denotes premium content | Sep 7 2008 Managing Partner archive
Volume 7 Issue 7
The profit game: Expansion strategies in a competitive market
As another year comes to an end, two transatlantic mergers dominate the news with promises of an exciting start to 2005. The merger of Nicholson Graham & Jones (NGJ) with Kirkpatrick & Lockhart (K&L) is assessed in detail in this issue, but DLA and Piper Rudnick have also jumped on the bandwagon to confirm their merger, just as we go to press with the final Managing Partner issue of 2004.
The combined firms of Kirkpatrick & Lockhart Nicholson Graham and DLA Piper Rudnick will launch on 1 January 2005, and we will wait to see how their respective integration efforts pay off as the year progresses. With the DLA and Piper Rudnick merger, however, sheer size will be the daunting feature. With over 1,000 lawyers on either side of the Atlantic, the firm will be one of the biggest in the world.
It is a prospect that will suit Nigel Knowles’s impressive ambitions for global domination. A year ago, Managing Partner profiled Knowles and asked whether the firm was risking too much with its speedy expansion activities. But there seem to be few limits to the firm’s growth, as any concerns are swept away beneath this empire-building onslaught.
Successful integration on a transatlantic level will, however, surely prove challenging. For NGJ and K&L, the combination is more straightforward. NGJ will become the London office of an international operation – its purpose clearly laid out from the start as its location provides the crucial commercial crossroads for international ambitions. For DLA and Piper Rudnick, however, there is a more even balance of power, with a similar number of lawyers on each side of the pond providing plenty of room for cultural incompatibility. From past performance, however, Knowles seems unlikely to let such trivial concerns impact his strategy for global success.
On a wider note, the two mergers are indicative of further changes in the marketplace that must trouble mid-tier firms. Many firms have worked hard to build an international capability in recent years, as they have recognised client needs to work on a global level. Alliances, networks and mergers between similar firms have all contributed to this effort, enabling smaller firms to stretch geographically or offer additional service lines to potential and existing clients. International mergers, however, will inevitably put pressure on many mid-tier firms as they fear being left behind in the race for market share. Some will surely start looking for potential international merger partners, as firms seek ways to escape an increasingly bleak mid-tier market where firms seem to be competing for a dwindling amount of work from clients less willing to pay premium prices.
Of course, firms combining on an international level risk more, not least of which their independence. When a firm may have spent many decades building a reputation to win client trust and loyalty, a merger can effectively destroy all efforts in an instant. Internally, uncertainty may cause mayhem as lawyers leave to find their fortunes elsewhere. And externally, clients may defect to other firms that can provide greater service consistency. Managing the process of change will be hard and, even if successful, the firm must accept that its culture will have to adapt to fit the combined operation. For some that will prove a compromise too far, while others will consider that the benefits of international expansion outweigh any downsides to the decision to merge. For all, however, there are challenging times ahead and there is no room for complacency.
Caroline Poynton
Editor
Features
Health warning: Mergers can seriously damage your health
Cobbetts takes a quiet pride in its working environment, with a long-standing reputation for enticing and retaining its staff. In recent years, however, the firm has been creating more dramatic waves in the market with aggressive expansion strategies that have seen it complete three mergers in the space of eight months. With plenty of experience now under his belt, managing partner Michael Shaw provides some best-practice tips for managing a firm through change.
Winning combinations: Making a success of a law-firm merger
It is said that preparation is the key to success, but in the merger process, it is only the beginning of a long process that requires foresight, commitment, communication and decisive leadership. Giles Pugh, European head of Hildebrandt International, provides a holistic insight into the ongoing process of change that comes with any agreement to merge.
Making waves: Opportunities and trials in a transatlantic merger
The combination of Kirkpatrick & Lochart and Nicholson Graham & Jones is the first law-firm transatlantic merger of the year, but there are signs that more will follow as firms look to internationalise their services. Caroline Poynton talks to Michael Johns and Tony Griffiths of Nicholson Graham & Jones and Peter Kalis of Kirkpatrick & Lockhart about the strategy behind the merger and what it reveals about the changing landscape.
Networking out global solutions
When everything appears to be about consolidation, networks can appear a welcome respite for firms hoping to retain their independence. Getting the full advantages of being a member of such an association, however, is more difficult. Carl Anduri, president of Lex Mundi, provides some important tips for making the most of your network membership.
Made in heaven? Making a success of post-merger integration
Even the most promising mergers can fail if proper attention is not given to the integration process. George Bull, head of the professional practices group at accounting firm Baker Tilly, discusses the pitfalls and how to avoid them.
Marry in haste, repent at leisure
The business case for merger might be strong, whether it is to create a full-service firm, plug gaps in service to key clients, increase expertise, expand the client base or achieve wider geographical coverage. There are, however, significant risks, the strategic aspects of which are the main focus of many firms. Frank Maher, partner at Legal Risk, however, argues that firms need to pay far more attention to the dangers of operational risk in negotiating and completing a merger.
Informing the HR agenda: Thought-leadership study 2004
Acritas and First Counsel recently undertook research into HR issues at law firms large and small. Here, Lisa Hart, director at Acritas, and Tim Skipper, director at First Counsel, explain the implications of the findings for law firms looking to improve their people-management strategies.
Regulars
Personal profile: Racing to the top
Jonathan Fox first experienced the joys of the legal profession when he joined DLA as marketing manager in 1997. Seven years on, and he is heading up Holborn firm Collyer-Bristow as its first non-lawyer chief executive. It is a progression that demonstrates his desire to lead and his enthusiasm for the business of law. Caroline Poynton finds out if he can live up to his ambitions to make a successful impact on a firm that is steeped in tradition.
