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Avid snow skiers know the feeling that comes from arriving at the bottom of a black diamond slope and looking back at the terrain just covered. Rock climbers have a similar feeling after arriving at the top of a particularly challenging incline and looking down. Successfully merging two firms each with about 200 lawyers (and staff to match) brings similar feelings. Looking back and thinking about the separateness of the two previous organizations and observing a fully combined firm functioning as if the merger was a long time ago brings a sense of accomplishment mixed with relief. As with the skiers or rock climbers, then comes the ability to say “that wasn’t so bad.” What ensures a safe arrival at the bottom of the slope or the top of the cliff? What makes for a profitable merger and how do you avoid the pitfalls that impair the merged firm’s performance? The formula for each firm considering a merger is probably unique to that firm or merger. However, there are some common threads in efforts to maximize profits and avoid pitfalls in any significant merger. ASSESS RISKS Smart skiers don’t start down a black diamond slope without a healthy respect for the task or without being ready. Law firm managers obviously should approach mergers similarly. A successful merger will result from the joinder of firms conditioned to the concept of a merger, managements sensitized to the trauma potential of a merger and a shared vision for the combined firm. For maximizing profits, both firms considering a merger must be strong and profitable individually. The financial performance of both firms also has to be compatible — close enough that both firms see benefit from the combination. Fear of “dilution” kills many a merger, but fear of “dilution” can be addressed successfully with firms properly matched and with promise of a compensation system based upon “meritocracy.” PREPARING THE TROOPS Losing lawyers and staff harm the merger’s possibilities for success. Both groups of partners of the merging firms must arrive at an understanding that “merger pain” is worth the gain. A pitfall for merger efforts is putting the “generals” too far in front of their “troops.” Troops not following or following reluctantly spell disaster. Firm leadership must understand the reality of systemic shock to merging institutions. A significant pitfall for any proposed merger is a firm leadership’s appearing unconcerned about the toll on lawyers and staff of merger changes. And, of course, both firms’ leadership must articulate a vision to capture the spirits of the vast majority of the partners in each firm. Effective communication becomes key. Lawyers and staff need to know where they stand. Agreement between merger partners on areas critical to the future of the law firm is essential to provide the roadmap for moving forward. Ingredients for combined success include commitment to client service, professional and personal ethics, quality of work, recruiting as a priority, the culture of the firms and a selfless commitment to the firm, common compensation philosophy, growth, training, management philosophy, community and professional service, and diversity. STICK WITH IT Even if a merger appears the right course, determination is important. To continue the skier analogy, mid-slope halting and breaking rhythm can prove a bad mistake. So it is with firm mergers. In proceeding with merger talks, tough issues do come. Once an appropriate merger partner is located and talks begin, determination to see the venture to conclusion makes resolving the tough issues possible. Unsuccessful merger talks aren’t helpful to the image of either firm. Another pitfall to the success of the merger is lack of confidentiality. Premature leaking of the potential merger or details can only unsettle both lawyers and staff and can result in losing people. MAXIMIZE SYNERGIES Synergy is an overused term these days. However, discerning correctly synergies from a merger and making certain they are achieved maximizes profits in the most remarkable manner. For example, both firms in the Locke Liddell merger had successful energy and oil and gas practices prior to merging. In the year after the merger, the combined firm provided three times the services to clients in this industry than the combined total had done previously. Representation of clients in this industry was appropriately recognized as an opportunity for synergies from the expertise existing in both firms and the ability to cross-sell and attract new clients. It worked. Presence in Houston with greater resources, presence in New Orleans and greater presence in Dallas and Austin also creates synergies that have enabled the combined firm to maximize services provided to existing clients as well as to new clients. More than 90 task forces in the combined firm focus on particular clients and industry sectors, each meeting to develop plans to broaden the services provided clients and industry sectors. BALANCING ACT Maximizing profits comes from maximized opportunities for service without over concentration or other loss of balance. The stability and profitability of the merged firm is enhanced by balance. Balance in locations, balance among industries served, balance among clients (none so large that its loss would be dramatic), balance among lawyers (a right mix of practice areas and none so important his or her loss would be dramatic), balance among legal expertise (as full service as can be), and, of course, balance between work ethic and quality of life. Firms, like people, have personalities, more often today referred to as “cultures.” And the culture of a firm shows when merger talks first begin. In the case of the Locke Liddell combination, each firm approached the merger with a commitment that every lawyer at either firm would be given the opportunity to be part of the combined firm. This approach proved right for the combined firm. THE TIPS In sum, here are a few proven tips for those contemplating a merger and wishing to maximize profits and avoid pitfalls that injure performance in a combined firm are: � Start with the right foundation and ensure a common vision for the combined firm; � Negotiate the terms of the merger with the knowledge that the people on the other side of the table are about to become your partners; � After the merger, treat all your new partners as if you have been partners all your professional lives and all the lawyers and staff as critical members of a team; � Keep everyone, including those who are involved in management, to the maximum extent possible doing what they do best — practicing law; � Integrate practice groups and other aspects of the firm to the maximum extent possible as soon as possible; and � Involve your clients and potential clients in the excitement of the combination; take full advantage of the opportunities provided by the increased size and depth by placing strong emphasis on communicating the merged firm’s capabilities to clients and potential clients. Harriet Miers is a co-managing partner of Locke Liddell & Sapp in Dallas. Miers specializes in commercial litigation in state and federal courts.

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