Close this search box.

What they aren’t telling you about Mergers in the Legal sector

Mergers of law firms have grown prevalent in the legal field, with firms frequently rationalizing them by claiming to satisfy client demands for integrated worldwide solutions and guidance. Clients on the other hand, rarely play a significant part in driving these mergers. The main drivers of such mergers are often measures to reduce expenses and competitive advantage.

Pros and Cons

One of the primary benefits of law firm mergers is the opportunity for cost reductions. Firms can minimize overhead expenditures by merging tasks and reducing repetition. Shared resources, such as support staff and technological infrastructure, can result in enhanced efficiency and better resource allocation. Furthermore, mergers and acquisitions can allow firms to enter new markets without the need for costly organic expansion initiatives.

For example, according to the Gazette (learn more) firms in the UK have historically encountered difficulties in the US market, whereas US firms have struggled to establish themselves in European markets. Mergers provide a means of overcoming these constraints and gaining a stronger presence in various geographies.

While there are benefits to mergers, there are also drawbacks to the idea as well. Clients are concerned about the possibility of having disrupted established relationships with attorneys and the levels of service they are used to receiving. Clients value their respected partners’ personal connections and experience, and they have concerns that these ties would be jeopardized or lost entirely throughout the merger process, which they very well might. Clients are also concerned that fees would rise due to the merger, particularly if the newly formed business gets a better market position.

Fuel to the fire

If that wasn’t bad enough, In the world of law, attorneys have forged a reputation for their reluctance to embrace new systems, faithfully adhering to time-honored methods that have guided their work for years. This sets the stage for a common yet formidable challenge that emerges in the wake of a merger: the need for one or more firms involved to change their way of doing things, embracing unknown systems and administrative processes. In a trying time of adaptation, the conflict of tradition vs. innovation is a pressing one. Keep in mind these are the beginning phases of a merger.

After a merger occurs, there is often a sense of uncertainty in the workplace, nobody can be certain what is going to happen. This uncertainty yields a combination of unpredictability and instability between new partners and associates.

This will make associates or sometimes even partners consider leaving. This is an inevitable problem that exists among the high stakes of a merger. While workers may not have the ability to directly affect the outcome of a merger, their involvement becomes critical in order to avoid an unpleasant impulse to jump ship. Employees are compelled to leave a corporation on the verge of a merger as uncertainty puts a shadow over their responsibilities and benefits. Fears of mismatched management styles, as well as a lack of confidence in new leadership, aggravates the problem.

How can this change?

According to the Law Society Gazette (learn more), it becomes critical to establish effective safeguards within the merger contract and partnership agreement, aimed at preventing partner departures and securing the firm’s invaluable reputation” to protect the collective entity’s interests.

*** Alan Levy is a rising third-year student at Indiana University majoring in law and public policy with a pre-law declaration. He intends to go to law school after university in hopes of becoming a malpractice attorney.

In case you missed it... Check out more articles on our blog