Law.com picked up a terrific article by Leigh Jones on "Client Conflicts: The Hidden Cost of Law Firm Mergers." It's a great overview of many of the stumbling blocks related to conflicts that can trip up a pending merger. And like so many other issues related to the strategic management of law firms, it has, at its roots, a core of deeply held misunderstandings about the nature of how business works that is, frankly, disturbing in the extreme...
[Note: I apologize about the Borg image... I just
couldn't think of a dang thing that illustrated the concept of "merger"
other than, "You will be assimilated..." Really, very sorry.]
Here's an old riddle from the Sales Department, courtesy of my 12+ years in retail: What's the quickest way to get your hands on a million dollars? Start with two million and let the Marketing Department spend half. The point being, obviously, that it's easier to spend money unwisely than it is to actually make money on behalf of the company.
I've revised that riddle based on my observations of the legal industry.
Q: What's the quickest way to build a $100 million law firm?
A: Merge two $75 million firms.
If you don't get it, I pray to God you're not anybody's MP, CMO or CFO.
First of all, let's get one thing straight -- I have huge respect for firms that merge for the right reasons. It's a bold step and one that, when done well, will reap big dividends in the long run for the firm and its clients. Why? For the same reasons that big companies do well in other sectors:
- Economies of scale
- Availability of product/service packages
- Training/career opportunities
- Geographic leverage and service offerings
- Continuity of care
- Brand equity
In most modern, mature industries, larger companies have merged and merged again and have continued to provide ever increasing levels of product innovation, service, value and price competition. In the legal world? Not so much. As I pointed out in article I wrote for the American Lawyer Media's Law Journal Newsletter "Marketing the Law Firm" back last September, "Measure Expertly" (full text available from here), the legal industry is incredibly unconsolidated, i.e., "unmerged" compared to other sectors. I won't repeat the data from that article here. You can either trust me or go read it.
The issue of conflicts is, of course, one of the reasons that the industry is unconsolidated. You simply can't represent everyone. But when you look at Jones' article carefully, you'll see the "cart before the horse" problem that typifies so much of what passes for strategy -- and marketing -- at law firms. And it begs the question of law firm marketers; are you ready for the "seat at the table" you keep asking for? And even if you're ready... do you really want to go there?
What am I talking about? Well, let's use a neat little project planning tool we call the "Root Why" discussion. You start with the assumption of... something... usually with a suggestion or announcement of a plan to do something. And you keep asking, "Why?" Just like an irritating three-year-old. Until you get to the "root 'why.'" Here we go.
- We're going to merge our two firms. Why?
- To be bigger. Why?
- To remain competitive. Why?
- To do the work we want.
WAIT! You've reached a possibly flawed assumption. Are you NOT doing the work you want now? Let's rephrase that.
- To do more of the work we want. Why?
- To make more profit for the partnership.
Ding ding ding. There's a "root why." More profit always counts as a root reason to do something in a marketing plan. Other adequate "root whys" are:
- To be more efficient
- To improve client satisfaction
- To improve employee satisfaction
- To lower costs
- To improve time-to-market
These are all goals that are so fundamental to business that questioning them is stupid. If you don't know why you want to do them, get out.
But many firms launch into a merger without drilling down to an acceptable "root why." They simply want to be "bigger." There are assumptions about that desire that are, as Jones makes clear, very flawed. This same problem holds true for dozens of other types of firm administrative, strategic and marketing decisions. They are undertaken without a clear understanding -- or even an attempt to fathom -- the underlying, fundamental business rationales for decisions that will, in some cases, ruin the firm.
In other cases, these decisions will simply make everyone miserable (mostly the lawyers and employees), waste money (mostly the clients') and frustrate everyone.
Read Jones' article twice. Please. Send it around your firm. Not just as a really good piece about the complications and hidden dangers of conflicts. Although that is an important subject in itself. But reference this as a very good example of what happens when you aim at a goal that isn't the real goal. When you set your sights on a vision that isn't clear. And when you try to do anything "for the sake of it" rather than for the reason of it.