Best Practice: 1st steps for law firm mergers
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. We are a 17-attorney firm in Dayton, Ohio. Several of our founding partners are retiring and we have been contemplating a merger with another law firm but are not sure where to start. I would appreciate your ideas.
A. Start by determining your merger objectives. Why do you want to merge? What do you hope to achieve? Is merger compatible with your strategic plan? What size of firm are you considering?
Once you are sure that merger exploration - in general - makes sense - you should insure that your house is in order. In other words - can anything be done to enhance the value and/or marketability of your firm? For example:
- Do you have a business or strategic plan? If not - how will you convince a potential merger partner that you have a plan for the future and know where you are going? Maybe now is a good time to work on that plan.
- Work on and clean up your financials. Improve the financial performance of your practice. Eliminate deadwood. Write-off uncollectable A/R and WIP.
- Avoid entering into long term commitments that might make your firm undesirable to another firm. (new long term leases, risky client matters/cases, loans, admission of new partners, unfunded partner buyouts/retirements, etc.
- Enhance firm image where you can.
- Develop a first class firm profile.
Next, develop a merger marketing plan and begin working the plan. Try to generate enough leads that you can explore a merger with several firms instead of engaging in "random merger talks" which often result in isolated merger offers with you having no framework for comparison.
Use an outside consulting firm if you need help organizing, identifying candidates, and managing the process.
Once you have merger candidates identified - the real work begins.
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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.