Should I be open to merging my law firm with another firm ? The answer is simply yes.
Of course this does not mean that a merger will be the best possible outcome for your firm ! What it means is that in today’s economic environment and global context, law firm mergers can make a lot of sense. You want to understand whether it also makes sense for your firm and, if it does, how you can turn it into a success.
One has to be blind not to spot the changes that are affecting law firms. Clients are seeking more specialized legal advice and litigation support. Clients’ needs are becoming more global. Clients wish to pay less for commodity services. New niche firms and global players are growing. The Big 4 have re-entered the legal market. At the same time technology and effective knowledge management are no longer a luxury, but essential tools towards success for law firms. Marketing, social media and visibility are critical. New alternative players and different business models to partnerships for law firms are being tested…
In this environment it is fair to say that most firms will lack a number of answers to these challenges. Only when a firm has taken the time and done an honest analysis of its strengths and weaknesses in this changing context, will it be able to identify the real priority areas for future development. Such analysis will also bring and help identify a number of actual opportunities for the firm. All these will ultimately need to be aligned with a firm’s strategic direction. This homework of knowing what your firm requires to most successfully move forward in this changing environment is to be done well before you start looking at merger opportunities. It is required to ensure you have a solid set of criteria that will help you choose between what are real opportunities and what are distractions, or even worse, a waste of time and energy. Many firms will benefit from the help of an outsider to facilitate this process.
Does a merger make sense for your firm ?
Once you have done your homework as outlined in the previous paragraph, the next question arises : How to most efficiently realize these priorities for development ? This is when the merger question will arise. Will a merger help me realize these priorities faster and better than by not merging ? Will a merger bring me new issues that may neutralize the benefits of a merger ? What are the alternatives to a merger, such as alliances or networks ? What will happen if you do nothing and simply continue growing through internal promotion and/or lateral hires ? To answer these questions, you need an open mind and accept that teaming up with others may make you more successful. You will want to test the various options in light of the defined priorities. If a merger is to be considered, you will also want to test every possible merger candidate in light of your priorities. It requires a professional and fact-driven approach to select and score possible candidates. In addition, it requires a clear articulation of your strategic direction.
The importance of the latter cannot be underestimated. In my career, I have handled a large number of law firm mergers and integrations. The most important success factor, next to a smart process of identifying how this merger can faster help tackle the prioritized challenges and opportunities, is a clear and repetitive articulation of the vision of your firm and ensuring it is supported by the overwhelming majority of the partners. This requires bold and concrete discussions with merger candidates. It requires time and a willingness to stop any discussion at any time if there is doubt as to those. This process will allow you to answer the question as to whether a merger with a concrete candidate makes sense for your firm or not.
Mergers fail, how to I avoid this ?
They fail too often, but that does not mean that they necessarily have to fail or have to be overly painful. Assuming that the preparatory work has been done well and the merger helps realize faster priorities for your firm, success will depend on how well the change and integration is managed. You should assume that your firm does not have the experience or means to do this. In other words, the hard work of facilitating the integration and change will not stop with the announcement of the merger. For mid-sized firms in not too many locations, our experience teaches us that it will take up to 2 to 3 years before the merger is fully absorbed and one firm with one culture and one vision is realized. It will also take up to that time to benefit from all the responses to the challenges and priorities that have been identified. You will be required to make dedicated resources available for this integration. It will consist of a number of project leaders and people being formally made (partially) free to work on these projects. If there are more than 3 projects in connection with the merger and integration, you will also require an overall program manager who will oversee the projects and processes. There is a cost attached to all of this and you should take it into account when deciding or not upon a merger.
So in conclusion ?
To merge or not is a question that you will want to address, but only after your firm has done its homework of defining its vision and its priorities in light of a changing environment. If a merger may make sense (which it will in the overwhelming majority of cases) you will need an objective process to score potential candidates. You will want to check if merger candidates help you realize your priorities more effectively. If it does, and you are convinced the other firm and its partners share your vision, a merger will bring you real benefits. For the merger to succeed, you will require time and resources to lead the projects of change and integration. They will not only ensure a successful merger, but an optimal realization of your projects. There is a cost attached to this and it should be factored into the overall costs of a merger. Should you be convinced, do not hesitate to contact us. We would be pleased to help you navigate through this in the most efficient and successful way.