Together we have recruited in the Midwest for almost 20 years. In that time, we have observed and been involved with numerous law firm mergers across the Midwest. In just the last five years in Minneapolis alone, we have seen six law firm mergers involving Minneapolis firms and out-of-market firms. Those mergers happened in wildly differing circumstances and for wildly different reasons. We know lawyers at every major firm in the markets we serve, and we have even brokered some of these mergers, so we have a unique perspective on the varying degrees of success of these combinations.
A successful merger isn’t just about achieving scale or a broader geographic footprint. At least it shouldn’t be; a firm can achieve these benefits in any merger. A truly successful merger hinges on a good cultural fit (people, compensation, management style), practice group synergies, and how the combined firm will fit in the market post-merger (i.e., the firm’s strategic reason for being in a new market). This last item is often overlooked in our experience, which is a serious mistake.
As we have watched these mergers unfold and witnessed firsthand the aftermaths, we have learned a few important factors that should guide any law firm considering a merger in any market. When we represent a firm that is looking to enter a new market through merger, we work with our client and help them at every stage of the merger process: pre-merger, during merger discussions, and post-merger. We help our clients identify the strategic reasons for entering the new market and keep focused on those strategic reasons as we move through the process. We research the market and identify and initiate discussions with local firms that are potential economic, cultural, and strategic fits. Once discussions are underway, we help our clients navigate any issues and questions that arise. We help close the merger transaction and make sure the firms are integrating with one another throughout the process. Lastly, we help the combined firm sell the transaction to the market. Any law firm headed down the merger path can benefit greatly by working with a local recruiter to assist with any and all of the foregoing.
At the outset, we learn as much as we can about your firm’s goals and strategic reasons for seeking a merger partner in the target market. Our team will identify suitable potential combination partner firms based upon our inherit market knowledge and through additional research. Research comes from our vast internal MLA network, full-time research team and proprietary database, with information collected for nearly 40 years.
After meeting with you and determining the strategic reasons for entering the new market, we present you with a list of firms to approach that we believe meet your economic and strategic goals. Your firm will benefit from our deep knowledge of the market you wish to enter. We speak every day to lawyers and managing partners at every firm in the markets where we have a presence. We are not “robo-dialers.” The deep conversations we have every day give us market-wide and firm-specific knowledge that is unmatched in the industry. MLA’s market knowledge goes far beyond knowing local firms’ culture and strengths and weaknesses. Among other things, we know: a) what has and has not worked in the market in prior mergers; b) which local firms are (or should be) ready for merger discussions; and c) local firms’ prior experience (good and bad) in merger discussions. This knowledge will also help anticipate and overcome local firms’ initial objections to a merger (which are usually based on less than complete, inaccurate information). Industry consultants on the coasts cannot approach our local knowledge in every market where we have a presence.
We will collaborate with you on an ongoing basis to create, hone, and enhance a thorough (yet consumable and intriguing) message that is market-specific to “sell” the opportunity. We explain the strategic reasons your firm wants to enter the new market and why its strengths will help it fit in the market and appeal to lawyers and clients there. And most importantly, we can help explain what your firm has to offer the lawyers at the firm to be acquired.
We connect directly and confidentially with the decision-makers and firm leaders at each of the potential target firms we identify. When the confidentiality of the out of market firm is paramount, we have the relationships and reputation that allows us to reach out to potential target firms on a blind basis (we don’t disclose your firm name or location) to determine whether there is an interest in exploring a potential combination with a firm like yours. If firms aren’t interested at all, then they never know your firm was looking.
Because of our market position and deep relationships, we are given the respect required to have a meaningful communication about the opportunity. Simply put: Partners/firm leaders take our calls, and as a result, your firm’s story is heard and considered by the carefully targeted audience.
During Merger Discussions
We make the formal introduction and handle the logistics thereafter as needed (i.e., scheduling calls and meetings, exchanging NDAs and economic and conflict information between the firms, etc.). We communicate with the firms regularly throughout the process to discuss status, provide market intel and feedback, and report progress. We can help keep the acquired firm’s partners and leadership realistic about their place in their market and how industry trends (consolidation) will affect their ability to keep clients and retain top talent. We keep the parties focused on the strategic benefits to be realized by the combined firm. We do not exert undue pressure to close a deal, but we do make sure both firms are putting their best foot forward in the process.
We also make sure the key people on both sides of the transaction are meeting one another to discuss merger logistics and the merger’s aftermath. This point is overwhelmingly important: a successful merger entails law firms who begin the integration process well before the deal is consummated or even announced. This is MLA’s strategic goal. Our work is focused, not just on helping get a deal done, but helping the firms prepare to hit the ground running immediately after the merger is completed. Week one of the merger should not involve lawyers getting on planes to meet their new partners in other offices. They should be getting on planes to meet clients and prospective clients. The internal integration is best handled as part of the process that the firms go through before their respective partnership votes.
We can also begin to plant seeds and tease the market about the new merged firm so the firm can start recruiting Day 1. We can have conversations with attorneys where we tell them that: “I’ll have something new and exciting to speak with you about after January 1.” This is a must. Your phone won’t magically ring off the hook the day after the merger is consummated with local lawyers seeking to join the new firm.
We are your eyes and ears in the market after the merger. Because we speak with lawyers in the market every day, after the merger is completed, we can message attorneys in the market the strategic reasons for the merger (beyond achieving scale and a broader footprint), the benefits to the new firm’s attorneys and clients, and why the new firm will be a great fit in the market.
In our experience, whenever there is a merger, the legal “rumor-mill” kicks into overdrive. Some of this market discourse can be negative. There are two basic reasons for this. First, other firms that do not want to merge feel the need to disparage the firms that choose to do so to justify their choice to “remain small and independent.” Second, prior mergers that did not go so well have affected the market, usually by negative comments from lawyers at the acquired firms (these attorneys are usually the most vocal) who did not benefit from the merger.
We can help set the record straight and explain the merger to the market. We can explain 1) the benefits to the local firm and its lawyers; 2) how the process was thorough, well thought-out, and due diligence was thorough; 3) both firms’ thought processes and philosophies that brought them together; 4) the strategic reasons for the merger; and relatedly, 5) the “business case” for the out of town firm’s decision (something other than scale) to come to the new market. The foregoing helps the merged firm combat misinformation in the market. It also helps the firm quickly add lateral talent after the merger.
As hard to believe as this might be, we still speak to many merged firms’ lawyers (and their management!) who several years after their mergers still cannot articulate the strategic reason for their combination. There are several new firms for which we still don’t know how the merged firm fits in that market, and their lawyers don’t know, either. As this article makes clear, when we broker a merger, we work with our clients at the outset to identify the strategic reasons for entering a new market and this guides the entire process. Everyone involved knows why the merger happened and they are invested in its rationale and its success.
Lastly, when we work with a firm to consummate a combination transaction, we will never source and of the lawyers who were at the target firm at the time of the merger transaction so long as they continue to practice at your firm.