Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Three weeks ago I was asked by the managing partner of a 16 attorney insurance defense firm about staffing and growth models for an insurance defense firm and I listed the following models and discussed the first model - grow your own associate staffing. Over the past two weeks in other posts I have discussed models 2-5.

Attorney staffing/growth models include:

1. Grow Your Own Associate Staffing
2. Lateral Associate Staffing
3. Contract - Staff Associate Staffing
4. Lateral Partners (Equity or Non-Equity)
5. Of Counsel (Various Approaches and Purposes)
6. Mergers (Or Small Firm Acquisitions)
7. Branching

This week I will outline the pros and cons for number 6 and 7 - Mergers and Branching.

Mergers (or small firm acquisitions)

PROS

1. Quicker access to talent, expertise in a new practice area, and client book of business.
2. Access to infrastructure and resources.
3. May enable the firm to fill in weak spots quickly.

CONS

1. Risks of a wrong business marriage. (The larger the target firm the greater the risks)
2. Issues involving integrating the firms
3. Control issues
4. Conflict of interest issues
5. Compensation - money, approaches, etc.
6. Cultural incomptability
7. Management time to evaluate the feasibility of the merger

Branching

Using approaches listed above.

The appropriate strategy is often a mix or combination of the above approaches. Need to drill down into the financials and review past experience concerning breakeven point for profitability of your attorneys, costs/overhead, fee collections, time and profit margin.

Often the WHO dictates the WHAT (specific strategy)

Click here for our blog on law firm mergers

Click here for our law firm management articles

John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.