MAKING MERGED FIRMS WORK AS ONEby Joel A. Rose
WHY LAW FIRMS MERGE:
Law firms merge for the below reasons:
*To increase their opportunities for retaining a client base;
Finding a merger candidate can be a daunting process. However, integrating a merged group of attorneys into a "new" firm's culture, practice environment and organizational structure so that attorneys from both firms work as one may be a greater challenge.
The potential problems that may occur after the joining of two firms are infinitely complex. Such a merger will call for a change in the manner in which the attorneys in the newly merged firm currently practice law and manage their business. It will potentially require different approaches to management and compensation, but will open numerous new opportunities, especially with the enhanced professional, substance and economic objectives of the newly merged organization.
A segment of our consulting business is derived from assessing the feasibility of law firm mergers and assisting partners integrate the merged firms' cultures and governance, methods for delivering legal services, enhancing interpersonal relationships between attorneys within the same and different practice areas and building a unified administrative and support structure to support the attorneys in the merged firm. Partners in many of the firms we work with raise the same concerns that the miscarrying of a merger provides more problems in the disentanglement of the firms than the original bringing together of these attorneys. This article is intended to identify those areas to be integrated and to discuss approaches to achieve the effective integration of attorneys into firms that have merged so that all parties may realize the anticipated benefits of the combination, immediately and over the longer term.
GENERAL AREAS FOR INTEGRATION:
There are at least seven general areas for integration that need to be considered: These include:
Performance and Billing Rates:
Firm brochures, modifications of Web sites to reflect the combination, preparation of additional newsletters, client alerts and other communications will be beneficial for the integration process.
Our consulting firm has had particular success when retained by merged law firms to design interactive relationships building activities to enable partners from both firms to get to know each other, learn about each other, have some fun while spending time working together on a joint project(s) while getting some important work done growing the firm's practice(s) and integrating the partners of the combined firm. Such activities, when properly conceived and implemented begin to enhance the development of trust and personal relationships among and between partners in the same or related practice areas.
Presentations by specialty groups and the identification and development of cross-marketing strategies and opportunities have proven to be extremely beneficial.
The administrative organizational structure of both firms that identifies each of the administrative functions, the supervisory complement, staffing and reporting relationships for personnel in each firm must be analyzed to determine the most appropriate staffing requirements and structure for the merged firm. To accomplish this, a position description should be drafted and reviewed for each position that lists the functions, responsibilities and reporting relationships for each position. This will allow the development and implementation of action plans to insure the integration of Firm #1 into Firm #2. Creating such an integration plan calls for the determination of the most appropriate staffing ratios. One major concern is the extent to which the current administrative support staff will be willing and able to integrate into the new structure within the merged firm. This is a key issue that should have been addressed by the partners early on during the due diligence process.
Time and billing and practice/litigation support technology, and communications technology and intranet systems must be integrated. Hardware and software have to be inventoried to determine whether the current systems are compatible and if either system has the capacity to handle the volume of additional work required for the merged firm. If not, the decision has to be made whether additional or different hardware and/or software will be required, and which vendor(s) will be best suited to be of service to the increased processing requirements of the merged firm. In addition to analyzing the hardware and software, the technological and organizational skills and know-how of the IT staffs of both firms must be analyzed to determine the most appropriate IT supervisory and staffing structure for the merged firm.
Human resources hiring, training and evaluation activities need to be planned and coordinated. The compensation structure must be explained to the members of the administrative support staffs. Benefits administration for insurances and retirement issues must be addressed.
Operational and human resource manuals have to be updated and distributed to attorneys and members of the support staffs. Common hiring and advancement policies and the development of an integrated compensation program for the partners, associates and members of the support staffs needs to be articulated. Training and development programs for attorneys and members of the support staffs have to be developed and implemented to insure consistency among all personnel who are working at comparable levels.
Professional development and pro bono activities for the firm including bar activities, pro bono legal practice, community service projects, charitable contributions, etc. have to be articulated.
In conclusion, for partners in an increasing number of law firms, merging with another organization may be the only way to accomplish rapidly, or at all, their professional and organizational goals and their desired continuity of existence. However, integrating a merged group of attorneys into a "new" firm culture, practice environment, organizational structure for the business, substantive and administrative sides of the merged firm's practice so that attorneys and members of the support staff from both firms work as one, may realize the anticipated benefits of the combination, immediately and over the longer term.
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