Authored By: Iris Garrett
Has your law firm ever pondered the benefits of a merger? Successful mergers allow firms to expand their national or global reach and be better equipped for the changing legal climate, but others can sometimes fail altogether and ruin the reputations and established relationships the firms had built beforehand. If your firm is wondering whether a merger is the right move, you may want to do more than just ponder the benefits. A decision as crucial as this requires due diligence and a laser focus on the future.
Leslie Gordon discusses law firm mergers in an article in the ABA Journal. She says though they are becoming increasingly popular, they are not a foolproof business strategy and should not be a firm’s endgame by any means. Gordon says mergers can serve a broader business goal, such as reaching new markets, adding new practice areas, or creating efficiency, and they also bode well for more simpler reasons like strengthening a firm’s size and brand. Firm management consultant John Olmstead agrees, “A merger is a very serious thing…” and cannot be “a knee-jerk decision that’s all about the short term, all about money”.
If your law firm’s reasons to merge meet these criteria, Gordon provides expert tips for surviving the process. We’ve listed a few of them below.
Before spending months on a merger, leaders should assess potential deal breakers. This could be business conflicts like the firms representing clients in competition with one another, or more personal conflicts like choosing the new firm’s name or partners who aren’t willing to back a new combination.
Leaders should be able to end discussions when necessary. If red flags start to pop up like one firm seeming too desperate to merge or trying to out-negotiate the other, leaders must have the discipline to walk away from what looked like a good deal.
Leaders should analyze and scrub compatibility metrics. Everything from clients and rate structure to finances and operations should be evaluated. A law firm’s work culture (its governance, work-life balance, how employees are treated) is also extremely important.
Gordon suggests creating a transition committee and an integration plan once the merger is underway. She says if firms notice weakening financial performance or a significant loss of clients, they may have a problematic merger on their hands, but if clients come to believe the combined firm is better suited to fit their needs, then the merger is a success.
To read Leslie Gordon’s full article, click here.
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