"Human Spirit Desires to Embrace Change:" Need Lawyers Apply?

Guess the speaker (hint:  London-based Managing Partner of a firm you've heard of):

"Over a 10-year period the impact of rationalisation by industry sector has been dramatic.   In the banking sector, 28 major institutions reduced to eight, in pharmaceuticals 33 to 13 and among mid-tier law firms in London 16 to 11.  Consolidation of clients and legal services providers has happened, is happening and will continue to happen."

OK, it's Roger Parker of Richards Butler. 

And this is apropos what exactly?  His telling the background story behind their merger with Reed Smith.   What's impressive is the forthrightness and optimism with which Parker, and Richards Butler, approached this "rationalisation" (a/k/a consolidation).  Where many managing partners, or firms, might view this with trepidation, uncertainty, and hand-wringing, Parker saw it as an "exciting" opportunity and embarked on a concerted three-year campaign to position Richards Butler for a merger.

How does one do that?  The same way one manages any business to make it more attractive to suitors:

• monitor costs relentlessly
• clean up the balance sheet
• improve cash flow (by, e.g., accelerating billing and collections and improving the quality of receivables)
• insist upon, and enforce, a clearly articulated strategic positioning.

The last may be the hardest, as it requires consensus among the partnership to establish and genuine discipline to carry out.  But Parker is clear that "rapid revenue growth without focus on strategic positioning [can harm] the quality of earnings, potentially a long-term issue" (emphasis supplied).

We also learn how Parker and his colleagues approached the all-important issue of the cultural challenges that a potential (now, actual) merger could pose.  Make no mistake:  The financial "hygiene," specified in the bullet points above, is a necessary but by no means sufficient condition for a firm intent on merger to meet.   Those are things that, in any well-oiled firm, should be practiced as a matter of routine.

The make-or-break challenge is, rather, the cultural one.  What does Parker have to say?  Note his nuance:

"We embrace debate but it must not be the seed of discontent and distrust. Management has a duty to lay out its thinking and plans and to answer questions. Abuse or shorten this process and debate becomes a harbinger for division. Division turns into rift.

"But debate must be managed. A major international merger is, for any business, a seismic shift."

And the key to "managing" debate is to rigorously keep one's eye on the business issues, and not the subjective, emotional, gremlins that can affect rational decision-making.

As Parker puts it, "business concepts can become clouded by subjective thought:"  Suddenly a merger is no longer a major milepost in the execution of a long-term strategic plan, but instead it represents a "loss of control," a "loss of independence," a "takeover." 

Parker will have none of it.  Consolidation is the order of the day; all ahead flank:

"Be in no doubt: the game is worth the candle. We have chosen to partner with a dynamic and well-led organisation that shares a common vision of the impact of the globalisation of legal services, is culturally compatible, has a track record of making mergers work and gives us reach and investment resource to fuel our global ambition.

"Most important of all, we create opportunity for our people and our clients. Human spirit desires to grow and embrace change and the uncertainty and challenge that it creates. As one of our paralegals commented: "We can work with new ideas and new people.""

Are we listening to a lawyer here?

Yes, we are listening to a 21st Century lawyer—in a larger, more capable firm on a carefully thought out, realistic 21st Century trajectory.