When two become one: What law firm mergers and acquisitions mean for future solicitors
04 December 2013
On Thursday it was announced that personal injury (PI) giant Slater & Gordon is to merge with Manchester outfit Pannone in the latest high-profile law firm combination this year. The £33m deal follows other recent high-profile tie-ups including the coming together of Penningtons and Manches last month and the international merger in August between London's SJ Berwin and Chinese firm King & Wood Mallesons. Meanwhile, in the most recent piece of activity, it has been confirmed that regional trio Blake Lapthorn, Morgan Cole and Boyes Turner are in talks to create a top 40 law firm. A full list of 2013 mergers can be found on Jomati's 'MergerLineUK' website.
What may be driving this activity is a dawning sense among law firms that in order to thrive in a changing legal market they either need to specialise in a specific set of practice areas where they can offer value, or scale up to trade under a widely recognisable brand.
The former route has been tried by firms with varying degrees of success. For example, Mishcon de Reya has placed extra emphasis on its already strong private client practise in order to ride out the economic turmoil – and performed well, posting impressive financial results and winning a host of accolades. On the other hand, an attempt by Cobbetts to develop its strong niche practice advising on raw materials transactions wasn't enough to save the independence of the firm last year. Keen to avoid this sort of fate, it is no surprise that other firms have increasingly been looking to join with others in order to enjoy strength in numbers.
When a merger works, the benefits can be profound. Hogan Lovells – the product of a 2009 tie up between London's Lovells and US firm Hogan & Hartson – is seen as one of the most successful mergers of recent years, propelling the combined outfit to global player status. Ben Higson, graduate recruitment partner at the firm, recently gave an account of the thinking behind the move to The Lawyer: ’Mergers are also often considered if the management believes there is the potential to create a stronger platform to meet the growing global needs of clients and use their enhanced capabilities to attract new clients. Mergers can also create new cross-selling and business development opportunities for the firms,’ he said.
But integration of organisations can prove trickier than anticipated. Speaking privately, veteran partners who have been through mergers tell some amusing, and surprising, tales about the realities of bringing together often very different cultures into one supposedly unified brand. Add in the international element of many modern law firm mergers and the challenges are even greater.
The opportunities and upheaval created by mergers clearly have implications for firms' trainees and trainees-to-be. Broadly, they tend to be positive. Andrew Leaitherland, Managing Partner of DWF (the firm which snapped up Cobbetts at the turn of the year), explains the upsides: ’A merger can present trainees with significant benefits and advantages. The merged firm may have greater resources and this can manifest in many ways: larger training budgets mean more opportunities for learning and development; more offices may mean opportunities for relocation; and a widening of service lines may provide greater scope to work in different practice areas. The talented and ambitious trainee may well find that they are ideally suited to an acquisitive firm because of the career progression opportunities this presents.’
But the process can also prove unsettling. Marc Piano was four months into his training contract at Halliwells when the firm collapsed and the remnants – including the firm's trainees – were taken over by Barlow Lyde & Gilbert (BLG). Piano continued his training contract at BLG. 16 months later, BLG was acquired by Clyde & Co, where Piano spent the final four months of his training contract. He recalls his experience:
’BLG and certainly Clyde & Co were different firms to Halliwells, and to each other. Still, both tried. BLG did a great job shortly after taking over Halliwells’ insurance arm – bringing us down to London for training and giving us plenty of opportunity to integrate with the existing intake both professionally and socially. When BLG merged with Clydes, an enormous Christmas party was thrown for the trainees of the newly merged firm at the swanky London office. There was us battle-hardened Halliwells veterans, the BLG trainees – a little wary after the merger – and the Clydes trainees. A mixed group indeed! Personally I spoke to/inflicted myself on as many trainees as I could, and thought they were all sound men and women from the limited interaction I had with them.’
Of the period, Piano adds: ’While the experience has held me in good stead, it wasn't an easy time – before, during or after.’
Few, of course, will experience the sort of upheaval that Piano went through. For many more a merger will present opportunities: to work on larger deals, do international secondments and play a part in crafting a new organisational culture.