Mergers between law firms garner headlines. Just last week, Kansas City’s Husch Blackwell was in the news when it announced that it was merging with Whyte Hirschboeck Dudek S.C., a Wisconsin based business and litigation firm. The merger comes less than year after Husch Blackwell’s Chairman Maurice Watson described the firm’s newly adopted strategy of focusing on six economy segments that it can better serve as industry subject matter experts.
Under this new strategy, Husch Blackwell is moving away from being a firm of “generalists” to becoming a firm demonstrating industry sector expertise in the health care, energy and natural resources, financial services, construction, food and agribusiness, and technology and manufacturing industries. The plan takes a fresh look on the legal services market and identifies a path to success through differentiation.
If Husch Blackwell’s merger with Whyte Hirschboeck Dudek is in furtherance of the industry-focused approach, it could be a smart move because the merger would be one that seeks to execute the vision of the firm. If the merger is not predicated on implementing the firm’s “differentiation” strategy, its wisdom is suspect and it may amount to growth for growth’s sake. Right now, however, only Husch Blackwell knows the motives behind the combination and, in turn, its prospects for success.
But every time a merger is announced, it brings to mind the fact that only about fifty percent of them succeed. To improve the odds, there are at least four rules merging law firms should follow:
Further a Strategy Other than Growth. In most cases, growth is not a strategy but should be a tactic in furtherance of a thoughtful plan. Having a strategy for the long-term improvement of the firm that is enhanced by growth can be very successful. But if a merger results from simply being “opportunistic,” the outcome may be less than helpful to the long-term health of the firm. Merger or other combination should only be pursued if those growth tactics are consistent with a strategy that is not focused on growth.
Blend Two Firms that are Compatible. Too often firms are combined because outwardly they seem to be a good fit. But truly drilling down on compatibility involves comparing the two firms’ cultures, finances, clients, compensation and operations. If any of these five areas are not symbiotic, a closer look at pursuing the combination is required. While complete compatibility may not exist in every case, misfires should be kept to a minimum and a plan should be developed to forge the new firm into a harmonious whole. If a compatibility analysis shows too much dissimilarity, the firms would be wise to walk away.
Have an Integration Plan. As a combination heads towards closing, it is essential that serious thought be dedicated to developing an integration plan for the two firms. The integration plan should be a product of both firm’s input and should draw on leadership from both sides for its implementation. Full buy-in from the rank and file should be the goal. Upon closing, the integration plan needs to hit high gear with the support of leadership. There is no time to waste.
Have a Follow-on Plan. The consummation of a merger or other combination does not mean the firm can rest. While it should be in the midst of implementing its integration plan right after closing, it should do more. The firm must develop a strategy that leverages the excitement and goodwill engendered by the transaction so that momentum from the combination is not lost. Too often the merger process is so exhausting that little gets done post-closing to maximize the new firm’s prospects.
The idea of merger can gain support at some firms these days because it represents dynamic action that may offer a solution to a problem or an antidote to law firm malaise. Without careful thought, however, a merger is neither a solution nor an antidote. If your firm is thinking about merger, will it follow the four rules described above?