In both mergers and acquisitions, careful planning and execution can be critical.
If your firm is preparing to join forces with another legal industry entity, to ensure a smooth transition and successful outcome, you may want to take the following factors into account.
ARRANGING OFFICE SPACE
If the larger firm that’s participating in a transaction has enough room and feels having all talent in one location would be advantageous, the smaller firm that’s involved might move into its office, according to Gene Commander, an executive business counselor for the legal profession.
In other instances, a smaller firm may present a chance for a firm to further its reach.
“If the [firm] is acquiring [it] to expand [its] geographic footprint in a different city [or] part of the country, you would probably not abandon that office space,” Commander says. “You might move or expand, as the firm moves forward; it really depends on the needs of the combined firm.”
Other elements can also be an influence, according to Kent Zimmermann, Principal Strategic Adviser to law firms at law firm management consulting firm Zeughauser Group.
“[It] would usually depend on things like how long the lease or leases are, if there's two of them — and also where the high-performing people most want to be; what would be good for recruiting,” Zimmermann says.
Firms need to confirm how they’ll approach attorney and staff career progression — as well as day-to-day tasks — after they combine.
Since joining Roetzel & Andress, a firm with offices in six states and Washington D.C., in October, Akron-based firm Brouse McDowell, for instance — which folded an eight-attorney firm into its operations in 2022 — has moved some firm members into Roetzel’s Akron office.
The two firms have maintained separate locations in Cleveland since combining and are currently figuring out how to combine them, says shareholder Dan K. Glessner.
“We were able to negotiate ourselves out of the Akron office lease,” Glessner says. “Both firms have commitments in Cleveland. In this economic environment for commercial real estate, it has to make sense to let somebody out of a lease.”
PROPOSING SUCCESSION AND OPERATIONAL PLANNING
Firms need to confirm how they’ll approach attorney and staff career progression — as well as day-to-day tasks — after they combine.
A number, such as Brouse McDowell, don’t request a change in the other firm’s leadership composition when coming on board.
“We were very comfortable becoming part of the team,” Glessner says. “If we want to participate at those levels, we'll put our hat in the ring like everybody else.”
Some firms may be hesitant to agree to appoint attorneys from an incoming firm as partners in the near future. If the firm that’s being acquired will ultimately comprise a meaningful portion of the other firm, it could dilute its profitability, Zimmermann says.
Other organizations, though, may be able to accommodate a request to carry out the firm’s previously planned partner promotions.
“For example, there are combinations we advised on this year where the smaller firm had certain lawyers in mind for promotion to the partnership,” Zimmermann says. “It was important to them that those promotions stay on track through the course of the combination.”
Transitioning all employees to singular systems can also be an important operational element to consider; firms should also factor in time to complete important tech-related M&A steps such as transferring information from one system to another so client data is retained from the firm that’s being acquired.
Firms may try to schedule a number of formal or casual events to help new colleagues get to know each other after a merger or acquisition.
After Glessner’s previous firm combined with Roetzel, the latter firm provided instruction to help Brouse McDowell administrative staff members get up to speed on its technology systems.
“They did a nice job of setting up the training courses with their IT and accounting folks,” Glessner says.
Acquired firms may opt to gradually phase out preexisting devices they’ve been using, donating or otherwise disposing of them when it’s time for them to be replaced, and then adopting the larger firm’s preferred technology, Commander says.
“Over time, practice management, billing, accounting systems need to be unified,“ he says. “If one organization is truly absorbing another — from a geographic standpoint — they're probably going to try to utilize the physical assets of the acquired organization until they can be upgraded.”
ESTABLISHING A COLLECTIVE CULTURE
While much of the focus during M&As tends to fall on the technical aspects of combining the two firms, creating a magnetic workplace culture is an essential part of enabling the two teams to work well together, according to Commander.
Leadership can encourage a unified culture, he says, by being transparent about the new firm's values, mission, vision and strategy.
“Is a combined firm realizing greater talent recruiting [and] business development competitiveness?” he says. “Are you seeing low attrition rates among talent — and clients? Are you bolstering the continuity and the sustainability of the combined firm? Those are the things that aren't talked about a lot — but may become very apparent two or three years down the road after the merger is completed.”
