the actors in this form of global production network (Dicken et al, 2001) are individuals within global organizations and their inter-personal relationships. Interviewees were therefore further interrogated about the ways such networks are formed, embedded and used.
The networks that allow knowledge production and circulation result from individuals developing awareness of, and relationships with, colleagues who have expertise and knowledge relevant to their specialist area of legal practice. Lawyers in global corporate law firms specialise in both legal practice areas (e.g. antitrust/competition; banking and finance; M&A/corporate; tax) and industry domains (e.g. airlines; financial institutions; real estate). It is therefore essential that they know the other lawyers in the firm who specialise in their practice and industry areas . In the law firms studied, this awareness emerged from: (a) transactional encounters, when individuals from several offices work together on a cross-border project involving several legal jurisdictions; and (b) non-transactional encounters, telephone conference calls of practice groups or telephone calls resulting from the deliberative searching of ‘expertise databases’4. Grabher (2002) refers to this as ‘know-who’ knowledge and highlights a similar process in advertising legal PSFs.
Inevitably, the geography of these networks reflects the spatially patchy networks of global legal PSFs (Beaverstock et al, 1999). However, as figure 1 suggests, despite the significance of South East Asia in the activities of global law firms, interpersonal networks stretched principally between: the London and New York offices; and the London, New York and continental European offices. It was somewhat surprising that the South East Asian offices of these firms were not as intensely tied into knowledge production and circulation in the same was as the North American, UK and Western European offices were. A number of factors seem responsible for this and are discussed more fully later in the paper.
Figure 1 . The geography of global legal PSFs offices and the knowledge networks stretched between them.
Source : Fieldwork.
Embedded Knowledge Networks
Whilst the establishment of the networks that allow global knowledge production and circulation is essential, it quickly became clear that this was only half of the story. Of especial significance to the efficacy of such networks was also the affect of a series of embedding forces that influenced the social dynamics of the relations between actors.
To begin, the effectiveness of these networks was suggested, by all but a minority of interviewees, to be based on the strength of the social relations constituting the network. It was repeatedly argued that having ‘know-who’ awareness alone was insufficient and that it was necessary to embed such networks in socially constructed spaces. Lawyers all recognised the importance of cultivating relationships with their overseas colleagues that were not simply based on functional, transactional, necessity. Instead, they suggested relationships also had to be developed over extended periods for non-transactional purposes (i.e. for cultivating ‘non-contractual’ social and professional relationships). As two lawyers commented:
It further emerged that these types of relationship are only successful when they are matured over time to create: tight bonds between individuals; a reciprocal desire to help one-another; and a belief in both the intentions of and advice given by a colleague. Lawyers argued that creating such socially embedded relationships was, nevertheless, not a simply process. In particular, success was a result of the way the engaged in two principal practices.
Firstly, regular virtual interaction that allows one-to-one communication between individuals was essential to the maturation of network ties. Whilst both the transactional and non-transactional means of developing networks involve various forms of orchestrated group interactions, in particular telephone conference calls, lawyers all suggested that cementing inter-personal relationships and developing their social foundations began with one-to-one interactions by telephone. Here, as more than one interviewee put it, individuals could ‘check each other out’; begin to develop an understanding of one-another’s expertise and personal characteristics. By engaging in such interactions on a regular basis (daily with the most important ‘network ties’ and at minimum weekly), over time, interpersonal networks began to develop the socially embedding features described above5. As one lawyer described these embedded networks:
This line of enquiry also revealed an important role for a second practice that further advances the embedding process. Occasional face-to-face encounters were unanimously highlighted by lawyers as playing a pivotal role in further ensuring the knowledge producing networks are embedded in the strongest and most effective social spaces possible. For the lawyers interviewed, business travel was a fundamental aspect of working for a global organization. Of those involved in this research, all travelled at least once a year whilst some (five interviewees) travelled over eight times a year and one travelled at least once a month (12 times a year). The frequency varied with seniority (see below) but in all cases business travel was recognised as an important activity for two reasons. First, it helps smooth cross-border transactions. Both meeting clients and other members of a cross-border project team face-to-face allows the ironing out of the most complex issues in a transaction. Second, it further helps embed the relationships involved in knowledge production and circulation. Surprisingly, as much emphasis was placed on the second benefit as the first, with senior lawyers arguing that although the cost of business travel was not to be taken lightly, travel to ‘network’ with colleagues was a legitimate expense because of how it ‘ties’ the global network together. One partner likened it to turning contacts with overseas colleagues from ‘pins in a map’ to genuinely meaningful relationships.
