Creating Value through Collaboration and the Network Effect
In a recent blog post for the ABA Journal, Roya Behnia discusses the “network effect,” the idea that a product or system gains more value overall through its adoption by more and more users. She notes that while certain industries learned the value of the network effect early–like telephone companies who knew that the more people who used telephones, the more valuable telephones became–the legal industry is still toying with the applicability and value of the network effect in its own realm.
Behnia sites a couple notable examples of in-house counsel applying the network effect for their companies’ benefit. She describes Pfizer’s Legal Alliance Program, in which the company’s outside counsel are asked to collaborate with each other for Pfizer’s benefit. She also praises a program launched by Cisco Systems’ legal department, whereby the lawyers at Cisco share data security and privacy best practices with customers and anyone else interested in these issues. The project seeks to help legal departments and law firms offer greater client and consumer protection with fewer resources, while creating collaborative industry standards for best practices.
The value that this type of open collaboration could create seems obvious, and the barriers to it seem just as obvious. From concerns about origination credit within law firms to intense competition among firms for what has been a shrinking outside counsel spend over the last several years, is true collaboration that harnesses the power of the network effect simply a mirage? Or can application of principles like the network effect grow the size of the pie for everyone, creating greater value for clients and their counsel alike? We firmly believe the latter is true. Do you?
