Law mergers and acquisitions and what they mean for solicitors and employees

Over the last few years, there has been an exponential increase in high-profile law firm mergers, both domestic and international, but what has been the main driver of this activity? It appears, among law firms, there is a dawning sense that in order to survive and thrive in a challenging legal market, they either need to upscale, trade under a widely recognisable brand or specialise in a particular set of practice areas in order to offer value.

 

Firms keen to avoid the fate of Cobbetts, who last year failed to save its independence, have been increasingly looking at merging with others which will arguably provide strength in numbers.

 

When a merger works well, the benefits for both firms can be substantial. Perhaps it will create a stronger platform to meet the growing global needs of clients or use its enhanced capabilities to attract new ones. Mergers can also generate new business and cross-selling opportunities for firms. But whatever the reason for the merger, it can be an uncertain time for everyone involved. None more so than the associates, trainees, and non-legal staff who are often left in the dark until the ink on the merger has dried.

 

The consequences of a merger can be a mixed bag for both partners and employees alike. Mergers may come with new opportunities for networking and perhaps even stock options. And some employees may be given new responsibilities, but generally speaking, the integration of firms means cutbacks on overheads and restructuring the newly merged firms into a single streamlined practice.

 

Older partners, who on the face of it are likely to benefit most from a merger, have recorded the realities of bringing together sometimes very different cultures into one seemingly consolidated brand. Factor in an international element, and the challenges are even greater.

 

The fact is, depending on the size of the firms coming together, there is likely to be a culture change, although compatible firms usually try to merge to make the transition easier. In other circumstances, the larger firm could push its culture onto the other smaller firm. Mergers can be disruptive and are a long and involved process requiring a high level of commitment from both sides.

 

Upheavals and opportunities provided by mergers can also have clear implications for trainees, although, as with anything, there are advantages and disadvantages. A merged firm may have better resources, which can manifest in a variety of ways: bigger training budgets mean greater opportunity for development and learning; more offices may mean there is a  possibility of relocation, and a widening of service areas provides greater scope for a wealth of practice experience. Ambitious and talented trainees could find the acquisitive firm more attractive because of better career opportunities and progression.

 

That said, the process can be unsettling. Ultimately, jobs may well be lost as the firms begin to integrate and streamline their operations. This can lead to an uncertain future for both solicitors and support staff, as the transition period doesn’t tend to create the best working environment.

 

Attempting to predict the outcome of a merger when in its earliest stages is impossible, but being transparent, will help employees to trust the outcome. Ambiguity is fertile ground for gossip, and employees are far more likely to accept a merger or acquisition if they understand the rationale behind it. Given how competitive the legal sector can be, law firm mergers can create a tense environment for every employee because no one can be sure where cutbacks are going to be made.

 

Resistance to change can be a huge issue during mergers and acquisitions, which is understandable considering the potential for job losses. So it is important that employers properly support their firm’s employees during the build-up, implementation and conclusion of any merger or acquisition.

 

Law firms do not take mergers lightly because of the time and resources required to make them work. Many merger talks simply fall through because agreements cannot be made between the practices. Because of this, when mergers happen, firms will usually be a good fit with all parties from both sides committed to ensuring the merger is a great success.

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