Firms may try to schedule a number of formal or casual events to help new colleagues get to know each other after a merger or acquisition.
When Brouse McDowell joined Roetzel, the two firms held a series of mixers between both larger and smaller practice groups within their offices and other locations, such as a winery.
“You want to create a laid-back atmosphere where people feel comfortable [talking] a little bit about themselves,” Glessner says. “Some of them were just an introduction, and then an opportunity to network [and] get to know each other. [At] one, the litigation practice chairs from both groups [had] a more organized agenda — [they] wanted to talk about what [they saw] as opportunities or obstacles.”
New York City-headquartered firm Hanly Conroy, shortly after its launch in 2002, tapped plaintiff's law firm Simmons Browder Gianaris Angelides & Barnerd LLC, headquartered in Alton, Illinois, to help with a large-scale case. Members of the two firms built a strong relationship in the following years before deciding to merge in 2014, according to Jayne Conroy, shareholder at national law firm Simmons Hanly Conroy, LLP.
The more people who know, the greater likelihood of a leak, and when there's a leak, it's never good for the firm because the headhunters come out of the woodwork and do everything they can to dislodge people.
The Simmons firm then obtained space in the same building as Hanly Conroy in New York. To further facilitate firm members getting to know each other, Hanly Conroy co-founders Jayne Conroy and Paul Hanly obtained an apartment in a town near Alton where their attorneys could stay.
The firm later purchased a house next to the Simmons office in Alton for firm members to use.
“We felt it was important to have those kind of face-to-face meetings,” Conroy says. “It made it a lot easier for us to actually have a place where people could stay for four or five days, or a few weeks if they needed to and were working on something together.”
NOTIFYING STAFF AND CLIENTS
Early discussions about a merger or acquisition may only involve a couple of people from the senior leadership team. The group typically starts to grow as talks continue, Zimmermann says — and can subsequently involve practice group leaders and other firm members.
The ideal time to tell firm employees and clients about the deal can vary, based on the details of the arrangement and leadership preferences. Some law firms may prefer to wait to tell the entire staff until the arrangement is fully fleshed out; others may favor earlier communication.
Zimmermann advises holding off until late in the process, if possible.
“The more people who know, the greater likelihood of a leak, and when there's a leak, it's never good for the firm because the headhunters come out of the woodwork and do everything they can to dislodge people,” he says. “[Even] a small number of people [leaving] can really change a firm.”
Although Holland & Knight’s combination with Nashville’s Waller Lansden Dortch & Davis, which gave Holland & Knight a nearly 2,000-attorney roster, wasn’t officially announced until 2023, Waller’s leadership told the firm’s employees about the deal in July 2022, on the day a local paper planned to publish an article about the firm being in merger-related discussions.
Throughout the more than 50 conversations that led up to the final agreement, Waller took considerable steps to ensure the potential deal remained under the radar, according to Matt Burnstein, Waller’s former chair and managing partner, who is now the Executive Partner of Holland & Knight’s Nashville office.
“I conducted several months of talking about it internally, soliciting viewpoints, having different groups of Waller lawyers meet different groups of Holland & Knight lawyers in different cities,” Burnstein says. “It's hard to bring 20 people from Nashville to Charlotte, North Carolina, for a meeting without somebody noticing — somebody [at] a competitor or a client being on the same plane. I had 18 people fly on four different planes early on.”
Restricting the knowledge of a potential merger or acquisition to a limited number of people can help prevent employee and client panic. Like a number of firms, until the arrangement with Holland & Knight was finalized, Waller maintained a delicate balance behind the scenes.
“I had concentric circles of knowledge and awareness and endorsement, starting in March 2022 and ending with a vote in December 2022 in favor of the combination,” Burnstein says. “Every aspect had to be thought through. Do I think that there was perfect confidentiality? No. But we had gotten all of the heaviest lifting done before it became so public that we couldn't get it done in an orderly fashion. It took everything we had for the course of 12 months to achieve that result.”
