1. The Business Case
  • What will we do differently after the merger in order to be more successful? Just having more resources rarely means that you will use them effectively.
  • Which partners will lead those efforts and be accountable for specific actions and specific results? Just as importantly, have those partners led similar efforts before, and demonstrated their success (beyond just developing a large personal client base)?
  • In order to make this merger successful, are we expecting cultural shifts and behaviors that we haven't been able to implement before?
2. Lost in Process
  • Identify and resolve the big issues first, so you don't waste months negotiating a merger that has no chance of success.
  • Organize the discussions into three sequential but overlapping components: business case, deal structure (term sheet), and integration. Of those three, the business case and integration efforts will determine the success of the merger, far more so than the deal structure or term sheet.
  • Keep in mind the one fact that separates mediocre deals from the most highly successful: Focus on the specific activities you will do together, and, wherever needed, acknowledge how those are different or more difficult than your past actions. Verify with clients whether they honestly see real value in your combination. If your integration teams keep talking hypothetically about what you could do, but don't get specific in terms of who/when/how, you are well down the path of creating yet another mediocre, underperforming merger. The worst combinations are almost always characterized by a lack of cultural and market position progression, and a lack of actual teamwork between predecessor firms.
  • Don't be afraid to walk away. Too many firm leaders find themselves negotiating terms for six months, on a marginal combination, but keep pushing forward because they fear they will look foolish if they have invested too much time and don't produce a merger. If you handle the process right, bad deals should die after one to three meetings and die for all the right reasons.
3. Don't Put Off the Hard Issues 4. Conflicts, Conflicts, Conflicts 5. No Magic Beans
  • The merger of two middle-market, midsize firms only creates a large middle-market firm, not a dominant market leader. Too many firms confuse cause with correlation when it comes to firm size or market position.
  • Firms with a poor track record of cross-office cooperation and cross-selling almost always become a larger dysfunctional firm, rather than a highly integrated, well-functioning team. If your historic cross-selling efforts were largely instigated by your clients, rather than by your lawyers, the odds are you aren't going to capitalize on the opportunities created by a merger unless you face up to fundamental shifts in your culture.
6. Not Too Big, Not Too Small, Just Right 7. The 20 Percent Rule Has Been Muddied 8. Open Yourself Up 9. You Are as Well Known for Your Worst Lawyer as Your Best 10. Lawyers Think Term Sheets; Successful Leaders Think Integration and Strategy Blane R. Prescott is a consultant with MesaFive LLC, a specialized management consulting firm serving law firms and in-house counsel in North America, Asia and Europe. Contact MesaFive at [email protected].