Reflecting these ideas, all lawyers noted that their employers organized a range of opportunities to meet overseas colleagues. These included: global induction meetings where new recruits meet their overseas counterparts; global partner and practice group conferences (sometimes referred to as retreats); and away-day activities in overseas offices (used mostly to embed networks between European offices where day-trips were possible). As two lawyers described the benefits gained:
It was the combination of telephone mediated interactions and these face-to-face encounters that embedded the most successful knowledge producing and circulating networks. In this sense, it could be argued that telephone mediated interactions begin the ‘thickening up’ of the networks constructed in organizations whilst face-to-face contact finalises this social construction process.
The importance of the embeddedness of these networks can be illustrated by the affect of the social spaces constructed on one of the key challenges of globally stretched learning: the difficulties that arise from culture clashes. For just over half of the lawyers interviewed, the inter-personal networks that allow knowledge production and circulation had, in the past, been in some way affected by cultural differences between the parties involved. Whilst it is not the intention of this paper to engage in extended debate about the spatial peculiarities and variegations of cultural characteristics, a brief examination of this factor highlights both the cultural embeddedness of global corporate networks (Dicken et al, 2001; Doremus et al, 1998) and the way in which socially embedded networks can compensate for the, potentially negative, affect of culture clashes.
Lawyers principally commented upon culture clashes that emerged from the differentiated behaviours and norms associated with legal practice throughout the World. In particular, interviewees regularly noted that corporate transactions are approached differently in US, UK and continental European jurisdictions respectively6. Without meaning to typify these cultures or excessively simplify the differences between them, the cultural variations can be summarised as follows: in the US lawyers respond to a problem by finding a solution; in the UK lawyers speculate about a likely solution; in continental Europe lawyers’ state the legal position (in an academic style analysis of legal precedent and statues) and why that causes a problem. They do not suggest a solution. As noted, this is an overly-stereotypical view of the differences, but one that does encapsulate the variations that lead to clashes in culture. For example, numerous lawyers in New York commented upon their frustration when their continental European counterparts simply defined the problem faced in legal terms without offering solutions.
This issue can be understood through a range of extant studies, including those of professional cultures (Torstendahl, 1990) and the differences between civil and common law practice styles (Abel and Lewis, 1995). However, of most interest to our discussion here is the way such difficulties were overcome in socially embedded networks. Lawyers suggested it was possible to excuse such differences, tolerate them and prevent them from damaging the effectiveness of inter-personal networks when relationships were socially embedded in the ways described above. As one noted:
‘Politics’ in Embedded Networks
Whilst the value of these embedded networks was undisputed by lawyers, it was also clear that their socially constructed nature also affected the dynamics of the relations between actors. In particular, the networks were affected by: (a) different levels of inclusion in network constructing practices; and (b) uneven geographies of power in the networks. Both of these factors further highlight the need to complicate the analysis of global organizational networks, open the black box used to represent the firm, and recognise the socio-cultural construction of relational networks and their structural outcomes.
Two factors were of particular significance in relation to the value of relational networks and the level of inclusion in network constructing practices, both auguring against the successful construction and exploitation of interpersonal networks by junior lawyers. First, junior lawyers (i.e. non-partners) were only able to develop networks with other non-partners. This in itself has value, but is of exponentially less value than talking to partners who are inevitably the most knowledgeable individuals in law firms (Hatsopoulos and Hatsopoulos, 1999) and have extensive and valuable ‘grey hair’ experience that can be learned from (Terret, 1998). Whilst partners would happily work with and advise associates in relation to a transaction, associates felt it impossible to further these inter-personal networks and transform them into the type of socially embedded professional relationships essential for effective knowledge production and circulation. They suggested this could be explained by their inability to overcome the invisible walls created by the time honoured ‘hierarchical’ conditions common to law firms (Smigel, 1965). As two junior lawyers commented:
This politics of exclusion was also created and reinforced by a second factor. Junior lawyers commented that business travel was more limited for them than for partners. They fell at the bottom end of the frequency range for travel (those interviewed all travelled between one and three times a year). Most transactional travel (in relation to cross-border projects) was completed by partners because of their dominant role in client handling and legally complex situations. Other forms of business travel also occurred more frequently for partners with, for example, conferences/retreats occurring at least once a year. In contrast, junior lawyers were normally confined to an induction during their first year of employment, an overseas ‘seat’ as part of training, and occasional (often bi-annual) attendance at practice group meetings. Consequently, junior lawyers were less able to develop the embedded networks needed to most effectively benefit from globally stretched knowledge production and circulation. As one junior lawyer noted:
This process is also partially responsible for the weakness of embedded knowledge networks interconnecting the South East Asian offices to those in Europe and North America. Even for senior lawyers, travel to offices in South East Asia (or from South East Asia to Europe or North America) was infrequent due to the time and financial costs involved. This prohibits the embedding of relational networks in the same way as infrequent travel does for junior lawyers. It might also be behind the pattern Beaverstock (2004) noted of an important role for lawyer expatriation to South East Asian offices. As stretched embedded networks are weak, co-presence becomes important for the transfer of expertise.
