At the time of the near-unanimous ‘yes’ vote to merge with Reed Smith in June 2006, the Richards Butler board was well experienced in dealing with diverse management challenges. Strategic business planning and analysis, client development and brand differentiation — you name it, we had done it. In contrast, the board went into the merger with little practical experience of the challenges, both organisational and cultural, of successfully integrating two large international businesses. Now, more than a year after the vote, eight months into the formal merger and with the benefits of the combination being realised, it is clear that early steps taken by the constituent firms have been critical to the success of the merger. These steps are considered below.
Get senior management involved
Every merger is different, yes, and throws up its own challenges, but the underlying issues — encouraging disparate teams to work together, maintaining effective lines of communication across the two firms, reconciling differing systems and structures, and fostering a collective sense of enthusiasm and involvement — are similar. The experiences gained from previous transactions helped set the parameters of discussion.
One of the most important lessons for us from prior mergers was the need for the merging firms to make sufficient senior management resources available to organise and push integration. Senior management need to be clear that effective integration is a key part of their personal objectives.
Accordingly, director of strategy and senior management team member Michael Pollack moved to
One of the most common problems with law firm mergers is the growing list of specific, granular action points, which seem to grow week by week. As a result the integration team met weekly with structured, rigorous agendas, action plans and implementation timetables. These meetings addressed key issues such as systems integration, location of practice groups and space matters, client relationships, opportunities for cross-selling and external and internal communications. Regular and thorough discussions unearthed critical issues in a timely and pre-emptive manner.
One example of the value of this exercise was that it soon became clear that systems integration required a distinct team to focus upon it. This meant that greater focus by a distinct team was levelled at key operational and support function matters. This is an important element that must not be overlooked. This team was led by Reed Smith’s chief operating officer, Gary Sokulski, who chaired regular meetings incorporating senior personnel from IT, human resources, library and information systems, learning and development and, of course, finance. We did not find it necessary to take external advice in this area partly because of previous Reed Smith merger experience.
A further step we took was to make sure a significant number of partners attended regular Reed Smith retreats in the
Keep external focus
The contribution of the legal services industry to the
The merger itself was driven by the growing internationalisation of our clients and of their legal needs but, in practice, it was vital to ensure that we made the cross-selling promise a reality. What services could we offer from existing Reed Smith locations to Richards Butler clients, and vice versa? Which clients were most likely to benefit from the combination? How would we identify their needs? Simple stuff? Conceptually yes, but the key is in the execution. Effective cross-selling is essential if a merger is to be truly effective. Cross-selling is a culture and, as such, the major challenge is partner behaviour.
We quickly realised the need for a central driver to coordinate and drive the cross-selling process and therefore established a cross-selling team led by Tom Todd, senior US partner in London, to help to foster practices in the new organisation and drive it into the business with a range of internal communications tools that encouraged lawyers to pursue client development opportunities and celebrated success. The most immediate wins came from benefits arising from a greater geographic spread. Making sure that real estate clients in
Preserve and celebrate cultures
One of the main perceived threats firms often fear during the time of an intended merger is the dilution of their established culture, and the legal industry has certainly witnessed many such casualties. Therefore a major theme during our integration discussions was the need to nurture, preserve and develop local and national cultures, in what we hoped would be a tolerant international environment. This required continual assessment of the perspectives of different groupings in various locations in which the firm operates. When integrating two distinct firms, even if there appears to be a logical or efficient way to implement an internal function or change, it may not be the best way for everyone and it is essential to be flexible on change — balancing the need for centralised efficiency with local sensibilities.
In our merger negotiations, the assurance that Reed Smith management was sensitive to the cultural issue and was equally keen to build on our respective histories was a critical issue for many Richards Butler partners. At each of our integration meetings we examined the impact of our decisions on individual groups with varied interests and perspectives. For example, the team considered the impact of physical location change on previously tightly-knit groups of individuals who we needed to relocate to less attractive space. Naturally, the medium-term objective of moving the
Fostering relationships
Relationships operate at all levels and in all directions with all our people. This is something that all law firms attach weight to but in the context of merger — a time of acute change and uncertainty — it becomes increasingly important. The way senior US Reed Smith management interrelated with partners and staff during the immediate integration period was always going to be scrutinised. Tremendous effort was put in and relationships built quickly, which is a testament to the original merger decision of the partners. However, integration is not a three, six or 12-month exercise. It takes considerably longer and requires continued assessment, measurement and tending.
Mergers are by no means right for all firms and many will prefer the lower-risk option that organic growth provides. However, when executed well they can transform businesses. Such transformation can lead to a far quicker achievement of strategic goals for law firms, hence the importance of integration.
Roger Parker is managing partner of Europe and the