March 10, 2003
Legal Times
By Mary W. Legg
You finally landed the practice group of your firm’s dreams: the first food and drug practice group that could cross-market with existing clients to bring in the valuable and growing market of FDA work. Key partners in the group had excellent name recognition and portables enough to keep many hungry associates busy. With all of the skills, talents, and clients possessed by this group, you were sure they would “hit the ground running” and really add to the firm’s bottom line.
But after two trying years, this group has failed to meet expectations. And one of the key partners defected within a year.
Chalk it up to just another bad lateral hire? With the strength of the FDA industry and the anticipated growth in that practice area, should the firm launch a new search for the right group? And where did you go wrong in the selection and hiring process so that you won’t make the same mistake next time around? Should the firm look for certain traits or characteristics in the next group that this group did not possess?
Maybe the problem is not in the hiring process, but in the integration process, or lack thereof. When laterals join the firm, what are the expectations of the parties? Are they clear? Does the firm have in place any methods and procedures to help laterals accomplish their goals?
Laterals often don’t succeed because they are unfamiliar with the important nuances of the firm’s capabilities, and unaware of how to tap into opportunities. Bad experiences – some public, some not – have made firms more wary, but have also made candidates more careful. Too many have heard of or seen a promising acquisition founder because the new group was not properly integrated into the firm. That’s why candidates increasingly insist on knowing how an interested firm plans to integrate them before they consider transferring there.
What firms need is a comprehensive yet practical process for melding the strengths of the laterals with those of firm members. Whether your firm is acquiring one partner, a practice group, or an entire firm, it will benefit from establishing a written plan for integrating laterals.
Written Integration Plan
The plan should be sufficiently general to cover the acquisition of any and all prospective targets, yet specific enough so that details, such as identities of groups and individuals, can be easily plugged into the plan. As firm members and staff become familiar with the plan, the integration process will not only become easier with each acquisition, but will also enable the firm to continually improve on its plan.
To get started on your integration plan, focus on the reason the firm wants to expand, in general, and why it is targeting particular practice groups. Growth for the sake of growth is not very persuasive to many enlightened partners.
The plan should outline the areas of practice that will be developed or strengthened, and why these areas are important to the firm. This process will enable the firm to identify to any target group its expectations. Comparing expectations will enable all parties to determine if there is a good fit.
Don’t wait for the acquisition to become final before beginning the integration process. During the negotiation process, news often leaks into the marketplace, causing a feeding frenzy of headhunters and other firms seeking to capture key partners. Absorbing all of your laterals quickly can prevent groups from splintering off from the core target group to join competitor firms, taking with them valuable clients.
Establish an Integration Team
An integration team will be crucial in realizing the synergies between the firm and the acquired group. The team should be established as soon as it is reasonably certain that a partner or group will be acquired. Meetings should be held every week, starting before the laterals arrive.
The size of the team should be based on the size of the firm and the planned acquisitions. At least some of the team members should have a thorough knowledge of the overall firm, while others should have an in-depth knowledge of a practice group that is relevant to the acquisition. The team could also include administrative personnel who know the practices and clients of the firm. A member of the group being acquired should be added to the team at some point before the start date.
Weekly team meetings will not only reveal additional synergies and assist in the integration process, but also will keep the team abreast of developments during the final stages of negotiations. The team may be able to help the firm avoid any potential stumbling blocks to the acquisition or identify legitimate deal-breaking issues.
Attorneys should get together with the lateral candidates on a formal and informal basis, in large and small meetings and socials. These meetings should begin during the negotiation phase and increase in regularity as the talks progress. These meetings should go beyond the typical lunches and in-office business meetings. The team should select partners and associates from both the firm and target groups whose practices may benefit from knowing more about their future colleagues. Even if there is not an obvious link between the practices of some of the participants, they may discover new connections. The team should also assist in arranging small dinner parties to be held at people’s homes, to which significant others are invited.
Reporting Back
Unless the people involved in these meetings are required to share what they learn, much useful knowledge will be lost. Very soon after each meeting, each attendee should report back to the integration team about relationships they either discovered or developed. They may even be able to report a new or revived connection with a current colleague. The attendees should also submit a brief but definitive plan to establish the new-found relationship: for example, within three months of the group joining the firm, they will introduce a new partner to their client, and the benefits they hope to obtain from the introductions. The team can use the information they receive to ensure the participants follow through on their discoveries and establish new ties.
Incentives
In the absence of careful tracking, successes in cross-marketing can go unnoticed. Not recognizing that integration efforts are working can stall and even kill an integration plan. The firm needs to communicate successes, both big and small, to the rest of the firm. The method of communication should fit the firm’s size and culture. Sending e-mails may suffice for some firms. One firm went further, posting a chart of successes in its lunchroom, and holding a contest with several different categories: most introductions; most new matters generated; and highest billables from cross marketing. The grand prize winners received an all-inclusive vacation to the destination of their choice. The competition this contest generated was fierce and fun.
Obviously, if the acquisition is successful and the synergies that prompted the move are realized, most everyone at the firm will benefit. That means that everyone should bear the burden of making it work.
It is often difficult to convince partners to devote time to projects that are non-billable. Bonuses, from small to significant, should reward individuals for their contribution to making the acquisition successful. Anyone who takes the time to report useful information to the team and follows through on any suggestions made by the team should be awarded a bonus. Those who were more actively involved in the process should be rewarded accordingly. It’s everyone’s responsibility to help make an acquisition successful.
The time and expense involved in integrating a new group is minor when compared with the costs of a failed acquisition.
Mary W. Legg is President & General Counsel of Firm Advice, Inc., a Legal Search Consultant Firm in Washington. She can be reached at mlegg@firmadvice.com or 202-861-7707.