While law firms have long experimented with adjacent businesses, recent industry changes have triggered a new level of investment in and focus on the formation of ‘New Law’ businesses. Given their recent emergence, the term New Law is not yet well defined and the application of New Law models continues to evolve with changes in technology and client demand. Despite this shifting marketplace, New Law offers opportunities for firms and merits more exploration by law firms seeking to differentiate their services, deliver enhanced value to their clients, and establish new sources of revenue.
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.
In times of economic uncertainty, it is tempting to focus attention principally on business resilience measures. Disruptions in the world around us are causing a number of law firms to ‘hunker down’ and focus on short-term management. This creates the risk of strategic drift at a time when a clear strategy and direction has never been more essential. Not only do firms need to continue to make progress on strategic initiatives in order to avoid falling behind the market and competitors, but they also need to think about how their business and the business of clients will change as a result of the pandemic.
Law firm leaders are currently focused on business resilience measures – making the business decisions that will help the firm get through the trough of the pandemic and the resulting impact on the economy, as well as initiating planning for a safe return to the office environment. While these immediate issues are critical and pressing, leaders would be well served to start thinking now about the medium- and longer-term impact that the current situation will have on the legal industry and on their firms.