Law firm mergers are a big deal with many already closing in 2018. We’ve reported on some this year here and here.
But what is the best strategy for merging. There needs to be an alignment of strategies between the proposed merger parties, say legal consultant and strategist for law firms in transition Andrew Jillson of HayseLLC. The problem that can arise however is that the law firm cultures do not align and therein lies a major issue.
And yet, for many prospective merger partners, the alignment of cultures may be a lowly-regarded factor compared to revenues, geographic spread, areas of specialty and the like.
Jillson considers six areas of law firm life to determine law firm compatability:
Business Principles vs. Professional Commitment.
Most sophisticated or advanced firms recognize the importance of operating as a business but beyond that unanimity there can be widely divergent approaches. A firm’s dedication to “operating as a business” may be tough to swallow for another firm that is more committed to adhering to “law as a profession” maxims. Forging a common fit may prove difficult.
Live to Work vs. Work to Live.
For some lawyers and their firms, making as much money as possible is the driving force for having their firm at all. For another firm, that values a comfortable living while enjoying an equally satisfying quality of life, the outlook can be far different. Joining two firms together with contrasting views on money and lifestyle can start out a marriage with a deep cultural divide.
Compensation Systems and Their Resulting Behaviors.
One firm’s approach to doling out compensation can be very different from the next firm. A difference in two compensation systems can suggest a poor fit. But the bad fit can go beyond the technical process of evaluating and rewarding performance. Compensation systems inevitably encourage behavior. Bringing together two groups of lawyers whose compensation system behavior could not be more different can compound an already formidable challenge.
Taking vs. Giving.
There is no right or wrong answer to whether a firm should be civic, and profession minded or not. Nor is it wrong for a firm’s lawyers to only focus on client satisfaction. The law firm industry has more than enough room for firms of either bent. That said, two firms at opposite ends of the non-monetary value spectrum might prefer to remain apart.
Hard-nosed vs. Touchy Feely.
How a firm’s people (professional and non-professional) are treated says a lot about a firm. Lawyers or other personnel currently at a “people place” may find life at a more cutthroat shop impossible to accept. In any merger, the human resources equation is a big one and must be solved.
Solo/Silo vs. All-Hands-On-Deck.
A teaming atmosphere can be dramatically different from a place where being helpful is neither expected nor rewarded. If a merger will bring together lawyers not on the same page about the concept of teamwork, inefficiencies and resentment will mount to the detriment of the merged firm.
Determining whether there is a ‘fit’ in these and other areas is a key towards achieving a successful law firm merger, including client mix and market position.
But, as Jillson notes, the ‘culture fit’ is one of the keys that cannot be overlooked for fear of jeopardising a law firm merger that may fail without it.