Why merger utopia is a myth

Why merger utopia is a myth

We hear a lot about “mergers of equals” in the legal sector, perhaps more so than in other industries. This desire for equality in the combination of two law firms stems from the importance placed on partnership and the sense of personal ownership.

Although it does not necessarily follow, it is hard for some lawyers to shake the idea that if, for example, a 500-partner firm merges with a 50-partner firm, then those brave five will be outgunned by their new comrades in decisions on compensation, allocation of management roles and matters of strategy. In short, there is a fear they might be diminished or side-lined in some way, perhaps in all ways.

Instead, the idealised combination is the famed “merger of equals”. This emblematic combination appeals to partners’ sense of shared power. Such deals suggest there is no party higher than the other, that there is no culture more dominant than the other and that no-one will lose their influence. It is a type of merger utopia and in this respect it is also nearly mythical.

Mergers of equals, in at least the UK legal market and based on the respective number of lawyers combining, are very rare. If one were generous and considered a merger of equals to mean firm A was no more than 50% larger than firm B, then the total number of mergers of equals involving the UK 100 since January 2011 would be just seven. This is out of 90 mergers in the last four years (up to the end of October 2014). Or to put it another way less than 8% of UK 100 mergers even approach size equa

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About the author:

Richard helps law firms with important strategic decisions. He advises on areas such as merger, practice development and geographical expansion. He also provides assistance to law firms in relation to organisational and operational issues.

Richard has spent over 16 years working in the legal sector focused on the UK and global legal markets. He previously worked at Jomati as a strategy consultant and authored the Jomati Report series between 2009 and 2014.

Prior to that, Richard worked at US-based, Hildebrandt International, and also held senior, legal sector editorial roles in London and Paris.