Raising the Bar

“We’re thinking about combining our firm of three lawyers with another small law firm. Do you have any guidance for us on what to consider in making our decision?” Clients ask me questions like this more frequently these days.

In some cases, a booming law practice has rainmakers looking for experienced help. Some senior lawyers in solo and small firms consider mergers as they begin thinking about succession planning. Sometimes young lawyers with developing practices seek to cut per capita overhead by spreading fixed costs across more fee earners. For some small firms, the merger mania in BigLaw has stimulated them to consider their options.

When contemplating a merger, many risks and rewards must be considered and due diligence investigations should be conducted. Culture clashes undermine mergers more frequently than any other factor, however.

When there are only 5 lawyers in the whole office, common values become even more critical. There is nowhere to hide. Variances in strongly held beliefs and values tend to grow from cracks to chasms. They can threaten the productivity, health and work satisfaction of everyone in the office, as well as the success of the firm as a whole.

Fortunately, with fewer people involved in a small firm, it can be a little easier to identify and discuss issues that may develop into rifts in a law firm partnership. Here are a few subjects to discuss.

1. What is your attitude toward money and the firm’s fiscal policy? Do you advocate leveraging debt to help the firm advance quickly and to weather dry spells? Or do you prefer a more conservative pay-as-you-go approach, relying on partners for any bridge loans required during slower periods? […]