How law firm mergers affect employee engagement and how to support your team
21 December 2020
Mergers in any sector can happen for any number of reasons, from a desire to globalise and reach new markets, to consolidating in the face of economic difficulties and uncertainty. But mergers and acquisitions themselves can be very uncertain times for everyone involved. None more-so than the associates, non-legal staff, and fresh-faced graduates who are often left in the dark until the ink on the agreement is nice and dry.
Why we could see an increase in law firm mergers and acquisitions
While it’s true that M&A can be a response to economic strain on the sector as a whole, its high-risk nature makes it a complex issue. 2008 saw quite a few mergers during the financial crisis, but in 2009, they had fallen by 24%. This reflected newly cautious attitudes to the effects of economic downturn, with many firms instead focusing on cost-cutting measures. Despite this, though, the UK firm Lovells LLP merged with Hogan & Hartson in Washington, DC to form Hogan Lovell, a global firm of 2,500 lawyers in what was the second largest law firm merger ever. This was just as the UK tentatively declared its part of the recession to be over in the final quarter. With the combined economic uncertainty of COVID-19 and Brexit, it’s possible that UK firms may have to consolidate to survive.
With Brexit predicted to bring huge changes to the UK legal sector, more firms might follow Lovells LLP in partnering with firms in other countries. This would help UK firms continue to operate internationally by making it easier to ensure their associates are qualified to practice law in other countries. Take the 2019 merger between Fieldfisher and McDowell Purcell, for instance. In fact, The Law Society of Ireland has stated that, from 2016 to 2018, there were roughly 2,200 applications by UK lawyers to join the Irish Roll of Solicitors for this very reason.
The impact of law firm mergers on employees
Generally speaking, the consequences of mergers can be a real mixed bag for an organisation’s employees. Law firm mergers can come with new networking opportunities and even stock options. Some employees will be given new responsibilities, such as having to collaborate remotely with associates in the other firm during and after the merge. But the consolidation of merging firms means cutting back overhead and restructuring the newly combined firms into a single organisation. To put it bluntly, this means some job losses are usually inevitable.
So given how competitive the legal sector can be, law firm mergers can create a tense environment for employees on all levels, as nobody is sure where cutbacks will be made. Employees might start drafting their CVs or just try to keep their heads down and work flat-out. With that in mind, it’s important to provide the proper support to your employees in a merger, whether they’re an associate, graduate or paralegal.
How law firms should support their employees during M&A
Resistance to change can be a big issue during mergers and acquisitions. It’s understandable, given the risk of impending joblessness. So it’s important to properly support your firm’s employees during the build-up, implementation and conclusion of law firm mergers.
Be as transparent as reasonably possible: Obviously predicting the specific outcome of a merger in its earliest stages is a fool’s game. But being transparent helps your staff to trust you. It’ll be easier to keep everyone relaxed if they can ask questions. After all, ambiguity is fertile ground for gossip, and employees are more likely to be accepting of a merger if they understand the rationale behind it. Trusting workplace cultures can also be better for a firm’s client acquisition in general.
Check in with your employees: Even if someone isn’t being made redundant, the restructuring associated with M&A can be very stressful to deal with. Whether you’re merging, acquiring, or just running your firm like normal, regular check-ins are a tool we’ll always recommend.
But it matters even more during M&A. Your associates and paralegals could have concerns they’re hesitant to raise openly because they would rather keep their heads down to try and avoid redundancy. Checking in lets a firm’s employees privately raise issues with the managing partner or senior associate reviewing their update. As a leader, this is also your chance to inform your decision-making about potential redundancies.
Making people redundant during law firm mergers requires you to make the most informed decision you can. You might be preparing to cut someone because, while they have their moments, their performance keeps tailing off, and there are a bunch of people in your target firm who specialise in the same area. But then you review their update and question histories, and you realise that what’s affecting this associate’s performance is a workplace-related issue that can easily be resolved. Without that check-in, you might have burned some top talent over situational factors.
Our check-in system also enables recognition-based 360° feedback. Implementing these recognition questions, such as ‘is there anyone who you feel was especially reliable this week?’ allows everyone in your firm to tag each other in their answers. This is great, because it can give you a consensus of who your most valuable, essential team members are. Facing inevitable redundancies can force leading partners to make some very hard decisions, and this information can help you to be confident in whatever choice you make.
Provide redundant employees with a reasonable notice and severance package: But let’s say you’ve grit your teeth and made the cuts, on paper at least. It’s important to let soon-to-be redundant employees know as soon as possible, with a good notice period before it actually comes into effect. This gives them valuable time to look for another job and tie up loose ends. Aside from being a pretty decent thing to do, your employees will be able to handle law firm mergers and similar situations a lot more calmly if they know that the off-boarding process gives them a bit of a safety net in the event of a sudden dismissal.
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