‘Power’ in Embedded Networks
It also emerged from interviews that the networks of knowledge production are imbued with uneven geographies of power. This has an important structural affect on both the firms themselves but, also more widely, on the nature of ‘global’ corporate law. Of the key global legal PSFs listed in table 1, all emerged from primarily UK or US originating legal practices. This reinforces the dominance of the type of US and UK ‘mega-lawyering’ described earlier in the paper. It emerged from interviews that global knowledge production and circulation networks are used to encourage, in particular, continental European offices, and increasingly offices in the East of the continental block, to adopt mega-lawyering practices. This was a form of power that was, interestingly, predominantly (though not exclusively) exercised by partners in the New York offices of both US and UK global legal PSFs. The following quotes exemplify the way the knowledge producing networks are used to catalyse the development of corporate legal practice in Eastern Europe:
The construction of this power is possible, firstly, because of the concentration of travel for interpersonal networks construction within Europe. For example, interviewees in New York suggested that for every one trip to South East Asia they would make at least three trips to Europe. Consequently, the embedded networks are ‘strong’ (see figure 1) and can be effectively used to reproduce the Cravath model of practice. Secondly, this power is also constructed and reinforced by the way partners, in particular in the New York offices of the firms studied, depict and portray the continental European offices. A form of rhetoric has developed over time that constructs these offices as both needing the ‘assistance’ of, again in particular the New York office, to deal with the complexities of global corporate transactions and as being the benefactors of such assistance (in that their legal practices and ability to compete in a global marketplace has developed). The way two partners working in the New York offices of global law firms described continental European offices exemplifies this construction process:
The affect of this socially constructed power is networks that are used to influence the way law is practiced in other jurisdictions so as to smooth the completion of global transactions. It means that the global knowledge production and circulation networks are often involved in attempts at the transferral, or at least re-translation, of US legal practice in continental European jurisdictions. This has significant consequences for the nature of global legal practice with, in particular, the nature of the advice provided to clients and the structures used for cross-border mergers, acquisitions, re-financings and other corporate transformations taking a distinctly US style (The Economist, 1996; Trubek et al, 1994). When coupled with the corporate ‘socialization’ programmes global law firms use to ensure all lawyers deliver uniform and standard services across the firm’s network7, there are important structural outcomes for the nature of corporate law. Indeed, it could be argued the globally stretched knowledge networks are partially responsible for the ‘Americanization’ of corporate legal practice others have noted (Trubek et al, 1994; Flood, 1995).
It is important to remember, however, that geographers have been reminded in recent times, above all by the contributions of John Allen (2003; 2004), that discussions of power such as this one need to take a more critical stance. For Allen, power takes multiple forms, something determined by the way it is exercised8. He argues it is therefore important to begin by recognising the mode of power employed before continuing to explore the construction of the powerful relations and the actions involved. According to Allen’s typology, then, the power identified in the global networks of knowledge production and circulation is a form of domination. Allen (2003, 28) suggests that where domination occurs it “may involve relationships close at hand or across vast distances, but in either case the imposition of a form of conduct according to a set of particular interests is characteristic”. This is subtly different to authority. Domination is a form of power accepted out of resignation to the powerful influence of the other party. Authority is power conceded because of recognition of the other parties’ legitimate claim to power and influence. The way the power is constructed in the networks studied here reveals why such a distinction is important. Lawyers in New York acknowledged that their continental European colleagues resent and complain about the way they project influence over their mode of practising law. However, the relationship is one where continental European lawyers are resigned to the need to learn from and retranslate the ideas and practices produced and circulated by, in particular, the New York office, both because of client demands and the relative financial, and therefore managerial, dominance of New York offices in global legal PSFs networks9. Lawyers in New York mobilise both the need of these lawyers to provide clients with a US style service and the high levels of financial muscle held as resources to ‘exercise’ power.
