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Can the two walk together? about mergers between Israeli law firms and the mergers trend

Mergers Law firmsDuring recent years, the Israeli financial press was abundant in reports about mergers between Israeli law firms. In 2012, the major merger was between Goldfarb and Seligman law firms, a merger which led to creation of Israel’s largest law firm, and was the peak of a year full of mergers in the legal market

Currently, it seems that 2013 will not fall from its predecessor, to name few- a merger between Baratz and Pearl Cohen Zedek Latzer law firm, as well as merger between Kantor Elhanani Tal and Meitar Liquornik Geva. As it was said in the firm’s merger announcement – “the merger trend and creation of “super offices” is gaining momentum, therefore we thought that Kantor Elhanani Tal & Co. should be part of this strain”

There is a great truth in these merger procedures; the trend of mergers between law firms is not unique to Israel alone. 2012 brought changes to the mergers field. In this year alone, over 60 mergers in a medium to large scale between law firms in the US only, some of them led to the creation of enormous international law offices which hold thousands of lawyers. A similar trend also occurs in Europe and in the Far East

What is the drive that motivates the law market to be a part of the intensive merger trend

The legal profession has become highly competitive, the demand for legal services has grown, however, the law firm’s customers have become more sophisticated. Beyond the fact that the global economy became weaker, in Israel – we must add to the equation the element of actual ‘flood’ in the number of Israeli attorneys, including the fact that this profession had opened its gates to foreign lawyers

One of the answers to those circumstances is the “merger fever” in the Israeli lawyers market

Under these circumstances, small and medium law firms often find themselves in a stubborn competition against the big law firms which are able to offer comprehensive services in many practice fields. In addition, large law firms can be more competitive in terms of wages, since they are able to absorb lower rates of income and use it as competitive tool

During recent years, a significant number of medium and large law firms had grown in Israel through mergers with other law firms. It seems that the fastest way (but not always the most successful one) for development and ‘movement’ in a law firm, is merging with another firm which considered to be a leader in his field

What is the added value of mergers between law firms

merged law firmsThe merger allows the firm to offer legal services in additional practice fields, and retain their clients basis in the optimal way. In the Israeli current legal market, no office can afford to lose clients due to lack of niches, or worse, send the legal work via outsourcing – to another law firm
Therefore, expanding the firm’s practice fields, is one of the main reasons for the mergers trend

A merger can also fix structural deficiencies in the law firm, including financial compensation for the lost of prominent partners (due to age / moving to another law firm), narrowing the gaps in experience and knowledge, strengthening weak departments in which the law firm is not considered a market leader, etc’. It is important to note, that the merged law firm brings his clients to this joint venture, and therefore there is an immediate increase in the clients base as well as in the firm’s income

In addition, the merger allows the law firm to increase the geographic presence into new areas, so it can empower the exposure to new clients. Last but not least, a successful merger may lead to synergy between two law firms, enhancing their joint brand, marketing abilities and reputation. If so, a well planned and successful merger, may stream new blood into the veins of a law firm, and increase significantly its income and status in the market

Where is the mergers trend heading

A research was conducted by the offices of Robus Legal Marketing and A-One, coming from deep background of hands-on in the Israeli mergers world and from Q&A given to Israel’s large and medium-sized law firms. From this research, it can be indicated that about 60% of the law firms are currently looking for a merger with same size or a smaller law firm

The research also indicated that many small to medium size law firms seek to ‘double’ their size at once, after coming to an understanding that the size of the law firm affects it’s visibility, branding and rating

it also indicated that Israel’s “Most wanted” practice fields are: Capital Markets, Environment, Antitrust, Intellectual property, Energy and private clients

It is important to note, that the current circumstances have an impact on recruiting senior attorneys. During the past, law firms were satisfied with drafting great lawyer with impressive resume; in Israel of 2013 one of the important qualities beside legal knowledge are marketing and business development potential. It should be noted that today, many senior lawyers are often required to bring with them not just their hands-on experience and know-how, but a certain client base

In conclusion, it should be noted that due to the increasing amount of competition in the Israeli legal profession and global economic conditions, we expect that 2013 and 2014 will bring with it a dramatic increase in the mergers between law firms as part of a worldwide tendency – mergers between Israeli law firms and in addition – mergers between Israeli and foreign law firms

While the Israeli financial reality is changing, the Israeli legal profession is changing as well, and mergers between law firms can provide a reactive response to the changing financial conditions in Israel and abroad

Robus A-one

About the writers

Adv. Zohar Fisher, CEO of Robus Legal Marketing – a Strategic consulting office for Legal Marketing and Business Development for law firms

Adv. Vivian Shalom, CEO of A-One Legal Recruitment, which engage in placement and mergers between law firms

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