Many firms in London are finding themselves increasingly squeezed between the large London practices or major regional ones (with their greater financial strength), and the specialist boutique firms (generally more agile and entrepreneurial). Although practices may not have grown sufficiently to generate the profits to which partners aspire, as they target larger clients, it can place firms in direct competition with their better-financed brethren.

Outside London , the number of regional firms is rising resulting in increased competition from larger and/or more specialised firms. Whilst many solicitors in the regions value the independence and hands on management participation which the majority of practices outside London offer, it is difficult to see many of these firms can achieve the desired level of profitability in the years to come. Indeed, many law practices now return surprisingly low levels of profits to their partners and whilst several firms have reported recent improvements in PEP figures they have often been achieved through some form of strategic restructuring of the business.

Our Directors, who have, between them, many years experience in practising law and building legal practices, are able to advise on these issues. We are able to advise on the desirability and mechanics of a merger , on finding merger partners, on growth strategy, acquiring strategic bolt-ons, senior lateral hires including executive appointments and succession planning, restructuring and reorganisation,

Law firms are a combination of disparate individuals with different personal objectives and ambitions. However, if management are willing to consider the merger path, then some exciting possibilities can arise:

1. Developing more specialist and lucrative niche areas;
2. The ability to attract big-ticket and commercial work offering higher fees levels;
3. Economies of scale providing more money all round so you can increase the number of staff; hire better quality fee earners; take on bigger premises in a better location; invest in state of the art IT systems etc;
4. More profits to distribute;
5. Gaining control over a larger organisation.

Some of the issues:

1. Losing a slice of independence;
2. Corporate management style takeover;
   The need for everyone to ‘run faster' to meet the needs and expectations of upmarket clients;
3. Cultural conflict;
4. Acquiring ‘dead wood'

Lateral Hires
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A possible alternative to the merger route is the strategic acquisition of a partner or team in a specific practice area. Perhaps a firm may wish to strengthen its reputation and profits in a core area of the business. Alternatively, it may seek to bolster an area of the practice not sufficiently competitive, or an area that has been weakened due to the departure of a key player for retirement or other reasons.

Many firms consider search to be an ideal tool to help them to consider and source the best candidate options for them in the market.

Restructuring
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Merger may not always be the answer. A preferred option may be to consider the restructuring of a practice to concentrate on local markets or the strengths of individual partners.

Re-organisation can mean a number of things. One possibility is centralising administrative functions such as accounting credit control, IT and HR, by firms within a particular local area. Or alternatively, hiving off low value, high volume parts of the practice (such as debt recovery) to cheaper premises away from high overhead localities.

Division of profits is another issue. To encourage and retain younger partners, it may be necessary to move away from lockstep towards a merit-based system. Although essential for the long-term profitability of the business, such discussions may provoke concern amongst some of the partner and so require careful handling.

Another complex issue is HR. The firm must keep abreast of succession issues and strategic lateral hiring. On a more general note, the costs of a high attrition rate are exorbitant. It is becoming increasingly difficult to maintain even professional staffing levels. You may wish to consider a radical new approach to your firm, such as introducing a structured working from home programme or an associate tracking programme (for lawyers who do not want the pressure of partnership but are keen to continue fee earning.) Although this will open new doors for you, it will also create new issues, such as how pay scales and career prospects are formalised.

Strategic Consultancy

• Merger
  
• Lateral hires
  
• Restructuring