Walker Clark Worldview

The final demise of the British firm Halliwells, reported last week in the on-line edition of The Lawyer, is a good case study in the financial failure of a law firm.  The Lawyer summarized the factors that led to Halliwells’ failure earlier this month.

The failure and breakup of Halliwells is instructive for law firms anywhere that substitute wishful thinking for attentive management of operating costs and deepening debt.  From what I have read about the final days of Halliwells, they seem to me to have been about as orderly as the evacuation of the Titanic, with reports that more than 30 support staff were handed no-notice dismissals, apparently without any redundancy compensation or accrued vacation pay, at the end of the work day at a meeting that not one partner had the courage to attend.  (To be fair and tell the whole story, more than 460 staff found employment in one of the firms that acquired the surviving pieces of the Halliwells practice.)

A new post this morning in The Lawyer provides a glimpse of the “afterlife” for the parts of Halliwells that were acquired by other firms, who have created “firewalls” in the form of separate LLPs to protect the acquiring firms from the liabilities of the former Halliwells partners, as well as to enable a more reasoned pace of integrating the new partners into their firms.

Norman Clark

The recent on-again off-again status of merger talks between Mayer Brown and Simmons and Simmons illustrate how law firm mergers are a lot like baseball.

As I watch the World Cup, I continue to be amazed at how world-class stars take what is basically a simple game and play it at a level of skill and grace that is almost magical.  Football (real football…not the American version) truly is the Beautiful Game.  (As my firm has clients in almost all of the countries in the Round of 16, I will not disclose my allegiances at this time.)

By contrast, baseball is a very difficult game made to look easy by the skills of its best players.

Law firm mergers, if done properly, are more like major league baseball than World Cup football. Although the business case for the merger might seem strong, the details of execution are usually much more difficult — especially at the “major league” level of two firms like Mayer Brown and Simmons and Simmons.  The complexity of merger negotiations and post-merger integration, combined with the intense partner attention and involvement that a successful merger requires, are among the principal reasons why good merger opportunities often fail to be realized. Conversely, most rushed mergers, in our firm’s experience, produce disappointing results at best, and, in many instances, an anti-synergy that leaves the combined firm weaker than the sum of its antecedent parts.

Although I am not privy to all the details, it appears to me that Mayer Brown and Simmons and Simmons are right to take their time with a searching, in-depth, and fully-informed consideration of all aspects of the proposed deal. A successful merger of these two excellent firms could be wonderful to behold, like a triple play in baseball. A sloppy merger could be each firm’s worst disaster, like an own-goal in the 90th minute of the World Cup final.

Norman Clark

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