Angharad Warren
Angharad Warren

Articles From the Team

Joining Forces

It seems that there is barely a week that goes by without news of another significant law firm merger but why is there such an appetite for firms to join forces and how does it affect lawyers within those firms...

It seems that the economic crisis of 2008/2009 that saw a series of high profile firms face tough economic times, huge redundancies and even complete collapse really made firms take stock of the bigger picture. They started to operate their businesses in a far more corporate manner, doing what needed to be done to survive the recession.

The battle wounds from that period are still keenly felt by many firms that still have higher debt and lower profits. Most firms do now appear to have climbed out of what would have seemed a pretty deep black hole at the time, but they are keen never to go back.

So why do mergers provide the answer to so many...

There are a whole host of extremely successful case examples of firms merging with and acquiring other firms. It is a well trodden path which has created stability and success for many key players. The most successful examples have seen relatively modest firms turn into major national/international practices within the space of a few significant mergers.

Mergers mean growth, both in terms of firm size and geographical coverage. A prime Midlands example would be Shakespeare Martineau. Shakespeares expanded rapidly through a number of lower profile mergers before its most recent merger with SGH Martineau, which itself had been through a series of mergers to become it's most recent incarnation prior to the merger with Shakespeares. The result is one of the Midland’s the leading law firms, a top 100 national firm with 900 staff and a £75m turnover!

As we have seen with Shakespeare Martineau, mergers can create casualties in terms of redundancies particularly where the two firms are similar in profile and operate in the same regions. There is bound to be some duplication of jobs, particularly in support functions and for the new firm to ultimately be a success this can be seen as a necessary evil, not that that will provide any comfort to those affected. The good news for those that have been affected in these situations is that the legal market is buoyant and whilst your role may have become redundant at one firm, your skill set is likely to be in high demand amongst their competitors.

An increasing number of firms not only have regional or national domination in their strategy but full globalisation and world domination... granted that sounds a little dramatic but take for example Leeds born Hammond Suddard now global giant Squire Patton Boggs following the firm's most recent merger with US firm Patton Boggs. They now operate from 44 offices in 21 countries! Or the world's largest law firm by lawyer numbers, Dentons, which not so long ago was a 600 lawyer City firm and following its most recent combination earlier this year with Chinese firm, Dacheng, saw them transform to a 6500 lawyer international firm.

Wragge Lawrence Graham & Co recently announced plans to combine with Canadian firm Gowlings to become Gowlings WLG in January 2016. This combination will result in a firm consisting of 1400 lawyers operating in 18 locations across the UK, Canada, Europe, Asia and the Middle East. Exciting stuff for what started out as a two partner Birmingham firm. These two firms look set to have all the makings of a successful international collaboration, they have an existing working relationship and rapport, similar cultures and ethos and given that they operate in totally different geographical locations duplication of roles is unlikely.

To build up a truly international presence without merger (or combination) would be a huge task for a regional/national firm; time consuming and expensive. The benefits for both sides are clear, particularly when a merger is entered into on a relatively equal footing.

Mergers come in many different guises; a joining of equals that complement each other, a take over/bail out or the acquisition of a smaller firm by one dominant partner to name just a few.

If your firm or a firm you are considering has plans to merge then ask yourself the reasons why and what that will mean for you as an employee. A successful merger depends on the whole staff successfully integrating without an 'us' and 'them' mentality. For it to really work you have to let go of the legacy firms and really embrace the new firm which will usually come with new opportunities, exciting changes and greater prospects for progression within what will hopefully be a more profitable and larger organisation.

This years' Law Management Section's Financing Bench-marking Survey results were highly positive and point towards firms having a strong year. As recruiters, we see this strength on the ground with increasing numbers of jobs and particularly for this years' newly qualified solicitors it has been a really positive market to qualify into. Despite this, a third of practices say they are likely to merge within the next two to three years and a fifth are in active talks. In short, there is no slow down in the urge to merge! Ultimately the legal market may come to resemble the accountancy model with a fewer number of players representing the majority of the world's major multi-nationals although there is a good way to go and hopefully there will always be a space for smaller traditional practices in our legal market.

If you would like a confidential discussion regarding your next career move, please contact Angharad Warren at BCL Legal.

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