United States: Law Firm Mergers: Once The Deal Closes, The Hard Work Begins

2015 was a banner year for law firm mergers. Not only have giant firms such as the Atlanta-based McKenna Long & Aldridge and international outfit, Dentons, combined, but so have dozens of smaller firms. According to the New York Times, nearly 80% of the deals announced in the second quarter of 2015 involved firms with 20 or fewer lawyers.

Closing a merger transaction is one thing; making the combination work post-merger is quite another. Many firms that merge focus primarily on getting the deal done, which means they may not be prepared to integrate the two organizations. If your firm is considering a merger, do not make this mistake.

A Team Effort

Integration planning should start as early as feasible during merger negotiations. Your integration plan should be a team collaboration that assigns responsibilities and includes target dates for completing them. Break down the plan into major activity categories, such as practice management (with each practice area as a subgroup) and administration and support services (broken down into accounting, human resources, marketing, facilities and IT).

Integration teams from each major category should be responsible for creating and monitoring the various parts of the integration plan. Include individuals from both firms as well as professional advisors on the teams.

An important byproduct of setting up transition teams is that it gives the groups an opportunity to work together and begin merging the two different firm cultures. There will always be some resistance to compromise, but your teams should work to put aside those tendencies.

Evaluating the Practices

While each team is important to a successful integration, the practice management category generally carries the most weight. After all, the merger's success rests with your partners' ability to combine practices, work together and develop new business opportunities.

The practice management transition team should evaluate several key areas. These include attorney experience; expertise and training needs; attorney workloads; and practice group management and reporting structures. This evaluation will help practice management understand how to shift casework from one group to another. Depending on the size of the combining practice groups, the best initial management and reporting structure may be a management committee made up of lead partners from both firms. This will give them the opportunity to work as a team rather than trying to stake out their own territories.

Redeploy Staff Resources

Your transition teams also need to consider administrative and support staff, as well as the likelihood of duplicate positions. While mergers in many industries are used to help reduce costs and combine like-functions, the savings derived from a typical law firm merger are few and far between. You may find that redeploying your resources is more effective than eliminating jobs.

For example, if your merger results in two receptionists, the extra receptionist may transition to a secretary, accounting clerk or library administrator position, depending on the person's existing skill set and your firm's needs. The point is that the internally focused transition teams should be more concerned with serving the lawyers and other departments within the firm and reworking processes and procedures than with trying to cut costs through job eliminations.

Other Important Areas

Another essential step is to establish one set of written guidelines for all internal operations policies and procedures. These include accounting policies, time-keeping standards, billing timelines, paid time off, benefit plans and leave of absence guidelines. Finally, your transition team should develop a marketing strategy for promoting the new entity. For example, consider:

  • Hosting meetings for inter-firm introductions;
  • Reviewing cross-selling opportunities;
  • Creating new marketing materials; and
  • Preparing major clients for a relationship with the combined firm.

Be sure to include both external and internal stakeholders on your transition team.

Start Planning Now

If your firm is considering joining the many law firms that have recently taken the plunge and merged, start planning now. You can never be too prepared for either the merger transaction process or the critical integration stage.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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