Mike O’Horo,  Co-Founder of law firm business development consultancy RainmakerVT  —  in reaction to the 2012 announcement of global law firm mergers by Dentons and Norton Fulbright, wrote that: “When I see these mega-firm combinations, the phrase ‘trying to scale the unscalable’ comes to mind. As currently practiced, law suffers from three structural limitations due to a lack of business maturity: 1. Production, 2. Management and 3. Sales (emphasis added):

In every other business category, as O’Horo outlines, companies recognize that Sales is a mission-critical function, and they invest heavily in hiring, training, equipping, motivating and managing a professional sales force. Yet law firms continue to go to market with reluctant, part-time, untrained, volunteer “saleslawyers.” 

Recent Swiss Verein Mergers are beginning as a net business development negative

As I wrote at the time about the Dentons merger: “The new firm will be structured as a Swiss Verein, an association of partnerships that maintain separate finances”, citing Ashby Jones report in the Wall Street Journal.  So the creation of internal efficiencies via merger is not the focus of this proposed merger. The development of new business is.  Notably, Norton Fulbright will also operate as a Swiss Verein.

What you have, therefore — with any Swiss Verein merger — is a group of independent law firms under the same brand – hoping the addition of new lawyers in other markets will produce new business. It won’t be that easy.  Once long standing (and in some cases lucrative) referral relationships which have existed for partners in Dentons and Norton Fulbright have now almost certainly been lost in those jurisdictions where new merger partners have been added

It is not enough to simply establish a global brand via a Swiss-Verein tie-up and “hope” your new partners refer business to you. Without an expertly designed and consistently applied business development initiative (in other words, a sales division), a co-branded Swiss-Verein is much more hope than promise. Dentons, Norton Fulbright – indeed any law firm embarking upon an ambitious global Swiss Verein merger — must now take a targeted, proactive approach to business development – both to make up for the loss of long standing referral relationships, as well as to build a new client base around energy and other opportunities the merger is seeking to capitalize upon.

DLA Piper maintains a cross-selling division

As I wrote first in 2012 and later updated, DLA Piper – whose revenue grew 14.6% last year as the firm rose to become the second highest grossing law firm in America – maintains a dedicated cross-selling division.  Formed in 2005 by a merger between three firms, DLA Piper has 77 offices in 31 countries across Africa, the Americas, Asia, Australasia and Europe. As of May 2011, it was the largest law firm in the world by number of attorneys must be credited with helping take the firm to near the pinnacle of the US AM Law 100 and it’s high revenue growth – even in a sluggish economy.

Take it a step further

I wrote as a follow up to the 2012  VQ Forum in Sweden, where experts in the future of the legal profession outlined that “clients want legal advisers who have deep understanding of their business and that law firms should align their services to support client profitability drivers” — that while cross-selling to an existing client base may produce revenue — a focused, well researched, proactive, sophisticated and determined outbound business development effort (again, a full sales division) should as a matter of necessity also be employed by law firms to maximize their ability to secure new business.

Partial solutions will not result in merger successes

As Mike O’Horo concludes in his analysis of recent law firm mergers:  “Unfortunately, in too many mergers, business development is an afterthought, a bolt-on, rather than the mission-critical element of M&A decision-making that it should be.”

Given the stakes in recent global law firm mergers, the lack of mission critical business development operations that O’Horo describes are no longer a luxury law firms aspiring to global preeminence can afford.  The global ambitions of law firms like Dentons and Norton Fulbright make it essential that these firms establish highly sophisticated legal sales divisions as a matter of urgency.

Posted by John Grimley

John Grimley edits and publishes Asia Law Portal

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