DISCUSSION AND CONCLUSIONS
From this investigation of the global knowledge production and circulation networks of global legal PSFs, it becomes clear that it is critical to: (a) open the black box used to represent these firms so as to understand the socio-cultural and political construction of global corporate networks; and (b) focus our analysis on the relationality of economic activities in contemporary globalization.
Networks as Spaces of Practice
Jones (2005), Yeung (2001) and others have suggested that the global networks of firms are socio-spatial constructions and that geographers need to complicate descriptions of such networks to move beyond mapping exercises (Coe and Yeung, 2001). In this study, the global knowledge production and circulation networks of legal PSFs have been shown to be socially embedded constructions ladened with power. Lawyers working for global legal PSFs engage in a number of practices that, first, construct relational networks and, second, nurture and develop these networks and embed them in social spaces of mutual respect, reciprocity and trust. This is vital for both logistically facilitating ‘flow’ across the networks but also for ensuring this ‘flow’ is effective, valuable and sustained in the long term.
This provides, then, important insights into the fundamental characteristics of relational, global, corporate networks. Methodologically, it begins to develop the agenda Dicken et al (2001) proposed and, through an explosion of the black box used to represent global legal PSFs, identifies the actors in and the constitution and outcomes of the knowledge producing and circulating networks studied. Of particular importance here is the discovery of the synergistic use of virtual and travel enabling technologies by the actors to construct and embed the networks. This both informs our discussion of the spatialities of globalization below (Amin, 2002), but also the way we conceptualise global corporate networks. It requires us to view corporate networks as spaces of social practice and engagement, not just as inert architectures without socio-cultural constitution. This advances the argument put forward for a more detailed and intricate analysis of the knotty, differentiated and contested nature of global organizational networks and contributes to the ongoing development of understanding of the way global PSFs organize.
The ‘political’ dimension to the global knowledge producing and circulating networks in legal PSFs uncovered by this research also begins to help us understand how the emergence of mega-lawyering as the dominant type of legal practice for global law firms (The Economist, 1996; Flood, 1996) is, in part, enabled by the use of the corporate networks of global law firms to produce and circulate understanding of such a practice and ensure its application in other jurisdictions. In this sense, the research shows how global organizational networks operate in a recursive state, both being guided by extant structural and socio-economic conditions but also reinforcing them. It also brings us back to Castells (1993) suggestion that the ‘global space of flows’ is (re)producing hegemonic capitalist imperatives whilst developing this idea and providing empirical grounding that fleshes out how such power emerges and is socially constructed (Allen, 2003; 2004).
Global Spatialities Revisited
There has been much debate about the most effective way to conceptualise globalized economic activities (Amin, 2002; Dicken et al, 2001; Peck and Yeung, 2003) with general agreement that analysis should focus upon ‘relational proximity’: the intensity of connections and relations between actors and places . The interviews analysed here reveal that it is the construction of inter-personal networks between lawyers working in spatially distributed offices that enables knowledge production and circulation and, of most significance, that it is construction of globally stretched social spaces embedding these networks that defines the networks’ success. In this sense, it reflects the arguments advanced by Torre and Rallet (2005) that we should recognise the difference between ‘geographical’ and ‘organized’ proximity. They ask, “What does ‘being near’ somebody mean? What does it imply in social and economic relations?...one can be present and active both here and there thanks to communication technologies and travel…being in proximity of someone not only means being near him/her, but also means having a string complicity with a person who is geographically distant” (Torre and Rallet, 2005, 48). ‘Geographical’ proximity, then, is a measure of metric distance whilst ‘organized’ proximity is a measure or relationality, interconnection and the sharing of ‘space’. In this sense, the lawyers described in this research operate in organized embedded social spaces and networks that create ‘proximity’ between distant parties. It means ‘geographical’ proximity is not necessary to produce and circulate knowledge or construct powerful relations.
This reflects and empirically documents a growing belief (Allen, 2003; Amin, 2002; Peck and Yeung, 2003; Dicken et al, 2001) that a topographic imaginary is needed to effectively conceptualise the geographies of global activity. Such an approach permits the spaces of interconnection and interaction, and most importantly their socio-cultural construction as embedded networks, to be analysed as modes of time-space reconfiguration and relational integration. In this case, the research has shown how such networks allow inter-personal relationships to operate as global knowledge production and circulation networks that stretch beyond relations of physical (metric/geographical) proximity. It also shows, as Allen (2002; 2003) argues, that neither tacit knowledge and learning nor the exercising of power is, in all cases, spatially restricted by the need for face-to-face contact.
