There are many opportunities for acquisition in today's legal profession, writes Rolf Howard.
These opportunities arise due to market changes, which also prompt a highly competitive approach to how lawyers now do business.
These market changes are driven by two main players:
1. Small, smart operators who have eyes on work traditionally dominated by the so-called mid-tier firms;
2. Global powerhouse firms who are looking down the food chain at work they formerly left to small practitioners, e.g. family law.
In order to be a successful law firm in today’s society, your approach must be entrepreneurial. Good lawyers and firms must also be capable human resources managers, IT visionaries, project managers, digital marketers and quality salespeople – but many are not and this is where acquisition plays a role.
The most important aspect of this whole process is recognising that you or your firm could improve your opportunities and capacity to excel if you merged with another firm whose support staff instantly take on the pressure of billing, account management, marketing and much more. Therefore, to thrive in today’s marketplace lawyers must be honest with themselves and embrace change.
So how does a successful merger take place?
1. A good strategic fit
The merger must be part of a clear strategic plan on at least one side of the fence (and preferably both).
In the last few years my firm has successfully acquired a number of sole practitioners and small practices. All the lawyers had a desire to continue working in marketplaces they identified as changing and where they had various unique needs and wants that were not being met by their existing circumstances.
Our strategic focus was to increase our fee-earning lawyers to cover variable costs and contribute to the fixed costs of our existing business. To my knowledge, many of the goals (if not all) on both sides of the agenda have been met in abundance.
2. A nurturing culture
The legal profession is a people business. Therefore, a successful firm should have a strong focus on the development and motivation of the people involved in delivering its service.
Staff should be nurtured in an environment that instils a strong purpose – one that’s over and above making money for middle-aged male partners. Your firm should foster a culture that maximises the opportunity for people to be the best that they can be.
This has to be the starting place for any law firm that wants to grow by acquisition. Growth will only occur by bringing lawyers into a better environment than where they were – otherwise leakage is inevitable, leading to loss of value.
Leading into a merger, you often hear discussions about whether the two parties will be a cultural fit. That is only a challenge if the stronger, acquiring firm has a less nurturing culture than the firm being acquired.
3. Develop natural leaders
Organic growth occurs in an evolutionary way, so aspire to find or create the leaders who come from acquisitions. Increased demand for services leads to engagement of junior or medium-seniority lawyers under the supervision of incumbent partners. Those young lawyers, steeped in your culture, can and should become the future leaders – but it will take some time.
Lawyers who join you through acquisitions may be relatively senior, but from circumstances or firms that have not developed their leadership skills as fully as could be the case. They will be leaders sooner if capable and attracted to exercise that role.
It is my experience that many good lawyers have an unexplored passion to lead, encourage, influence and motivate others. This willingness to push themselves and develop skills in others can be drawn out and utilised for the benefit of the organisation at a low cost, other than some time, energy and mentoring. Ultimately, everyone benefits.
4. A hero of the merger
Any acquisition or merger needs strong leadership. The leader must have the authority to make immediate decisions, co-ordinate support teams and set the pace. The leader should be strong on strategy and content, as well as process.
Ideally, this individual will devote a considerable amount of time and energy to the integration. Whatever the size of the firm being acquired, it is essential that the drumbeats of the fundamental businesses coming together continue seamlessly through the process. That is, new clients are attracted, work is delivered to an appropriate service level and the expectations of clients are exceeded during a period where staff are experiencing some disruption in changed circumstances.
Rolf Howard is the managing partner of Owen Hodge Lawyers.