| Conventionally a lawyer or a legal practitioner is an | | | | satisfaction. |
| individual certified to give legal advice and to | | | | Creation of transnational law firm by merger involves |
| represent clients in disputes before the courts. The | | | | synergizing of different working cultures. The |
| practice of lawyers advising businesses in deals and | | | | American law firms are bred in a more competitive |
| transactions and in complying with law to preempt | | | | and aggressive market oriented approaches than the |
| litigation in future is in historical perspective fairly | | | | firms in Britain and India. Thus it is pertinent that |
| recent. With the creation of business conglomerates | | | | there is a wavelength and consonance of thoughts, |
| the concept of offering one-stop shop for different | | | | wherein all the major partners are willing to |
| legal areas evolved and so did the institution of law | | | | compromise and adhere to a challenging future and |
| firms. In the 21st century with globalization being the | | | | the opportunity of doing cross-border transnational |
| mantra for transnational business transactions the | | | | deals by creating a global entity. They have to realize |
| evolution of law firms having offices in multiple | | | | that the merged entity will be penetrating into |
| geographical locations has facilitated the formation of | | | | different areas and this will help them build a stronger |
| International law firms. Cross-border consolidation of | | | | relationship with their transnational and multi-product |
| legal business is occurring as evidenced by | | | | institutional clients. The individuals in many cases have |
| convergence of law firms vide international mergers, | | | | to rise to the occasion and have the ability to think |
| multi-national firms and international law firm | | | | of building a bigger brand. It is significant for the |
| networks. Multi-national practices offer new | | | | partners to convince their clients that the emergence |
| opportunities to serve foreign clients. | | | | of the new entity will be of benefit to them too. The |
| General practice firms in major markets are | | | | use of technology to conduct conflict checks and to |
| increasingly feeling that 150-300 lawyers is only | | | | take away this power from the partners has to be |
| mid-sized, both from the perspective of clients and | | | | handled tactfully but assertively. The top to bottom |
| recruits. Consequently, many of these firms are | | | | review of the firm's management structure has to be |
| exploring expansion opportunities. Many follow | | | | built and at times the managing partner has to |
| aggressive and at times predatory M&A | | | | introspect if he has the ability and the tools to handle |
| techniques for their expansion and growth. The US | | | | the pressures of the new job. |
| and UK led firms have laid a pioneering and innovative | | | | The downside of such mergers is that there will be |
| benchmarks and industry standards on building and | | | | drop-off referrals from other firms, which will have |
| managing large scale law firms. | | | | concerns of handling clients over to a major |
| Today the transnational law firms have business | | | | competitor. Tremendous efforts have to be made to |
| turnover running into hundreds of million dollars and | | | | build relationships and mutual trust between partners |
| are managed in a professional manner like any | | | | of different branches and locations so as to boost |
| Fortune 500 corporations. Many of them hire top | | | | internal client referrals. |
| class accountants and MBAs to keep abreast with | | | | There is one area of concern if such mergers are to |
| the latest management and financial techniques in | | | | be incorporated in different cultural settings. When |
| constant effort to build a sound 'brand' name and | | | | the merger happens between firms of Europe and |
| create an effective and positive 'value position'. Since | | | | America there is not much differentiation in working |
| the U.S. Supreme Court's holding in Bates v. Arizona | | | | culture and in dollar-euro exchange rates. But it will be |
| (1977) wherein the prohibition on commercial | | | | a challenging issue, when an International Law firm |
| advertising of attorneys was lifted, the American law | | | | would like to do an acquisition in a country like India, |
| firms have made substantial budgetary allocations for | | | | where the billing is significantly different than the |
| advertising like any other business corporations. | | | | ones adapted by the transnational law firms. The |
| As the size and complexity of the merger | | | | number of Indian law firms that work on the hourly |
| transactions increases, a premium needs to be placed | | | | billable cycle are handful whereas that is the norm |
| on both effective evaluation and implementation of | | | | with the International law firms. The strong sustained |
| the merger. Merger discussions can place stress on | | | | growth of the Indian economy and the appetite of |
| both individuals and organizations. There are few | | | | Indian businesses to make a presence in the global |
| changes in a law firm that are as dramatic as a | | | | trade is compelling many International law firms to |
| merger. The key to managing this change is planning, | | | | have a "India Group" practice vertical as at present |
