The Gazette 1979

JULY-AUGUST

1979

GAZETTE

to be made as to who will continue to be a Receptionist and who will be offered a job in another area. The integration of staff salaries and staff pensions will also have to be considered. It is desirable that the level of salaries and pensions in the two firms be streamlined so that persons of similar status receive similar salaries. The working hours for the new firm will also need to be agreed. I am afraid that in matters of streamlining of salaries, pensions and working hours, the new firm is likely to come off worst because it is the law of human nature that no one will agree to a reduction in salary or to an extension of working hours! (4) Partnership Agreements It will probably be wise prior to the merger to give some consideration to the drafting of a partnership agree- ment. It may not always be possible or even advisable to attempt to complete a partnership agreement before the merger. Consideration of a partnership agreement will however highlight various matters and make sure that the parties are not in conflict. The most important factor in any partnership agreement is of course whether there is to be any restriction on the partners practising locally in the event of the partnership splitting up. My view is that there should not be any such restriction but it is of course im- portant that this should be agreed with the other partners. It is I think also desirable to create a situation that on retiral or death the retiring partner or his dependants should not be entitled to any payment for goodwill. It is also I think wise to agree in principle that partners will retire at a specified age. Consideration must also be given to what pension arrangements exist in the two firms both for partners and for staff and to consider what further pension arrange- ments need to be made and what the cost will be. GENERAL It is not hard to see that not only is an immense amount of work and planning necessary for the successful merger but there is also a lot of expense. The reality is likely to be that the new firm will have new equipment furnishings and systems. The burden of the capital expense of this may be lessened by renting or leasing. I would hazard a guess that in most cases, far from there being a saving in overheads by a merger, that there is an increase in overheads. This is because so much new equipment and furniture is involved and the rent on the new premises is likely to be heavy. The merger will hope- fully produce greater efficiency and lead to cost saving ultimately. In the short term however the expenses will be much higher than the previous firms have been used to. MERGE IN HASTE . . . LONG TIME DESIRABLE There is so much work to be done in organising a merger that it is desirable to leave plenty of time and not to attempt to rush a merger through in a period of a few months. I would feel that a one year period is a minimum and the time taken may well exceed two years. SPECIALISATION The law is now complex and covers such a vast field that it is impossible for any one Solicitor to hope to be

able to cope adequately in all these fields. This is the reason for specialisation. This will probably be one of the objectives of the new firm. It may not however be immediately achieveable due to the necessity of not inter- fering with the client relationship. The non commercial client is likely to resent the merger and to be ready to suspect that it will interfere with the personal service he has had before. He will not want to be told you must go and see Mr. So and so. It will be necessary to introduce the specialist in the other department slowly and let the client get to know him and get confidence in him over a period. Specialisation in a particular field is undoubtedly help- ful to efficiency in that field. There are however dis- advantages. The specialist if he has not already had a very wide grounding in the other fields of practice can become very narrow in his outlook and restrict very much his value as a general advisor particularly to a non commercial client. It can also be very aggravating when dealing with a firm which is departmentalised to find that you have to deal with two or three different persons, none of whom appears to have an overall grasp of the case. Specialisa- tion seems to me to be most worthwhile in the commerical field. A merger does however enable specialists to be re- cruited. This is not only in the specialist fields of law such as taxation, company law and commercial law, litigation, probate and conveyancing, but also in the field of office administration. It is possible in a merged firm to afford specialists in the accounts department. Indeed in my opinion, a good Financial Controller is a necessity in a firm of any size. DO MERGERS WORK? It must be clear from what I have said so far that the merger of two firms highlights and confronts the merging firms with many important decisions that should indeed face existing firms. These include improved accountancy systems, use of computers, time costing, whether or not to employ an Office Manager, whether or not to have a Managing Partner, or the extent to which specialisation and departmentalisation is desirable, the improvement and standardisation of documentation, the organisation of proper library facilities within the firm and of course the ongoing recruitment of staff. The new firm will create the opportunity and the structure on which to build. In a smaller firm many of the matters to which jl have just referred may not be possible. In a larger firm not only are these matters also possible but also it is important that these matters should be actively considered and implemented where desirable. It is not my intention to go into detail on each of these matters. It is my experience that there is a reluctance in the early stages of the new firm to make more drastic changes than are immediately necessary. The more partners there are in the new firm, the more difficult it may be to get agreement on changes. The answer then to the question, do mergers work, is that they do work if the necessary thought and planning are done prior to the merger and if this work is continued after the merger. If it is not done then the larger firm is likely to be chaotic and the end result will be a much less efficient firm than the two former firms. If the work is

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