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Law Firm Mergers and Acquisitions – Strategic Considerations Copyright © 2007 by TAG Academy, LLC and John Smock. ALL RIGHTS RESERVED. This course material.

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Presentation on theme: "Law Firm Mergers and Acquisitions – Strategic Considerations Copyright © 2007 by TAG Academy, LLC and John Smock. ALL RIGHTS RESERVED. This course material."— Presentation transcript:

1 Law Firm Mergers and Acquisitions – Strategic Considerations Copyright © 2007 by TAG Academy, LLC and John Smock. ALL RIGHTS RESERVED. This course material may not be reproduced in any form without the permission of TAG Academy LLC or John Smock. Exceptions are made for personal research and study by the purchaser. Publications are distributed and programs presented with the understanding that TAG Academy does not render any legal, accounting or other professional services. The contributing authors to this publication have exerted their best professional skills to assure the accuracy of its contents. All original sources of authority presented by this publication, or orally, should be independently researched in dealing with any clients or your own specific legal, financial or business matters. October 19, 2007 John S. Smock Partner Smock Sterling Strategic Management Consultants Lake Bluff, Illinois (847)

2 2 LAW FIRM MERGERS AND ACQUISITIONS – STRATEGIC CONSIDERATIONS Agenda Continuing and significant consolidation is a primary trend/factor in the legal marketplace Solid strategic reasons exist for law firm mergers But, plenty of obstacles and barriers – most are legitimate The Ten Commandments of successful law firm mergers

3 3 LAW FIRM MERGERS AND ACQUISITIONS – STRATEGIC CONSIDERATIONS Continuing and Significant Consolidation Is a Primary Trend/Factor in the Legal Marketplace Trend to legal consolidation continues apace 2007 ahead of 2006 rate and, unless a legal service recession hits (very low probability), 2008 will exceed 2007 Recent survey of large and medium-sized firms indicated that 93% had live merger discussions in the past three years Significant large firm mergers (Reed Smith and Richards Butler, Lord Bissell and Locke Liddell) garner most attention – but mergers and consolidation occurring across firms of all sizes But, legal marketplace still relatively immature – lots of room for consolidation, market maturity (such as public accountings Final Four) will not occur in our lifetime

4 4 LAW FIRM MERGERS AND ACQUISITIONS – STRATEGIC CONSIDERATIONS Solid Strategic Reasons Exist for Law Firm Mergers Size a more important factor in outside counsel selection and in attracting and retaining talent Significant growth often provides a differentiated and upgraded playing field Client consolidation and law firm competitor consolidation Many law firm mergers have worked well (as defined by increased PPEP) – pretty convincing evidence If you want to grow significantly and/or dramatically – no other way But, not every firm should seriously consider a merger – it depends on each firms strategy, not what the other firms are doing

5 5 LAW FIRM MERGERS AND ACQUISITIONS – STRATEGIC CONSIDERATIONS But, Plenty of Obstacles and Barriers – Most Are Legitimate Most firms do not want to merge, they want to acquire Unrealistic expectations of the parties Significant (and irresolvable) differences in PPEP and RPL Opposition comes from both highly productive partners and the underproductive ones – two ends of the bell curve It is difficult to do Most firms go about it the wrong way and good mergers die in childbirth Takes too darn much time

6 6 LAW FIRM MERGERS AND ACQUISITIONS – STRATEGIC CONSIDERATIONS But, Plenty of Obstacles and Barriers – Most Are Legitimate (Contd) Unwillingness to address the needs of new firm We do it better here Over-focus on internal issues Less than critically needed internal communication and selling Legitimate financial barriers – retirement, capital, balance sheet consolidation

7 7 LAW FIRM MERGERS AND ACQUISITIONS – STRATEGIC CONSIDERATIONS Ten Commandments of Successful Law Firm Mergers Know thyself and thy agreed upon strategy – only pursue a merger if it fits what you want to be Carry out a defined and agreed upon process – target development, pocket proxy, agreed upon steps, responsibilities, and managed stages/phases (e.g. – dating, courtship, the wedding, and marriage) Consider a wide and continually narrowing range of targets – many are called, but few are chosen Do it or do not do it – make a decision and move it through the process – both in a timely manner Deal with the financial and client conflict issues early – they are often the barriers you cannot resolve

8 8 LAW FIRM MERGERS AND ACQUISITIONS – STRATEGIC CONSIDERATIONS Ten Commandments of Successful Law Firm Mergers (Contd) Focus on new firm not the legacy firms – develop new firms strategy and direction early Identify, document, and quantify synergies – it is hard to justify a merger without them Recognize the criticality and value of effective marketing – initial client contact, announcements, presentations of new firms, new firm marketing program Sell it to the partners – through a variety of media (e- mails, small meetings, clearly stated prospectus) – do not assume Communicate, communicate, communicate – you cannot communicate enough


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