The Gazette 1979

GAZETTE

JULY-AUGUST

1979

Merger of Medium Sized Practices

V. J. D. Kirwan, Solicitor

(Text of Lecture to Dublin Solicitors' Bar Association Seminar on "The Realities of Practice", 9th March 1979)

I start, I think, with some advantage in that it is un- likely that my listeners will themselves have experience of more than one merger and some may indeed have escaped the trauma. I have been involved in one merger only, but it was unusual and possibly ambitious, involving a merger of three medium sized firms. WHY MERGE FIRMS? It is fundamental that there should be a sound reason for any merger that is contemplated. Any Solicitor who harbours the notion that he will, by merging, end up in a cosy position free from work and responsibility, is sadly mistaken. Nothing could be further from the truth. The work involved in organising a successful merger is immense, and unless it is carried out thoroughly the resulting shambles is likely to produce heart attacks in the participants and an unsatisfactory service to clients. WHY THEN MERGE? A merger will usually take place for one or more of three reasons. (1) PERSONNEL. (2) BUSINESS. (3) TO PROVIDE A BETTER AND MORE SPECIALISED SERVICE TO CLIENTS. (1) PERSONNEL There are cases where one firm may have a surplus of partners or staff and not enough work and another firm may have too much business to handle and not be able to recruit sufficient staff. In such a case a merger may be beneficial to both. Similarly an elderly Practitioner with a good business who wants to take matters a little easier may want to join forces with a younger solicitor who is starting practice, the younger Solicitor providing the energy and con- solidating the firm for the future and the elder practitioner providing the established business. Sharing responsibility Under the heading PERSONNEL there is I think another reason for merger and that is the possibility of responsibility. In a small or medium sized firm a Practitioner may find himself overburdened with work and in difficulties in going away on holidays and in general constantly under pressure. A merger may enable responsibility to be shared and create a situation that back up staff can be trained and financial and administra- tive staff can be afforded to enable the Solicitor to have the financial and administrative sides of the practice run efficiently leaving him free to concentrate on his own work for clients.

Colleagues who have tried to recruit competent staff, qualified or unqualified, will know how difficult this is; apart from very exceptional cases good staff are firmly secured by good positions in other firms. It is well known that in times of intense competition for good young Solicitors, firms must promote them and put them on the notepaper at an early stage if they are to hold them These people will mostly have been apprenticed and trained and then retained in that same office. So, to recruit good staff it will probably be necessary to train them yourself and to retain them. Tfiis is often easier to do in a larger practice than a small one. In a larger practice it is possible to have several apprentices at one time and to retain only the best. (2) BUSINESS Another reason for merging firms may be to extend tne categories of business carried out by the firm and hope- fully get into more profitable areas. It is well known that the larger commercial firms and institutions rarely give their business to small or medium sized practices. A larger firm will tend to attract a better type of commercial business. This does not always mean profitability as with lower overheads and other advantages, not possible in a larger firm, the small practitioner will often take home far more than the Partner in a medium or large practice. (3) BETTER SERVICE TO CLIENTS The previous two categories of reasons for merging might be considered as promoting only self interest. A further motive for merging will be to provide a more specialised and professional service to their clients. In a larger firm it should be possible to specialise and to departmentalise and this should lead to a better service to clients. I will come back to this later. WHO DO YOU MERGE WITH Having decided that you see advantages in a merger for one of the reasons indicated above, who then do you merge with? Clearly the other firm must complement yours either from a business point of view or from a staff point of view. There may be an advantage in merging with a firm with a different profile to yours. It should be possible to be less emotional about choosing new partners than choosing a marriage partner! Nevertheless it is fundamental that you should like and get on well with your prospective partners. You should try to make sure you know them reasonably well not only in business but also socially, before you agree to merge. It is also, I think, important that your prospective partners should not be small minded people. There are so 71