What lies behind the sudden increase in solicitors firms merging? Is it a need for personal partner security, succession or future proofing, fear of failing or a strategic move to build a successful business?
2013 has revealed a weekly supply of dramatic news impacting the legal profession. Jackson reforms, loss of legal aid, liquidations, economic position and client migration, inability for partners to plan ahead, ABS’s and the increasing impact of the Legal Services Act, succession issues for traditional partnerships, professional indemnity renewal……they have all combined to place the profession in new uncomfortable territory.
One consequence of these issues is the fact that there are now far fewer firms in England & Wales than at any time recorded by the Law Society.
As at September 2013 there were some 10,726 firms to be precise. It still sounds like a big number but as reported in the LSG it’s 400 less than the same month in 2012. This dramatic fall is due to all of the above factors which have resulted in:
The rather worrying state of affairs has created a rather tense atmosphere within many firms as they find themselves glancing around to find security against the pressures, the security of a merger partner.
It’s the merger activity that is of particular interest because if well thought through and executed it can deliver a very positive outcome to counter the weight of negativity surrounding the profession. Unfortunately the press releases with smiling partners shaking hands in front of newly branded and dressed offices are unlikely to convince many onlookers of the true drivers of such arrangements.
When partners start to feel the cold and their accountant or bank has that “little word in the ear” they see the one route to securing their future as that long discussed but never acted upon merger opportunity.
The firm nearby that presents less of a threat to personal control than others with domineering partners. The firm that has the client you’d always courted but failed to land. The firm who’ve just announced an investment in IT which must mean they’re “switched on” and looking to the future. The firm that hasn’t joined a national brand in a vain attempt to protect its future flow of work.
It’s not surprising that the above traits are seen as attractive to the partners of a firm keen to link arms with another. Regardless of whether it’s an arranged marriage or one that all partners consent to willingly, the success of the union will not be founded in any of those considerations but could certainly result in its failure.
As with any successful marriage having things in common helps but is not essential. Yes you need an attraction, a spark and a personality match that uses the “chemistry” to good rather than toxic effect. When joined the “personality” of the newly formed business must be a commonly shared persona. If not the deal can be blown wide open leaving space for detractors, conflicting agendas and negative views of those who were just waiting for the “I told you so” moment.
Leadership is critical and it doesn’t necessarily need to be a single person more often a team who share a vision driven by clearly stated and understood objectives.
The original cupid arrow that created the merged business is typically founded in solid logic and should have all the ingredients for a successful outcome. Unfortunately the complexity and challenge of putting organisations together can dilute and lose the benefit of economies of scale and combined resources.
Critical to the success is a clearly articulated strategy delivered consistently by an effective leadership team. The focus at all times MUST be on the customers, lose sight of that key fact and matters can start to unravel fast.
Rather than being daunted by the scale of the challenge it’s helpful to view the merger plan as a series of projects that each need to be worked on to achieve the overall desired outcome.
Not many employees relish change and mergers present plenty of new challenges and potential threats to personal job security. Keeping the talent engaged is important as is the need to motivate the business to achieve the new goals.
There are many positives to be borne from mergers but before being charmed by a suitable partner it’s worth looking at theirs and other track records. We can and should certainly learn from the mistakes of others and the legal market is peppered with them.
On the upside mergers can and do deliver, but best look at an equation that gives 1+1 = 3+ not 0. This is a marriage that needs to deliver offspring that can grow and evolve and take the newly formed business forward.
Here below are a list of projects, an example of the areas a typical merger would need to cover to deliver a positive and co-ordinated outcome. The list below is but a guide and is not comprehensive. The projects would of course be determined by the specific features of the merger.
Merger Projects Example
If any of the above issues resonate with you and your business and you would wish to explore your options please feel free to drop me a line in confidence – email@example.com
i2i Business Solutions, Management Consultancy
firstname.lastname@example.org twitter @davidlaud
Won’t be long and the House of Laud’s doorbell will be getting its annual Halloween workout from the local sweet-toothed, short-person, and some not so short invasion squad. When did we start parading the pumpkin and craving candy? It’s yet another US import that along with “Prom” has the younger generation hooked.
Not that I’m against US imports, I quite like the Apple iPad, a blast of Nirvana always improves my driving and Disney do make great “feel good” movies but not all things US leave me with a warm comfortable feeling.
Politics, now there’s something we shouldn’t import from the US. Or are we too late? The personality driven style of campaigning has worryingly been adopted by all parties. We can only count our blessings that the budgetary decisions are not as the US system and used as an American Football where gaining yards against a team can actually cause global recession part II.
My hope is that those in power and who finally found an answer to America’s “shut-down” will stop playing games in future and find sensible solutions that in some way retain the laudable aims of President Obama’s Health Care Reform Bill.
For the Republicans to be able to wield such a huge political stick and continually seek to beat the President with it is nothing short of a scandal. Of course these are my own opinions and others may well disagree but the basic position is surely one we cannot support. If the US “Shut-down” and budgetary stalemate had not been resolved and they were seen to default on their loans it wouldn’t have just been trick or treaters in the good old U.S. of A. crying at their lack of candy….we’d all be left short and can we afford to face such a dilemma just at the point we looked to be turning a corner?
As I write this Obama has announced a settlement and a compromise appears to have been reached. I applaud his stance with the Health Care Reform but managing a country is really no different to managing a business. When faced with an inevitable and catastrophic outcome that can be avoided through a mediated solution you need to put ego and personality to one side and negotiate to take matters forward. It was more than time to lay the cards down and stop playing political poker.
By finding a solution however the political momentum appears now to be firmly with Obama with the US electorate both angry and shocked at the tactics used by the Tea Party representatives and others within the Republican party.
Whilst not pretending to be an expert on US or Global politics it does strike me that the time has come for such activity to be scrutinised under a process similar to the 7 principles of Nolan Group’s suggested approach to public service.
For me the above are a pretty good rule of thumb for anyone in a public position of authority. From school governor to senate representative to the President himself.
We can all agree to disagree on points of principle but when stubbornness and point scoring prevents progress it’s time to step in. My preference now would be to undertake a review of the process that led to the crisis to put in place measures to prevent such calamities in future. Without this we could be back at exactly the same point in just a few months.
Of course I’m all in favour of balanced mediated non confrontational or posturing approaches but…..if any sticky fingered haribo horror tries to mug me for a sugar rush be warned. I may just say trick… 😉
David Laud Managing Partner – i2i Business Solutions LLP tweet @davidlaud