This paper has strove to describe and analyse the socio-cultural characteristics of the networks that produce and circulate knowledge at the global scale in legal PSFs. In doing this, three important conclusions stand out from the analysis. First, it is clear that, for economic geographers, there is still work to be done to develop our understanding of the geographies and practices of knowledge production and circulation. The findings tie in with Allen’s (2002) call for more sensitive and elegant analyses of both the way knowledge is produced and its spatialities. They also suggest that beyond debates about the geographies of tacit knowledge (Amin and Cohendet, 2004; Gertler, 2003) there are important debates to be held about the spatial politics and power imbued networks of knowledge, knowledge production and ‘flow’.
Second, the research has provided detailed evidence to support calls for the continued explosion of the black box used to represent firms in order to better interrogate the socio-cultural dimensions of their operation (Jones, 2005; Taylor and Asheim, 2001; Yeung, 2001). This suggests that the methodological frameworks proposed by those supporting the ideas of ‘new economic geography’ (Amin and Thrift, 2001; Yeung, 2003) and ‘relational production networks’ (Coe and Yeung, 2001; Dicken et al, 2001) can be further developed to assist in unpacking the confusing and elaborate ways global firms operate. As the empirical material presented suggests, lawyers working for global PSFs are enmeshed in complexly embedded networks, intertwined with intricate economic, cultural, political and social forces. These operate across culturally diverse and power imbued spaces which must be deconstructed if we are to understand the recursive structures involved.
Third, this study has further reinforced the need (Amin, 2002; Yeung and Peck, 2003) to continue in our efforts to reconfigure, renew and re-imagine conceptualisations of the spatiality of global economic activities. This paper provides a valuable empirical exploration of how proximity, social space and knowledge producing and circulating practices take on complex, non-scalar, forms that can only be understood through unconventional spatial frames.
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1. Beaverstock et al (1999) note that global legal PSFs operate using one of three models: (a) The ‘global firm’ where offices are opened overseas, managed and controlled by the partnership; (b) ‘Best friends’, alliance networks where overseas offices are controlled by local partnerships but integrated to form a global network operating under one name; and (c) membership of global legal associations where every firm is independent and members call on one-another to assist with cross-border transactions. All of the firms studied here use the ‘global firm’ strategy. In ‘alliance networks’ and ‘global legal associations’ knowledge management and leverage is more difficult and less common as each office operates as a relatively independent unit.
2. Four key characteristics that differentiate ‘mega-law’ firms from their counterparts can be identified from the work of Flood (1989): (a) the increased size of firms; (b) The specialisation in areas of corporate law and serving large corporate clients; (c) the high levels of internal coordination; and (d) the use of partner review and remuneration based on financial measures of performance.
3. The driving force behind the increase in demand for commercially sensitive legal services was the growth in number of American law firms in the City of London and the increased awareness of clients of the benefits of a ‘mega-law’ service.
4. Expertise databases also existed in all of the firms studied. They list all of individuals working for the firm and their practice and industry speciality as well as past transactional experience.
5. Of course, not all relationships were successful. However, most lawyers argued it made good business sense to do everything possible to develop such relationships, even when there were apparent clashes of personal characteristics. Indeed, persevering to develop socially embedded relationships could help overcome some of the difficulties associated with these networks. This is discussed further in a latter section of the paper.
6. Continental European refers to offices in the following cities: Amsterdam, Berlin, Brussels, Budapest, Frankfurt, Madrid, Milan, Pairs, Prague, Rome and Stockholm.
7. All of the law firms studied in this research operated some form of ‘global training’ events, in particular for newly recruited lawyers. Whilst the firms did not have the type of ‘global academy’ often associated with accountancy firms such as PriceWaterhouseCoopers, they did use global gatherings as a way of training new recruits to deliver a ‘firm x’ style service. Especially for US originating firms but also for those from the UK, this was a mega-law style service.
8. Allen (2003) distinguishes between authority, coercion, domination, inducement, manipulation and seduction as different forms of power. Each it exercised through relationships that construct power in unique ways, for example using different combinations of presence to draw individuals into line and constrain actions, concealment to hide intentions but manipulate individuals and numerous other forms of strategic behaviour.
9. An example of this financial muscle can be seen in the differences in turnover between two offices of one global law firm. Shearman Sterling’s New York office has a turnover of in excess of £209m whilst the Paris office has a turnover of just over £39.5m (The Lawyer, 2003). This is representative of the differentials between New York and continental European offices in all of the law firms studied.
Edited and posted on the web on 13th February 2006
Note: This Research Bulletin has been published in Geoforum, 38 (5), (2007), 925-940 under the title 'Relational Networks of Knowledge Production in Transnational Law Firms'