Surviving and Thriving Through a Law Firm Merger

Law firm mergers are fascinating for many reasons.

The merger between U.K.-based Allen & Overy and U.S.-based Shearman & Sterling is certainly one to watch.

Having been involved in a number of law firm mergers – global and national – I can attest that while each merger situation and scale is different, the process is often the same.

In my experience, there are four critical pillars of the merger process that need to be acknowledged and handled in tandem.

1. They’re Like Us

No, they’re not. Law firms have various reasons for merging, and like some marriages the parties go up the aisle with less flattering traits tucked away. And like most unions, quirks and oddities appear as everyone relaxes into the relationship. In most instances, this means dealing with problems pertaining to situations and people.

Most situations can often be dealt with swiftly while problems with solutions that seem patently obvious can drag out until dealing with them requires strong actions. Such exertions are often much ado about nothing, but can churn up ill will that wasn’t there in the beginning. This is when it’s smart to pick your battles.

Much the same can be said for people. Problematic people often leave shortly after a tie-up either of their own volition or that of the merged firm. In other instances, it can take a generation or two for the blended firm to stabilize, which can make for a long wait.

During a merger process – and for a long time after when the real work of managing a merged firm is underway – patience and kindness plus a sense of humour and the ridiculous will help save your sanity.

2. Market Positioning

Mergers are not a marriage of equals. There is always a dominant firm and for that firm, surviving a merger is job one.

For law firms that go through a merger or a series of mergers, remaining intact and recognizable is as critical as the retention of a strong legal market position.

A strong legal market position is never accidental. It is achieved through solid leadership backed by a united law firm membership dedicated to achieving strategically targeted and measurable market-differentiating objectives. It is rare.

What is more common is that a legal market position becomes diluted by the push-and-pull of various factions within the merged firm until, finally – months or years later – the blended firm gels into blandness due to exhaustion.

In the worst case, a merged firm becomes a co-op of siloed lawyers doing their own thing in their own way while operating under the firm’s banner. In this instance, a merged firm can earn a reputation for being transactional in its dealings with clients and constituents. Its behaviour can also become internally competitive with referrals – and accompanying points – going to contacts across the street rather than colleagues down the hall.

3. Restructuring

The structure of the dominate firm will prevail – shakily for a while, perhaps – but prevail it will. For leaders of various departments within a merged firm, this means evaluating what works and what doesn’t, and adopting the best and jettisoning the rest.

This means difficult decisions must be made pertaining to people, procedures and systems. While never easy, nor for the faint of heart, it is always best to restructure as soon as reasonably possible and to do so of your own accord. Otherwise, you risk being told to restructure and how.

Oftentimes, this is when a neutral third party can help. An independent consultant experienced in law firm mergers can assess, recommend and support restructuring decisions based purely on business betterment. An experienced advisor will cool a hot situation and be sensitive to people and politics. They will also provide a merging firm’s leadership with fresh perspectives, sober second thought, and tools, guidance, leverage and support on execution.

4. Honour Your Ecosystem

Never – even though I have here – leave your ecosystem to the last.

A law firm’s major constituents are not its lawyers or staff. Clients are the lifeblood of every law firm, whether its growth is organic or by merger. While a law firm’s major constituents are its clients, so are referral sources and ancillary supporters. This is why communicating clearly, early and often to your client-constituent base is critical to success during and after a merger process.

Mergers are a time of drastic change for any merging law firm and its ecosystems. This is why a merger process is the very best opportunity that you will ever have to seek input from your clients and constituents on how to do business better.

Asking for and acting on this input can instill clients and constituents with a sense of value that solidifies their relationship with the firm. And when input continues to be invited post-merger, a merged law firm is perfectly positioned to receive reciprocal value from its ecosystem as both a reward of trust and a hallmark for continued growth.