The dominance of large, multinational law firms could face a new threat in the form of an increasing number of small, independent niche firms are joining forces and establishing themselves on the market.

These legal alliances give small firms a powerful one-two punch: Each can maintain its specialization — say, divorce law — while reaching out to partner firms to offer clients more services. If a client is a large company, part of it might need services in tax law, and part might need counsel on bankruptcy or trade law, for example.

Since the 1989 revolution, it's been the large firms that could practice numerous branches of law under one roof, and that is why they've ruled the market.

This summer, Arthur Braun and Thyu Nga Haškovcová, two former Prague partners of international law firm Haarmann Hemmelrath, announced the creation of BPV Legal: an alliance of four regional firms that will operate throughout Central and Eastern Europe.

"There is no doubt that an alliance with other law firms in the region, and in particular, our strong EU practice, can allow us to offer a wider range of expertise, local knowledge and better service than if we were only Czech-based, and there is really only an upside in having such an alliance," says Braun, now a partner with BPV Braun Haškovcová in Prague.

The move comes as demand for law services in the Czech Republic is stronger than ever, and a new wave of specialized firms are finding ways to compete with a range of large, multinational firms.

"With the globalization of business generally, law firms find that their clients want them to travel with and assist them in navigating their activities in many different jurisdictions," says Jaroslav Havel, a partner with Havel & Holásek in Prague. "In order to fully serve a client, law firms need trusted partners in many jurisdictions, and the trend toward alliances with firms they trust in foreign jurisdictions is the result."

Chance for smart grads

In the 17 years since the downfall of communism, the country has experienced an influx of foreign law firms.

Haarmann Hemmelrath arrived in 1994, and was one of the first international law firms on the market.

Of the British firms that were quick to see the potential of the Czech market, Allen and Overy, Lovells and Clifford Chance all played a key role in the development of how law is practiced here today.

The market has adapted rapidly, and now consists of international firms that have merged with other firms to maintain a stranglehold and combat competition.

Because plenty is coming.

Young Czechs — intelligent, highly educated law graduates — are establishing their own firms in an effort to avoid working with their older compatriots. These firms have a real local flavor, but often cannot compete with firms that offer services in many jurisdictions, or countries. And with borders rapidly softening within the European Union, these days you have to be able to compete beyond your home turf.

"Alliances of law firms are an attempt by national legal practices to achieve some of the advantages of large international law firms with worldwide networks of offices," says Petr Kotab, managing partner in the Prague office of major international law company Salans.

More alliances on the horizon

Experts say the trend is a glimpse into the future of law practices here.

"Whatever field you operate in, it is normal business evolution to consider a merger or an alliance with other like-minded enterprises," BPV's Haškovcová says.

These can be alliances with international law firms or local firms in other countries — depending on the needs and preferences of clients. With the pressure to reduce costs, however, clients and their home lawyers often try to find the best value for services in foreign markets. That commonly results in alliances with top local firms that have international expertise, Havel of Havel & Holásek says.

"Home lawyers often coordinate work with domestic law firms, which results in more customized services than the international firms can provide, especially if the international firm does not have specific experience with the client or its business," Havel says. Havel adds that alliances of domestic firms have other advantages over international firms: more flexibility on fees and less chances that there may be conflicts of interest — both problems of multinational law firms.

'No threat'

Kotab, Salans' managing partner, insists that major players will still prevail on the market, thanks to a globally standardized high level of services that are demanded.

"[Alliances] can hardly be expected to present a major competition threat," Kotab argued.

BPV's Braun says, however, that still more bandind together is expected in the near future.