Making predictions for the year is always risky. When we made our predictions for 2020, we never anticipated that we would have the kind of year we’ve just completed. To our credit, we did predict that firms would need to be prepared to manage in headwinds, and that enhancing leadership diversity and reducing bias would be important priorities for law firms. Each of these turned out to be true, although we didn’t imagine the degree to which they would dominate the agenda for firms in a challenging year on so many fronts.
In recent years, we have worked on a number of law firm mergers where one of the firms was in a significantly weakened position relative to its past. More often than not, these mergers fail to move forward because there is too much uncertainty about the stability of the firm, the deterioration of its financial condition, and the questionable commitment of key partners to remain with the combined firm.
It would be a significant understatement to say that negotiating and executing a merger in the middle of a pandemic is complicated. However, it is not impossible. While we expect merger activity among law firms to be down in the second half of 2020, we are seeing an increasing number of firms begin to reinvigorate their growth strategy and consider merger.
Mergers among law firms are continuing to occur at a high rate. And more firms than those completing mergers are engaged in exploratory discussions to determine if a merger makes strategic and business sense. Periodically assessing the firm’s competitive position and strategic priorities can help to assess merger inquiries from the perspective of what is best for the firm.
Unquestionably there are successful law firm mergers, some hugely so – perhaps most notably the strategically sound international ones that have created the grouping of highly profitable leading global firms that are increasingly winning a larger share of the highest value work.