| structure and communication. It is pertinent to keep | | | | they are not allowed to set up practices in India. But |
| in mind that the legal profession is a service sector | | | | with India being signatory to General Agreement on |
| and its brand is nothing but the 'value' that each | | | | Trade in Services (GATS), it is inevitable that the |
| 'individual' attorney brings to it. Also the valuation of | | | | service sector in India will be liberalized. Today the |
| the firms is done on the strength of what each of | | | | International law firms and multinational companies |
| the partner can bring to his practice vertical. Thus if a | | | | refer businesses to different local law firms, but like it |
| few individual attorneys leave the firm, the brand of | | | | has happened in the advertising and consulting |
| the firm can be diminished exponentially. This aspect | | | | business most of the multinational companies would |
| makes the legal business (It could include any other | | | | like to relocate their work to a one-stop shop and |
| service industry (like consulting, software | | | | this might fuel the appetite for mergers among law |
| development and accounting), but for the purpose of | | | | firms. |
| this discussion I am only focusing on law firms.) | | | | From the perspective of Indian Law firms, the |
| different from other sectors. Consequent to a | | | | conventional wisdom is that young firms are not very |
| merger between different firms for a partner at an | | | | likely to be targets for a merger or acquisition. But in |
| individual level is that it changes the remuneration | | | | India the concept of law firm as a professional |
| policies, lines of authority and the bonus & | | | | business entity has acquired significance only since |
| retirement benefits. But at the professional level, | | | | the 1990s. Hence if a firm has built up its |
| what is considered and vigorously debated is how to | | | | organizational structure and its reputation, the |
| synergize the strengths and weaknesses of each | | | | likelihood of its being acquired becomes more likely. |
| firm and whether the firms are culturally compatible. | | | | Indian firms with strong domestic and cross border |
| Another significant issue which hovers over | | | | practice may find themselves inundated with offers. |
| M&A in law firms is of compensation among | | | | The greater challenge for an International law firm will |
| partners of the firm. Generally two systems are | | | | be its ability to keep profits per equity partner high |
| followed- traditional lockstep method and the more | | | | and to pay partners in remote locations based on the |
| competitive scheme of getting a share of income | | | | local billing which may not match the lucrative billing of |
| from ones business generation, generally known as | | | | bigger commercial cities. This will be a key element |
| the eat-what-you-kill-scheme. Lockstep is a system | | | | for effectuating acquisitions in different countries. |
| for paying partners according to how long they have | | | | These were the issues that led to the collapse of |
| been in the partnership irrespective of their personal | | | | Coudert Brothers, a firm with strong fundamentals, |
| contributions to the growth of the business of the | | | | which expanded by not laying enough focus on |
| firm. Lawyers in the partnership for three years, for | | | | developing strong domestic core practices to feed its |
| example, will all earn the same, even though they | | | | global network. It will be pertinent that firms though |
| may all bring different amounts of work to the firm. | | | | having a global name will have to develop a strong |
| But today the management of the firms is making an | | | | domestic practice and only then the merger will be |
| effort to evolve a hybrid system involving the | | | | successful. For a transnational law firm entering a |
| stability of lockstep and also to reward | | | | new market it would be worthwhile business |
| entrepreneurship among partners, a percentage of | | | | proposition to tie-up with a boutique firm as the |
| the share in the business they generate. This is more | | | | fundamentals of relationship and business can be |
| so when there are transnational mergers. Like for | | | | strengthened and gradual exploration of the legal |
| instance when Clifford Chance of England merged | | | | markets can be undertaken. This approach will |
| with Roger &Wells of United States in 2000. | | | | certainly create a long-lasting brand and effective |
| The enticement offered to the big money making | | | | value positioning both for the local firm and for the |
| anti-trust attorneys of Roger &Wells was | | | | International law firm. |
| common pooling of antitrust work of Europe and | | | | Overcoming these challenges may lead to a creation |
| United States, which would remain within the merged | | | | of what can truly be characterized as a Global law |
| entity and lead to more challenging assignments and | | | | firm. But can the sheer integration of global |
| more business for the merged entity. But the recent | | | | economies create a single law firm having effective |
| exodus of many American partners from this merger | | | | offices in different continents is a challenge that |
| suggests that this is one issue that is paramount and | | | | many law firms are exploring and only time will be a |
| needs to be worked on for every partner's | | | | better witness to its success. |