General Practice, Solo, and Small Firm Division
Merge Right: How to Pick a Partner or Firm
Some of us play well by ourselves, and some prefer the company of others. If you think you might take on a partner or join a firm, Anatomy of a Law Firm Merger, published by the ABA Section of Law Practice Management, offers helpful tips.
First, know that a merger is a means to an end-better practice opportunities, profits, or lifestyle. The initial step is making a strategic plan that plots your current practice's strength and weaknesses, and identifies potential business opportunities and impediments. What are the good reasons to merge?1. Enhance your practice's market position.
2. Increase expertise and specialization. If you want to keep clients, fill the gaps in your practice with others who have a recognized expertise.
3. Add complementary services.
4. Expand geographically. Big firms often look to small or solo firms to create branch offices.
5. Expand or diversify your client base. Small and solo practices once fed in the wake of large firms. No more. Competition is fierce. Taking on a partner or joining with another firm may be the best solution to a shrinking client base.
6. Enhance work sophistication. Some solos and small firms feel their practices lack depth. They don't get the prestigious clients. The work has stagnated. Their best employees are snatched away by bigger firms. For these practitioners, merging with a larger firm is worth the loss of autonomy.
7. Broaden the capital base. Merger can help solos and small firms expand their office space, get new equipment, upgrade technology.
8. Correct internal weaknesses. A partner or firm can bring in rainmakers, fill in age gaps, and attract individuals to provide leadership.
What are wrong reasons to merge? It doesn't hold true for every situation, but generally, you should not take on a partner or merge your practice if all you want to do is:
- Follow the trend.
- Solve economic problems. There is no "ideal" number of lawyers, though you can spread the economic burden among a number of partners, say the authors. But the larger the firm, the more it costs to run. Merger doesn't reduce overhead. Controlling expenses is not nearly as effective as increasing revenues if profits are your goal.
- Deal with problem personnel. You'll just take your problems with you.
Anatomy of a Law Firm Merger: How to Make or Break a Deal includes a diskette and is available for $89.95 (discounted to LPM members) from the ABA's Service Center (800) 285-2221 or go to www.abanet.org/lpm/catalog.