As firms consider their strategic position , a number of law firms are finding themselves underperforming relative to peer firms. For some, it is deja vu…for the second, third or fourth consecutive year.
You don’t need anyone to tell you that this is not a great way to navigate in this increasingly volatile environment. A firm that has experienced successive years of underperformance needs to consider whether they are going to be able to turn things around. Any firm can have an off year; but when underperformance turns into a trend, it is time to consider some broader questions.
The firm facing continuing problems may plan to turn things around by:
-Becoming more “strategic”
-Seeking outside assistance to identify and address basic issues
-Considering a change in leadership/management, or
-Entering the merger arena.
Merger is often an overlooked strategic option for firms. Assuming a firm can find the right cultural fit, a combination can be an effective answer to underperformance.
But it is not a silver bullet. Caution should prevail. There is no worse strategic option than joining forces with another underperforming firm.
We have witnessed this approach many times. And it is destined for failure.
While the leaders of some underperforming groups seems to gain comfort through affiliation with firms in a similar position, weakness added to weakness spells failure.
On the other hand, a firm considering merger as a way to compensate for underperformance must proceed strategically in order to realize success. In the ideal scenario, firms entertaining a combination would make up for each other’s weaknesses in the context of cultural compatibility.
Areas where we have seen firm’s effectively seek a merger partner to compensate for issues effecting performance include:
-Bench depth and broader expertise
There are countless nuances associated with successfully executing a merger with another firm. But with laser focus on the right issues, appropriate assistance, and enough time, merger may be a great solution for the underperforming firm.
If your firm is underperforming, have you considered a merger as a solution?
For those interested in additional readings on the topic of law firm mergers please see here.