15th August 2019

Law Firm Mergers – What’s in it for the lawyers?

Law firm Mergers

Law firm mergers – what’s in it for the lawyers?

There are two main reasons, at opposite ends of the spectrum – a desire to grow and a desire to stay afloat. In between there are a whole raft of reasons, as each law firm has its own corporate strategy and vision of the future. A major item on the agenda should also be the compatibility of the two corporate cultures.

Ideally, potential merger partners are looking to expand (in terms of services range and/or geography) but at the same time reducing the cost per head, through general economies of scale, technological integration and establishment and operating costs. Examples being;

  • The 2017 alliance of CMS (Insurance, Financial and Construction) with Nabarro (Real Estate) and Olswang (Media, Telecoms and Tech).
  • The recent merger of Penningtons Manches (UK based with 265 lawyers) with the maritime sector’s Thomas Cooper (offices in France, Spain, Greece, Singapore and Brazil with 26 partners).

Other reasons can include:

  • Succession Planning – Imagine a relatively small, but successful firm has seen the same, successful, senior partner group at the helm, but who are now all facing retirement at the same time with no discernable internal successors. A merger with another firm with management structures in place may be the easiest option to safeguard the welfare of their legacy, client base and loyal staff.
  • Client Satisfaction – Important clients who are embracing new offices abroad or entering new business sectors may require more local or enhanced range of services. Client loyalty only runs so deep and lawyers have to respond to demand.
  • Liferaft – A failing firm will grasp on to a merger as a means of staying afloat.
  • Consolidation – It’s often perceived to be better to represent a dominant force in one particular sector or geographic region, thereby becoming something of a magnet for new enquiries.

Of course, the mergers that actually occur are a fraction of those that are pursued, either casually or more seriously. After all, it has been said that every law firm has considered a merger at one time or other. The vast majority don’t progress past the initial overtures, either through incompatibility of perceived outcomes, different “cultures” and the occasional strong personality who actively sabotages the efforts.