Law Firm MarriagesMike White
I’m spending time with many firms these days that seem to be really interested in “combining,” partnering up, or at least acquiring groups of great lateral partners. Apart from the conventional observation that these efforts to juice up growth “inorganically” often mask failed efforts to grow “organically” (i.e., acquiring new clients!), aspirations typically reflect some pretty undeveloped thinking about why another firm would want to combine with their firm.
Lawyers – that is to say, law firms – tend to be pretty narcissistic in their everyday thinking anyway. It’s not surprising that firms embarking on a “combination-quest” think only about what they are looking for in a target firm, and not the converse. Now that the commercial legal services market has changed more in the past ten years than it had in the previous 100 years, law firms in search of target firms or lateral groups need to re-think and freshen up their answer to the question, “Why should a law firm seriously consider combining with us?”
Firms capable of being a good fit have to see something in your firm they want and know they need. Don’t make it hard for them. Out of the gates, PLEASE express a genuine interest in their view of how they would like to – and, in fact, would – benefit from combining with the right firm. Conventional criteria still apply (geographic footprint, practice group mix, economics, etc.), but should be consulted within the “necessary but not sufficient” context. In today’s legal environment, other emerging screening criteria are starting to matter a lot more and inform the best decisions about courtship and ultimate marriage.
It’s the Music You’ll Make Tomorrow That Matters, Not the Music You’re Making Today
It is more important now than ever for serious firms to paint a detailed picture of where a combined enterprise is trying to go and how it is going to get there. The best “renderings” do a great job of isolating all of the gaps in the two firms today – both as independent firms and as combined firms. Bolting together two firms usually doesn’t instantaneously address these gaps. In short, it’s just as important to realize how far the combined firm will be from full potential as it is to realize what the ultimate potential looks like. You’ll be better positioned to sell a desirable firm on the opportunity you represent if you’re honest about the admitted difference between “desired state” and “present state.” Additionally, have a detailed plan – articulated with conviction – for addressing that gap over the next five to seven years.
They’re Buying Vision and Innovation as Much as Anything
You should put together a clear, detailed, and ambitious multi-year innovation agenda. The economy is active, and most law firms are chugging along at a solid economic clip; it’s very easy for firms to get complacent about their day-to-day operating performance and their future. However, if there’s one area in which many firms are exhibiting great self-awareness (and humility), it is relative to innovation. “Innovation-phobic” firms know when they’re not doing anything to help their clients experiment with new ways to consume, manage, and measure legal work. These firms feel exposed, and often can be very attracted to another combination firm that has come up with a thoughtful multi-year innovation agenda, and a roadmap to become that firm of tomorrow.
That Culture Thing
Everybody talks about culture and it connotes such a fuzzy measure of a firm’s composition – it’s easy to be cynical about whether culture matters at all. The truth is that for firms that are built for success today, culture is everything. Peter Drucker famously said that “culture eats strategy for breakfast!” The challenge of course is that culture means nothing if you can’t touch it, feel it, and define it. Law firms that are serious about finding the right combination partner firm should define all of the cultural attributes and features of their firm in objective, describable elements that can be measured.
Additionally, such firms must be able to identify what processes, structural incentives, managerial methods, and training regimes support and produce the objective elements that make up their firm’s culture. It’s one thing to say that we are collaborative, team-oriented, and care about the success of other partners; it’s quite another thing to point to a specific bonus structure and monitoring process that activates partners to, in fact, behave this way. At Edge, we use a tool called the Edge Cultural Assessment to develop an understanding of all objective elements of firm culture; with this tool, our understanding of culture is removed from the abstract and subjective and is translated into the measurable and concrete.
Write It Down
If you’re a true believer about why a target firm should be interested in combining with your firm, then you’ll need to articulate all of those reasons, linkages, and benefits with conviction. It’s hard to express conviction about your own combination criteria and process if you haven’t taken the time to write them down on paper for prospect firms to digest. Remember, both firms are potentially placing a very big bet on an unknowable future. The only insurance policy target firms have is your intentionality about the summit, and the mountain you’ll need to climb together. Bring them along – and, in so doing, seduce them – by expressing as much of your thinking on paper as possible.
“Law firm combinations” and “lateral partner recruitment” sound like easy ways to drive growth. However, seasoned law firm leaders know that it’s easy to make bad decisions, and very difficult to mature and execute good decisions in this realm. My advice is to know who you are well, do your homework, and sell the plans you’ve authored for future success so you can get credit for being intentional and ambitious. Don’t let your appreciation for the summit distract you from your respect for the mountain!