Law Firm Mergers
Lessons from Successful Strategic Combinations
Kent M Zimmermann, John E Morris
Published: 2022
Pages: 104
eBook: 9781787428478
Lawyers and law firm leaders contemplating the future of their firms need to understand the changing dynamics of the market, and the ways in which mergers and other combinations may or may not help them fulfil their aspirations.
Beginning with an overview of the forces driving consolidation, it discusses how to formulate and get buy-in for a strategy and how to view a merger as a potential vehicle to accelerate progress. It looks at the advantages and disadvantages of combining with other firms, and offers practical insights about the process – from the best ways to identify and evaluate potential merger candidates, to how to approach those firms, to navigating the negotiations, and common deal terms that can bridge differences over crucial factors such as compensation, capital, and governance. Beyond the financial and strategic challenges faced by firms evaluating a merger, this title also delves into the cultural and human issues that can make or break a merger, from the best way to handle sticking points in negotiations to the ways in which firm leaders can muster support internally and head off opposition from their own partners.
Full of practical tips and laced with candid, first-hand insights from leaders who have successfully guided their firms through mergers, this Special Report will be the essential guide for a successful and prosperous law firm merger.
Table of Contents
| Cover | Cover | |
|---|---|---|
| Title Page | 1 | |
| Copyright Page | 2 | |
| Table of Contents | 3 | |
| Foreword | 7 | |
| Acknowledgements | 11 | |
| I. Understanding the flywheel effect | 13 | |
| 1. Introduction | 13 | |
| 2. Some firms are pulling away from the rest in size and momentum | 14 | |
| 3. Compounded growth is a crucial factor | 16 | |
| 4. Within a peer group, larger and more profitable firms have important advantages | 17 | |
| 5. The prospect of a merger can force a firm to address problems | 17 | |
| 6. The risk of doing nothing also has to be weighed | 18 | |
| Management perspectives | 22 | |
| II. Designing a strategy around strengths | 29 | |
| 1. Formulate a strategy that extends existing strengths | 29 | |
| 2. Take a hard look at your firm | 30 | |
| 3. Identify opportunities to exploit | 31 | |
| 4. Look for firms that share your strengths and aspirations | 32 | |
| 5. View the issue through strategy | 34 | |
| 6. It pays to be patient | 36 | |
| Management perspectives | 37 | |
| III. The special perspective of the smaller firm | 41 | |
| 1. Staying small has drawbacks, however | 41 | |
| 2. The cost of doing nothing is not nothing | 43 | |
| 3. There are tangible advantages to scale | 43 | |
| 4. How to begin evaluating the option | 45 | |
| 5. What to do if you want to go forward | 46 | |
| IV. Missing the window, or not | 47 | |
| 1. Perform an honest self-evaluation | 47 | |
| 2. Signs the window could be closing | 49 | |
| 3. Standing still carries risks | 50 | |
| 4. Addressing weaknesses | 50 | |
| Management perspectives | 51 | |
| V. Taking the driver’s seat | 53 | |
| 1. Being reactive carries risks | 54 | |
| 2. Agree on criteria and frame the discussion around those | 54 | |
| 3. Consensus on the criteria lays the groundwork for a deal later | 56 | |
| VI. Drawing up the list | 57 | |
| 1. Framing the initial criteria | 58 | |
| 2. Conducting the first screen | 60 | |
| 3. Profiling the most appealing candidates in depth | 61 | |
| 4. Prioritising your targets based on your criteria and feasibility | 62 | |
| VII. The approach | 65 | |
| 1. Do your homework and gauge your audience | 66 | |
| 2. Dealing with the sceptics | 70 | |
| 3. Keeping quiet and preparing for leaks | 73 | |
| Management perspectives | 74 | |
| VIII. The second meeting and beyond | 75 | |
| 1. What to ask for | 75 | |
| 2. Start fleshing out the upside | 78 | |
| 3. Develop a process and a timeline | 78 | |
| 4. Identify make-or-break issues and work through them | 79 | |
| 5. Voice concerns and state priorities, not demands | 81 | |
| 6. Start planning how to communicate with clients | 82 | |
| 7. Be flexible about the legal structure | 82 | |
| 8. Think creatively | 82 | |
| 9. Avoid flipping a switch that will leave someone in the dark | 84 | |
| Management perspectives | 85 | |
| IX. Getting partners’ approval | 89 | |
| 1. How to structure a vote | 91 | |
| 2. How to deal with vocal opposition | 91 | |
| Management perspectives | 93 | |
| X. Making the deal a success | 95 | |
| 1. Frame a shared strategy | 96 | |
| 2. Build momentum | 96 | |
| 3. Develop and track but-for revenue | 96 | |
| 4. Foster and measure cross-firm collaboration | 97 | |
| 5. Compensate partners for fulfilling the merger goals | 97 | |
| 6. Leaders set the tone | 97 | |
| Management perspectives | 98 | |
| Notes | 101 | |
| About the authors | 102 | |
| About Globe Law and Business | 104 |
Kent M Zimmermann
Principal, Zeughauser Group
[email protected]
https://www.linkedin.com/in/kentzimmermann/
Kent M Zimmermann is one of the leading strategic advisers to law firm leaders in the United States, consulting on a number of the most high-profile firm mergers over the past decade. At any given time, he is typically advising on several active merger discussions. Kent is also an ongoing strategic adviser to many category-leading firms, including five of the top 10 highest-grossing law firms in the world, helping them address the challenges and opportunities arising from the consolidation, specialisation, segmentation and globalisation of the legal services market. He believes that a well-informed and sophisticated understanding of the market and inside knowledge of the evolving strategies, cultures and best practices of highperforming law firms is essential to formulating plans to achieve a firm’s full potential.
Kent serves as a Law.com fellow and contributes to The American Lawyer; his insights are regularly reported by Bloomberg Law, Law360 and Reuters.
Before joining Zeughauser Group, Kent was one of three equity partners who built a leading technology company, Hubbard One, which was acquired by Thomson Reuters in 2004. He lives in Newport Coast, California, with his family.
John E Morris
Managing editor, special projects, at a major global law firm
[email protected]
John E Morris earned a JD from Harvard Law School and practised law in California before becoming a legal, business and financial journalist. Over the course of a decade at The American Lawyer, where he served as the magazine’s top editor and as editor-at-large, he wrote extensively about law firm mergers and the changing business of law in the United States and Europe. Later he was an editor at The Deal, Dow Jones and Bloomberg News.
John is the author of several previous books, including King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (2010), a history of the Blackstone Group and the private equity industry (co-authored with David Carey); Subway: The Curiosities, Secrets, and Unofficial History of the New York City Transit System (2020), an illustrated history of the New York subway system; and a history of the law firm Haynes and Boone, commissioned for its 50th anniversary in 2020. He is currently managing editor, special projects, at a major global law firm. He lives in New York City.