To understand why many boutiques are allergic to mergers, it's important to understand how they were formed. Years ago, each boutique came into existence out of a large firm. It’s the same story again and again: a couple partners at Fulbright, Kirkland, or Jones Day grew tired of the bureaucracy, the conflicts, and most of all — they grew tired of someone in some other city telling them what to do.
When you get to the heart of small firms, you always find the desire for autonomy. It's in the DNA. And so it makes sense that often the primary reason a small firm will not consider a merger is the loss of that autonomy.
When you get to the heart of small firms, you always find the desire for autonomy.
And who can blame them? This is the beauty of being at a small firm. You have the freedom to decide the dress code and office decor. You can make decisions without running it up the chain of command, to some executive in NYC or Chicago. You decide how much to bill, how much to work, how much vacation you take.
The loss of autonomy would be a true loss, and it's not an unwarranted fear. Some firms still operate in the old bureaucratic way. They franchise law offices like McDonalds franchises restaurants. Each office looks and feels the same. Partners across the nation bill the same rate. They value the way they do things, and only change very slowly, if at all. In our many years of working with firms, however, we have noticed a shift taking place in the last five years or so.
Across the nation, many firms are starting to realize the need to grow their platform. A firm that has offices throughout the Southeast needs a New York presence. A West-Coast firm could serve clients in Texas with boots on the ground there. Many of these firms aren't big bureaucracies — they are usually firms that are themselves the product of several smaller mergers. Because of this, they are open to different ways of doing things. These firms, rather than saying "Do it our way," come in and say, "Do it your way." They know that you know how to practice law in your city, and they have developed a business model that prioritizes the profitability of each group and office over the showy metrics that law firms sometimes chase.
A merger is always a risk, but when partners at a small firm talk with the managing partners of this newer breed of firm, they begin to see how they could feel at home there. Of course it's never possible to maintain all your autonomy in a merger — but knowing that it is possible to keep most of it while gaining the benefits of a larger firm should keep the door open to at least having the conversation when the opportunity comes.
If you would like to consult with us on a merger or an acquisition, please contact us today.