Combining firms to create a new enterprise

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Matteson (pictured): Bigger isn’t always better, but it sometimes is. If your strategies match up and both sides of a combination achieve what they were separately looking for, that certainly will evolve really well in the end.

Kenedy: I think a lot of times these combinations are the first step, as part of many steps toward a sort of vision at the end of the day that involves many combinations. The Chicago step isn’t necessarily the only step. It’s one step toward the ultimate goal.

What is firm competition like today?

Matteson: I’ve practiced here for 30 years and I think it is much more competitive today … I remember at my former firm, at a partner meeting, they put up a slide with 10 names and the question was: ”Where did this list come from?” No one got it. It was the list of largest clients of the law firm five years earlier.

There were so many changes that it was not a list that anyone recognized. We’ve always been competitive. I think in-house counsel changes more frequently now, and corporate leadership changes. I think that, and I’m glad for this, law firms don’t get business at the luncheon club anymore. They get it because they’ve demonstrated their expertise, they’ve been noticed, and the work is getting done very well. That is what makes it more competitive.

LoVallo: I think we challenge each other to do better, and our clients challenge us. The competition, in a sense, is intimidating, but it can be invigorating if you respond proactively. I do think what’s happening is change is happening, it seems, faster and faster.

I think if there’s been, I’ve been practicing almost 28 years, a point in time when things seemed to change fundamentally, it’s when information about law firms became public in The American Lawyer, probably around the early ’80s, and the growth of the legal recruiting field at the same time and maybe related to that. I think at that point the law firm partner had the ability to be a free agent.

And once that started happening, it became acceptable to some extent to do that. Things have changed fundamentally since then. Now what we are seeing is that, on top of that, there is a cycle of much more rapid change, change in corporations. We see consolidation and convergence in our clients, which has been happening much more. All of that turns things upside down or turns them over much more quickly than things used to change.

How do you balance your leadership roles with your practice?

Rudnick: The challenge is tricky. It requires a level of self-discipline. It involves figuring out, particularly on the firm leadership side, what am I really going to work on? What am I really going to be able to focus on?

With our clients, they are pretty good at serving as a governor for the work that we do for them, because we know how much they are willing to pay for things and we can organize our work lives and our client service roughly around those expectations. The work that we do in firm leadership is, on one hand, more of a volunteer position, and, on the other hand, if we chose to, we could work exclusively on that and still never do all that we could.

The challenge there is to figure out what are the two or three or four things that we are going to focus on. Who can I get involved with in those things? How can I get done what it is I like to get done, and involve people in the enterprise and the process? And, if you can do that, I think you have got a much higher likelihood of (a) succeeding in your leadership role, but (b) also maintaining that balance.

Kenedy: It requires a very high level of commitment to your firm. If you’re a leader in your firm, you have to have an appreciation that you are doing this for the overall good of the institution, and sort of giving back to your firm. Obviously, service to our clients is first and foremost, and takes top priority. That extra hour you may have a day, if you are committed to your firm, should go toward donating your time to helping the firm, whether that’s on committees, whether it’s on your management committee, whether it’s taking on extra responsibilities to make sure the business is running successfully.

Delegation is also very important. Surrounding yourself with lawyers who are willing also to commit to the firm and to help in that enterprise is also very important.

LoVallo: I think it’s always about balance. Before I was involved in a management role, to be successful, it was still about balance. I think it’s a little more complicated when you have two major roles. But, I think if you balance it right, one sort of gives energy to the other.

I think sometimes you can be a more effective practitioner drawing on what you’ve learned from actually taking a role in running the business, and be more effective for your clients. Your clients see you sometimes as more of a trusted adviser because they know you have that vantage point as well. I think trying to focus on the high-impact points is what you have to do, because you can’t do everything that you could be doing in either role. So you certainly can’t do it in both roles. Really sort of taking a step back, rather than periodically, almost daily, and looking at what things really make a difference…

Matteson: I made a decision mid-career about what I wanted out of being a lawyer. It was balance — family, my own life, my professional life. Now, splitting my time between firm management and my practice, I just keep that same set of principles. I’m always going to carve out just what I need in terms of human interaction. I know what my strengths are. They are not the budget.

I don’t spend as many hours poring over the proposed budget as I might over some personnel matters, or some things that affect the general environment of the firm. I love getting involved in associate issues, staff issues. That’s me making sure that I fill my day with things incredibly rewarding to me …

What characteristics made your firms’ mergers work?

LoVallo: After you get over the threshold issues of, are you financially compatible and structurally compatible and avoidance-of-conflict compatible, then you have to look at the culture. Are people going to like each other? We spent a lot of time getting a lot of people to know a lot of other people.

We maybe hit the right time, when we were sort of in the mid-to-late stages of discussions, when Reed Smith would have these retreats for business and litigation. A lot of our partners went to those retreats and got to see how this could work…

There are a lot of firms, which on paper in Chicago history, a lot of mergers that should have worked based on the lack of conflicts and financial compatibility, which didn’t work at all. You can’t underestimate the importance of culture. If a firm is used to having an open system of financial communication, for example, and you are asking partners to move into a closed system, it’s going to be very, very difficult when the new firm starts with really no trust level…

Rudnick: One of the most important elements of it is getting people to imagine the move. I think one of the things we did particularly well in our original merger was, we started from the premise that we were creating that which had never existed before.

And as we went through and talked about things like finances, associate recruiting, pro bono, professional development, etc. etc., we kept asking ourselves the question: You do it this way and we do it that way, what’s the best way to do it and not between those two, necessarily?

If we are really going to do this, this is a moment of fluidity that we need to take advantage of. That tone, I think, really created a lot of excitement on the part of our colleagues.

Kenedy: I agree. I think culture and buy-in are probably the two biggest keys to success. A lot of the culture you don’t really realize until after the fact, and hopefully you get lucky. I think in our case we definitely did. Buy-in, you can develop that any number of ways. You want to create a management structure that engenders trust in your partnership.

You want to demonstrate the success of your merger early and often. For example, we send out a weekly newsletter of cross-selling successes, and it focuses on lawyers from different offices teaming together and bringing in business that perhaps we otherwise would not have brought in, but for the merger. That’s something sent out to the partnership on a weekly basis and we just sell, sell, sell success, success, success. I think if you demonstrate the results, that’s where you are going to get the buy-in, because they are going to see this was a good idea.

Matteson: If you have the basic elements of buy-in, then the intangible is the people. Are the people going to step up and make this work, or are they going to be passive? If they are passive, it probably won’t work — even if everything else lined up. Giving people within the firm — staff, associates, and partners — a real stake in the game and creating excitement about how it really works for them. That’s no easy task because we have many offices and people in many different situations. It can’t be a single message … It is about building trust. We encourage people to get on planes and visit their counterparts in other offices in the same practice group, in a different practice group.

Get on a plane and introduce yourself and tell what you do. And all of a sudden you find you are coming away with a resource that you did not have …

I think the objective or definition of success are things like, are people sticking around? Are you losing staff? Are you retaining existing clients? Are you growing clients because of the combination, as Jennifer was describing? I think it’s important to keep track of those sorts of things. Overall, do you have the spirit? Does the combined enterprise have the spirit that you had when you were smaller? It’s kind of neat when you do.

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