Editor's foreword

As another year draws to a close, many firms will be thinking about the year or even years ahead. Some consideration, at the very least, is likely to be given to expansion strategies: how can firms best meet the needs of an increasingly international marketplace? The conclusion for many will be that only through increasing size, will they be able to best service clients on a global scale. That might lead to an organic growth strategy, involving lateral-hire campaigns and the launch of offices in key locations nationally or overseas. Most firms will at some point, however, consider merger opportunities as a more speedy means to deliver the breadth and depth of services now demanded by clients.

The risks involved in merger are significant, though. On an internal level, merger may lead to uncertainty and dissatisfaction as goalposts are shifted and firm-wide strategies change, potentially disenfranchising those who previously felt connected to the firm’s strategic direction. Such disgruntlement may be eased by clear communication and strong leadership, but only if the cultural and business synergies of the merging firms can be well demonstrated. In particular, cultural incompatibility is often overlooked by firms looking for a merger partner. But it is fatal oversight for any firm hoping for merger success.

For some firms, the risks of merger outweigh the potential benefits. For these firms, offering niche, rather than broad services, has proved a more successful and lucrative strategy. Firms such as Thacher Profitt & Wood and Davis & Gilbert have rejected merger strategies, not because they oppose the idea of growth per se, but because they will only expand to maintain client-service standards (see cover story, page 8). This approach has enabled them to focus on the quality of work and the services they offer, when rivals may be caught up with the inevitable, even if only transitory, disruption caused by merger activities. It also means that they can retain their respective organizational and cultural strengths – which can be irretrievably harmed by an ill-thought-out merger.

Deciding against such growth, however, does not mean that firms can afford to ignore the demands of the international marketplace. Clients are now working across international boundaries and need law firms that can cater for their needs in a global arena. Even for the most niche firm, international alliances and referral networks have become absolutely essential. But even here, firms are keen to cite the potential advantages of ‘best friend’ alliances or joining a network, over getting embroiled in a risky merger. For instance, an alliance of independent firms across numerous jurisdictions might give clients a better range of top-quality services than an international firm could ever provide. On the other hand, however, alliances or referral networks will always be subject to the self-interest of the various firms concerned. In choosing the right course, firms will have to carefully analyze their own strengths and weaknesses and plan an international strategy accordingly.

Apart from expansion strategies, this issue also includes a country focus on the Middle East, which is the first of its kind to appear in Managing Partner US edition. We plan, however, to follow this up with further regional focuses in future issues, reflecting the truly global nature of legal business today.

We hope that you enjoy this issue but please send any comments or feedback to me at cpoynton@ark-group.com.

Caroline Poynton
Editor

Features

The spirit of independence This article is for subscribers only
As most firms continue to look at merger opportunities for national and global expansion, there are other firms that are taking the opposite tack – and enjoying success in the lucrative niche market. By Kieran Flatt, US correspondent

Expanding the global footprint This article is for subscribers only
With some 70 per cent of its work cross-border and offices from Brussels to Beijing, top-30 UK firm Richards Butler has long held ambitions to extend its international presence even further. On 1 January 2007, the firm will merge with top-25 international firm Reed Smith to form a global legal powerhouse with around 1,400 lawyers. By Michael Pollack, director of strategic planning, Reed Smith LLP and Roger Parker, managing partner, Richards Butler LLP

A view from within: The Road to Effective Leadership – ACC’s 2006 Annual Meeting This article is for subscribers only
In October, the Association of Corporate Counsel held its Annual Meeting, which included a broad range of discussions on the trends and challenges facing in-house counsel in the year ahead. One topic raised, of particular interest to Managing Partner readers, was how corporate counsel choose, work with and rate their external law firms. By Laura Meherg, Meherg Consulting

Regulars

Thought leader This article is for subscribers only
By Karen Battersby, course director, know-how management, Nottingham Law School, UK

Opinion: Beyond the obvious in international mergers Free
Without doubt, every law firm possesses a distinct organizational culture, and that culture influences the firm’s success. Therefore, if two law firms merge, the manner in which their cultures merge also dramatically influences the merger’s potential for success. By Nick Jarrett-Kerr and Ed Wesemann, principals, Edge International