For my first blog of the New Year, I thought I would look at the topic of merger marketing. After a few relatively quiet years, last year saw law firm merger activity kick up a gear and I’m guessing that this year we will see many more firms looking to tie the knot.
In a flat market with little differentiation between the players and intense competition, mergers are often the obvious strategy for management teams to pursue; they either do so defensively to save costs or strategically to grow international networks or strong sector positions. Firms in financial difficulty also seek merger partners purely to survive and we are certainly seeing some of this currently in the legal market.
But from a marketing perspective, how should a merger be handled to ensure that the whole is greater than the sum of its parts before, during and after the merger has happened?
In my experience, having been through two major mergers as a senior in-house marketing professional, keeping a lid on merger discussions is vital if the firms wish to do a deal without the hassle of public scrutiny – by which I mean the aggravation of having the legal press and legal recruiters rampaging across your business unsettling everyone.
If a merger is on the Board’s agenda and a ‘green light’ has been obtained from the wider partnership, a small number of people should have been tasked with sounding out possible targets which match the required strategic profile for a merger partner. Until an approach has been made, and the other side has indicated a willingness to proceed, it is best to keep the identity of any possible merger targets from the wider partnership.
Law firm partnerships are notoriously ‘leaky vessels’ and I have seen partners deliberately scuppering merger deals that they do not like the look of by leaking information to the press at an early stage in the discussions.
At this point, the marketing challenge is mainly an internal communications issue, but not before the rationale for merger has been articulated and documented in a communique which is presented to both sets of partners before they vote on the tie-up.
The marketing functions should play a key role in helping the Boards to pull together market analysis of the combined firm’s anticipated market positioning and reputation, client bases (including possible conflict situations), SWOT analysis, client satisfaction analysis, etc.
I cannot stress enough at this point that the rationale for merger should be robust, defendable to critics, and based on real not imagined strengths and opportunities available to the merged firm. I’ve seen too many statements which stress the new firm’s size (So what?), its focus on service excellence (Shouldn’t all law firms be delivering this?), its strong culture (How is this defined and what does it mean for clients?), being technology led (So, your lawyers have got PCs and smartphones, so what?), etc., etc., etc.
If yours is a defensive merger to save costs, say so, spell out how you will achieve this, and explain how clients will benefit from these cost savings and your more efficient approach to doing business. Similarly, if yours is a strategic merger to grow a sector or geographical presence, set out how the combined firm’s resources will achieve this and how it will benefit clients.
During a merger, ie the few weeks or months either side of the ‘launch’ date, most of the marketing activity that I observe from merging law firms tends to revolve around producing new marketing collateral incorporating the new firm’s name and branding, eg websites, signage, letterheads, business cards, brochures, newsletters, etc. And whilst all this stuff is necessary, it is far from being the most important aspect of law firm merger marketing.
At this stage, the main focus should be on clients: identifying who the firm’s key clients are going to be, resolving conflict situations, appointing client relationship partners for each, assembling new client teams, consulting with these clients to explain the benefits of the merger to them, drawing up client service plans for each and putting these into action.
Any external marketing should be built around key sectors and/or geographical regions to be exploited by the merged firm. The combined firm’s new strengths in these areas needs to be promoted to opinions formers, intermediaries and key targets; key clients should have been informed by the relevant client teams.
‘Promotion’ should be on the basis of one-to-one meetings, ‘thought leadership’ pieces, conference and seminar presentations, and networking by individual lawyers. Social media, particularly LinkedIn, can play an important role in getting the messages out, but expensive advertising and sponsorships have limited proven value in the legal sector. Similarly, the jury is out on the value of legal directories, although to some extent they are a necessary evil.
After the merger has gone through, the main marketing challenges will be to manage the communication around any fall-out, eg departing lawyers, lost clients, etc, and to monitor that those promises made before the merger, especially to key clients, are being delivered. Internal soundings to ensure that partners, lawyers and staff are satisfied with their positions in the new firm are also crucial to detect any early signs of discontent and to put the necessary remedial actions in place.
Where the firm can evidence tangible benefits from its merger, these should be communicated to a wider audience to include possible recruits, opinion formers, intermediaries, and potential clients.
In the past, studies by McKinsey and KPMG have shown that a large majority of mergers destroy shareholder value, so the challenge of making a merger work is huge; the legal sector is no different. Getting your merger marketing right will increase your chances of success.
Kevin Wheeler is a consultant and coach with more than 20 years’ experience advising law firms on all aspects of marketing and business development. He has particular expertise advising firms on plotting the correct course through a merger.