Fear: you tell yourself: “if I don’t join a global firm, I’ll fall behind. Everyone else is doing it.” Fear is a poor counselor. Jumping aboard the merger and alliances train because “everyone else” is onboard reflects an inaccurate reading of the market. Not “everyone else” is doing it; there are plenty of independent, robust firms out there who know what they’re doing. And it’s also foolish because you don’t know where the train is taking you. You must have your own route. Mergers and alliances are just alternatives to get to your destination. They may not be the right train for you.
Vanity: the photo-op. The headline. The overnight doubling of your headcount. All these will pass and leave you empty and, if they were the main reasons for your move, with more problems than you started out with.
Daydreams: you think a merger or alliance will solve all your problems. Your diminishing profitability issues will vanish. A merger with a big name will prevent more partners from leaving. Their client hoarding tendencies will evaporate. How cute.
The client mirage: you assume that your clients prefer being served by the newest member of the XYZ Global legal family, with 30+ offices around the globe, than by good old local you. They might. They might not. Instead of assuming, why not ask: who are my clients? What do they need? And, even better, why not ask them what they need? When we interviewed corporate counsel at large Latin American companies we found that they have ambivalent opinions on mergers and alliances. Depending on who your clients are, what their business is and what you mean to them, a merger or alliance may or may not add value.
“Ok,” you say, “but I’m talking about new clients?” Perhaps it will bring you clients. But, again, it depends on your plan. If you’re a full-service firm in Peru with strong and numerous relationships with firms abroad, chances are that a merger or alliance will lose you more clients (from lost referrals and referrals of referrals) than it will win for you. However, if you’re a small, but well-positioned firm, with challenges to grow in your local market, then perhaps a merger makes sense.
Because someone’s asking: you hadn’t even thought about a merger. Not having done a serious analysis, you have no clue whether it’s good for you. But here you are, your very local you, face to face with a partner of a global player with 40+ offices in five continents who’s asking you if you’d like to become a member of the 5,000+ attorney-strong law firm. You can’t believe this is happening to you. How could you say no? Well, if a merger and alliance doesn’t help you achieve your plan, you should say no.
So, think, don’t feel. Achieving your business’ goals may not require a merger or alliance. Bigger is not necessarily better. Maybe you need to go smaller, ditch your unprofitable practice area. International is not necessarily better than national. What’s the point for you of joining a global player? Maybe independence is your best bet.
Also, the fact that you’re not considering a merger or alliance now doesn’t mean you’re precluded from doing so later. Maybe in three years, when reviewing your strategy, you decide that it makes sense at that point.
If a merger or alliance is what you need, move on to step four.