Most mergers fail. Not just law firm mergers, mind you, but most mergers period. Studies cited in the Harvard Business Review peg the failure rate between 70 and 90 percent, a staggering figure when one considers the amount of time, energy and capital that is invested in M&A. Failure in this context, of course, does not mean that the deal results in bankruptcy, but that the merger fails to realize the anticipated benefits, namely growth and improved efficiency.
An analysis of failures in law firm mergers can never be as empirical as it is for publicly traded companies, but these statistics ring true. Most law firm mergers fail to develop the anticipated synergies and efficiencies, and for many of the same reasons as in the corporate world. In corporate mergers, executives often fail to distinguish between mergers that improve growth prospects from those that increase efficiency. Similarly, in most law firm mergers the overwhelming focus is on the alignment of practice groups, client expansion opportunities, attorney integration, business development and geographic overlay, often at the expense of harmonizing operations, renegotiating contracts and improving efficiency in key nonrevenue-generating areas.
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