The potential merger of Berwin Leighton Paisner and US firm Greenberg Traurig has been tracked in the media over the past few months. However, this week it was announced that the business relationship between the 2 firms will go no further. The reason for this boils down to a factor often overlooked by many in the legal sector... Culture.
So how important is culture in comparison to a firms financial success and client base?
The answer: Crucial.
We speak from over 10 years experience in merger & acquisition consultancy, that the true power of a law firm merger lies in human capital. If the lawyers from both firms can't see eye-to-eye then the business is likely to collapse from the inside out. Staff will become difficult to retain, the clients leaving with them. Then the rumours start and the firm cannot recruit lawyers fast enough to replace the ones that left... Reputations are damaged and revenue streams are cut off.
So although BLP and Greenberg may have wasted some time and money debating the merger over the past few months, the cost of a merger gone wrong is likely to be something they could not afford.
Richard Rosenbaum, executive chairman of Greenberg, said: “We concluded that even though our original instincts did make sense, overall it's a big firm and the potential dilution of our culture and potential financial impact and risk in today's environment was greater than we were willing to take.” The firms' cultures were too different, he said, noting BLP is "more bureaucratic, more traditional and a little less decisive”. Rosenbaum said he also had concerns about BLP's compensation system, which "has an element of lockstep, which they would have to modify”, while Greenberg has a more merit-based system.