Back in 1977, one of the world's biggest international accounting, auditing and management consultancy firms created Arthur Andersen & Co Worldwide Societe Co-operative as an umbrella organisation for all their member firms throughout the world.

The Swiss societe co-operative structure made it possible for the firm to create an international corporate structure, comprising legal entities in different countries, that provided a common roof for single member firms doing their own business at their own responsibility, while continuing to uphold the 'one firm-one vision' concept.

Haarmann Hemmelrath has always operated as a multi-disciplinary firm, comprising lawyers, tax advisers and accountants. The firm expanded quickly throughout the late 1980s and 1990s, but this growth had its downside: while the legal structure set up by the firm in Germany worked on a national level, international growth demanded, in some cases, the implementation of completely new structures.

In some locations, employees were prevented from achieving formal partner status, as local bar regulations only admitted members of the legal, tax or auditing profession.

Our management realised that our original structure no longer met the requirements of the ethical rules, tax law, liability and insurance law in all the countries the firm had opened in.

Furthermore, the Enron case, which eventually caused Andersens' demise, also triggered off a discussion about independence of auditors and accountants.

Legal bar associations, traditionally sceptical of multi-disciplinary firms in numerous countries, put more and more pressure on multi-disciplinary partnerships (MDPs). The bars in some countries started to reject the MDP approach; the Vienna bar association even threatened to cancel our Austrian lawyers' admission if they continued to work together with non-lawyers in the same firm. It was time for a change.

The new structural model we were looking for had to fulfil certain criteria. It had to support our international positioning, foster our integrated approach, protect our member firms from liability risks and provide a suitable framework for tax and insurance matters, while maintaining the one firm concept.

The societe co-operative (SC), codified under Swiss law, seemed to be the best possible solution for numerous reasons. One argument for the SC is its worldwide acceptance, which allows the inclusion of member firms from all countries in the world. Another is its flexibility: there is a wide scope for setting up contracts and shares. Once the framework has been agreed on, there is plenty of entrepreneurial freedom for member firms and the firm has the option of growing steadily by involving further member firms.

Each individual foreign firm can be fully structured according to the regulations in the named country, be it tax or bar regulations. At the same time, the different needs of all the professions combined in the multi-disciplinary practice can be met. There are no restrictions in professional law on the admittance of partners. In terms of tax and insurance regulations, these can be adapted to the special requirements defined by national law or conditions of the different professions.

How does the umbrella organisation work in practice? At first, the original core firm and its member firms restructure themselves as a group of independent firms located in several countries. Each firm enters into a contractual agreement with the Swiss SC. The SC is a separate legal entity which co-ordinates the group's operations on an international level. All international offices of the former partnership become separate member firms of the SC that are ruled by national legal and professional regulations of the respective country.
The SC does not offer any consulting services itself. On an organisational level it operates through various bodies comprised of partners of the group, such as the general meeting or the board of directors.

All member firms operate under a common brand and share the same values and vision. They agree to common standards of quality management and use the same technical tools. The national firms have their own partners and employees as well as fields of business and clients. Although they independently decide on their own business opportunities, they commit to keeping each other informed about matters of common interest, such as economic and legal developments in their countries or further business perspectives.

The rights and duties of the member firms are codified in the agreements the firms sign with the SC. They include regulations ranging from the right to use the group's name to the financing of the SC itself.

The main practical challenge in the transformation process from a German partnership with 23 offices worldwide to an international group was the involvement of around 100 'owners' – equity partners – in the decision-making process. In the end the vast majority were convinced that the restructuring would benefit the firm. The partnership agreement and most local contracts had to be revised and new local corporations were founded to which employment contracts had to be transferred. All these changes took several months.

It can be expected that, under the various influences of the changing economic environment, more firms will follow this example.

Wilhelm Haarmann is the founding partner of Haarmann Hemmelrath.