Guest blog from Chris May; a practising solicitor and former Principal Solicitor at the Co-operative Legal Services and formerly a CEO and Operations Director.
When firms come together through acquisition or merger, results often fail to live up to initial expectations. So what steps can be taken to maximise the benefits and avoid the inevitable pain when things go wrong in a law firm merger or acquisition?
After the initial wooing and due diligence, the major efforts turn to operational and financial issues. Removal of duplication, setting financial targets and getting IT systems integrated are usually the main focus. Here measures can be applied, senior management and staff held to account and evidence gathered.
The more thorny issue – and one that can ultimately be destructive – is the issue of culture. Culture is hard to define and even harder to apply measures to. Understanding culture – and mitigating the effects of any differences – is the key to a successful outcome.
Whether it’s a law firm or an external investor, a major constraint is resource. Understandably, firms rarely have the spare resource or tools in-house to address all the issues they need to. Moreover, understanding the cultural differences may highlight changes which are needed on both sides. Something that may be less palatable for the acquirer then the business being acquired.
Steps to get the best out of a merger or acquisition
1. Set the agenda
Culture often develops organically and is unplanned. It defines the way the management and staff think, feel and act and includes the values, working language and habits that develop in a firm. Setting the agenda has to be led from the top: what culture should emerge? It is one that is to be imposed top-down or a blend – combining the best of each. Understanding where the greatest value lies is the key – and that may well differ between departments and functions.
2. Understand the differences
Inevitably, there will be significant differences between cultures. Recognising these and quantifying their nature and extent needs to be done early on. Tools that can help are:
- Map decision making processes in each organisation and accountability
- One to one discussions with senior management
- Evidence gathering from other staff – observation, interviews and surveys
- Client interviews
- Understanding what each business does well and not so well
- Identifying where the biggest gaps exist
- Understanding the gaps
To contrast the survey results of staff or clients, use a simple “word cloud” program – these can be purchased or downloaded free from the web using the search term “word cloud software” on Google. This gives weighted results according to the number of similar responses.
Compare the results between the firms.
3. Define what you want to create
Understanding the gaps can help to prioritise the most important points to address as well as defining the ultimate culture to be created. This needs to be clear and firm enough to be addressed in a cultural change plan, containing actions for management to execute as well as measures to assess success.
4. What help is available?
If you’re planning to merge or acquire, the time to start planning cultural integration is during the due diligence phase. It should be an integral part of the information that’s gathered and form part of the blueprint for the future. You can get help to:
- Develop an integration strategy
- Develop a detailed implementation plans
- Coaching to key internal staff
- Plan and manage the actions required
- Co-ordinate the project
- Manage people issues and programme communication
Chris May is a practising solicitor and former Principal Solicitor at the Co-operative Legal Services and a former CEO and Operations Director.