Law firm mergers have been in the news with combinations being announced seemingly every week. So far in 2018, the many mergers closed have drawn the attention of the media and law firm leaders alike. The rationale for any of the announced mergers depends on the specific transaction and the firms involved. Whatever the reason, they all come with great hope.
Any decision to pursue a merger should be premised on an underlying strategy that is not the idea of merger itself. This should be true for both firms in the deal. But even if the strategies are aligned, the melding of the two firms may not be a good idea if the firm’s two cultures are not compatible. Indeed, many firm leaders that have experience with law firm merger view “merging with the right culture” a critical component to achieving success.
For firms thinking that merger may be in their future, the importance of culture cannot be discounted. But in focusing on culture as part of merger discussions, what should a firm leader study? How can the leader move beyond the aspirational goal of being compatible to examining things more concrete? The answer can be found by looking at the following six areas of law firm life:
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.
The number of issues that can impact law firm merger success are many. The financial fit may be right or wrong. Client mix or market position are other variables that can be impactful. But the importance of a cultural fit cannot be minimized. If two firms thinking about combining are different in many of these six areas of day-to-day life, the two cultures may not be aligned. If you were considering a merger and many of these day-to-day characteristics of the firms were not aligned, would you go forward?