Guess the speaker (hint: London-based Managing Partner of a
firm you’ve heard of):
"Over a 10-year period the impact of rationalisation
by industry sector has been dramatic. In the banking sector,
28 major institutions reduced to eight, in pharmaceuticals 33 to 13
and among mid-tier law firms in London 16 to 11. Consolidation
of clients and legal services providers has happened, is happening
and will continue to happen."
OK, it’s Roger Parker of Richards Butler.
And this is apropos what exactly? His telling the
background story behind their merger with Reed Smith. What’s
impressive is the forthrightness and optimism with which Parker,
and Richards Butler, approached this "rationalisation" (a/k/a consolidation). Where
many managing partners, or firms, might view this with trepidation,
uncertainty, and hand-wringing, Parker saw it as an "exciting" opportunity
and embarked on a concerted three-year campaign to position Richards
Butler for a merger.
How does one do that? The same way one manages any
business to make it more attractive to suitors:
- monitor costs relentlessly
- clean up the balance sheet
- improve cash flow (by, e.g., accelerating billing and collections
and improving the quality of receivables) - insist upon, and enforce, a clearly articulated strategic positioning.
The last may be the hardest, as it requires consensus among the partnership
to establish and genuine discipline to carry out. But Parker
is clear that "rapid revenue growth without focus on
strategic positioning [can harm] the quality of earnings, potentially
a long-term issue" (emphasis supplied).
We also learn how Parker and his colleagues approached the all-important
issue of the cultural challenges that a potential (now, actual) merger
could pose. Make no mistake: The financial "hygiene," specified
in the bullet points above, is a necessary but by no means sufficient
condition for a firm intent on merger to meet. Those are
things that, in any well-oiled firm, should be practiced as a matter
of routine.
The make-or-break challenge is, rather, the cultural one. What
does Parker have to say? Note his nuance:
"We embrace debate but it must not be the seed of discontent
and distrust. Management has a duty to lay out its thinking and plans
and to answer questions. Abuse or shorten this process and debate becomes
a harbinger for division. Division turns into rift."But debate must be managed. A major international merger is, for any
business, a seismic shift."
And the key to "managing" debate is to rigorously keep one’s eye on the business issues,
and not the subjective, emotional, gremlins that can affect rational
decision-making.
As Parker puts it, "business concepts can become clouded by subjective
thought:" Suddenly a merger is no longer a major milepost
in the execution of a long-term strategic plan, but instead it represents
a "loss of control," a "loss of independence," a "takeover."
Parker will have none of it. Consolidation is the order of the
day; all ahead flank:
"Be in no doubt: the game is worth the candle. We have chosen
to partner with a dynamic and well-led organisation that shares a common
vision of the impact of the globalisation of legal services, is culturally
compatible, has a track record of making mergers work and gives us
reach and investment resource to fuel our global ambition."Most important of all, we create opportunity for our people and our
clients. Human spirit desires to grow and embrace change and the uncertainty
and challenge that it creates. As one of our paralegals commented: “We
can work with new ideas and new people.”"
Are we listening to a lawyer here?
"Human spirit desires to grow and embrace change and uncertainty"??
Yes, we are listening to a 21st Century lawyer—in a larger,
more capable firm on a carefully thought out, realistic 21st Century
trajectory.
