The SRA has recently issued a warning notice on law firm mergers, sales and acquisitions, seemingly in response to the fallout from the collapses of Axiom Ince and SSB.
 
In this Ten-Minute Talk, Partners Corinne StavesZulon Begum and Andrew Pavlovic discuss the content and implications of this SRA Warning Notice, with a particular focus on how this might affect how law firm mergers operate in practice.
 
The full Warning Notice can be accessed here.

If you have any questions in relation to the SRA’s Warning Notice or wish to discuss mergers and acquisitions more generally, please contact Corinne StavesZulon Begum and Andrew Pavlovic.

Making decisions on partner remuneration and promotion can be hard – and this is the time of year when it all happens!  There are so many factors to consider – both human and legal, big picture and small but important. Questions those managing these processes in all sizes of professional services firms may be asking include:

  • Does rewarding partners in this way help to achieve our overall strategy and business plan?
  • Will that reward incentivise that individual?
  • Will it drive someone to look elsewhere and what would that mean for our growth and vision?
  • Is it fair to others in the firm?
  • Am I acting in the best interests of the business?
  • Do I need to or should I take into account a partner’s behaviour as well as their work product and financial contribution, and what weight should I give it?
  • Is there a risk of discrimination – are there specific factors we need to take account of?
  • Does my LLP Agreement give me/us the power to move someone down the equity and by how much?
  • Does our partner performance review process support the decisions we need to make?
  • Are we rewarding our stars appropriately and sufficiently?
  • What changes can I consider making to our partner remuneration system to adjust for individual partner over-and underperformance?

Join us on Thursday 11 July for an interactive discussion which will answer these questions and leave you feeling more confident in your decision making process, and how you can use it to drive your strategic vision and mitigate risk.

Our panel brings together expertise in remuneration structures and their implementation and application, managing partner performance – both over and under performance, fair and lawful decision making and discrimination law. They will share their experience and insights on these issues, which affect all professional services businesses on a regular basis.
 
Co-Chairs: 

Guest Speaker:

  • Jeremy Callman, Barrister, Ten Old Square – A leading expert in partnerships and LLPs and renowned authority on the issues relating to discretionary decisions making in this context, having advised and litigated on numerous cases in this field.

PPA Speakers:

Date: Thursday 11 July 2024
Time: 9.00am-10.00am BST

Registration:
Register to attend here.

Join us for the next Professional Practices Alliance (PPA) webinar, ‘Cash, Remuneration & Economic Uncertainty‘ on Thursday 23 May. See below for full details and register your place here.

Times are tough for mid-market law. While demand for some key areas of legal service remains buoyant, others are under pressure. Markets are hypercompetitive. The war for talent has never been more intense. Much current innovation in Generative AI and other legal technology seems focused on reducing client need for external legal advice, not on enhancing the capabilities of law firms. In the UK particularly, shifts in tax law add their own complexity to this toxic mix.

Clearly, law firms need to approach profitability management in new and more creative ways. Business models and strategies must both evolve as digital elements supplant traditional legal service delivery channels. Past webinars on addressing financial pressure have focused mainly on financial hygiene, cost cutting and business development. These remain important but in times of systemic change, one must dig much deeper. How must law firms respond, systemically? To what extent do the ways in which a law firm is governed and organised help or hinder profit margin management? What regulatory requirements and restructuring options apply to a law firm that finds itself in financial difficulties? What options do firms have to use emerging technologies to simultaneously enhance both efficiency and profit?

Join our panel for the forthcoming PPA webinar Cash, Remuneration & Economic Uncertainty, where our panel will explore:

  • Navigating cash pressures: The financial challenges facing modern law firms, including escalating costs, high interest and basis period reform.
     
  • Strategies for success: How can these pressures be managed? From more robust time recording practices to optimising remuneration systems and KPIs, we will discuss the key elements for financial resilience.
     
  • Technology and AI: How can these be used to drive change and how do you ensure they are adopted fully and used effectively?
     
  • The future of law firms: What does the future hold? We look at long term vs short term investment models, PE in law firms, succession planning and related SRA implications.

Date: Thursday 23 May 2024
Time: 9.00am-10.00am BST

Webinar Chair:
Rob Millard PhD, Director, Cambridge Strategy Group – Law Firm Strategy, Mergers and Sustainability Advisor

PPA Speakers:

Registration:
Register to attend here.

Should you have any questions that you would like to be put to the speakers, please email Rob Millard.


SAVE THE DATES

We are delighted to announce our forthcoming webinars over the coming months:

Friday 14 June 2024: ‘How do you manage underperformance?’

Wednesday 11 September 2024: ‘How do you attract and retain high flyers?’

I attended Lawtech UK’s “GenerativeAI Series: Roadmap to 2030” event held at the Law Society earlier this week, with panels expertly chaired by Christina Blacklaws (she/her) and Richard Susskind. I was amazed though to hear that almost all legal tech start-ups aim their businesses at in-house legal departments and SMEs – not law firms. The few that do work with law firms focus effort on limited point solutions, explicitly not anything disruptive of business models. Law firms, I was told, are simply not interested in those kinds of tools.

The time will come (I believe quite soon) when law firms either become interested in these, or lose vast swathes of hybrid tech/human work that could be well profitable if delivered with business models better aligned with their performance drivers than the century-old billable hour, “Tournament of Lawyers” business model.

Our deck “The Sixth Generation Law Firm” shows how. It can be downloaded via the link here. If you find the deck useful, please feel free to pass it on.


In this Ten-Minute Talk, CM Murray Partners Corinne Staves and Zulon Begum speak with legal recruitment expert Stephen Rodney, founder of IntoGreat Coaching, about how to ensure the effective integration of lateral partner hires in law firms.

Key discussion points from this Ten-Minute Talk:

  • How effective are lateral hires within law firms overall? Are firms and individuals getting it right and what improvements can be made to increase their return on investment?
     
  • Common trends with partner exits involving lateral hires, including factors such as failure to integrate culturally or poor performance
     
  • The importance of a strategic plan at the outset, during the lateral hire recruitment process
     
  • The key elements of integration coaching for lateral hires, including:
    • Business plan vs an integration plan
    • Integration of the lateral’s clients and building profile, both internally and externally
    • Understanding the firm’s culture
    • Establishing how success will be judged
       
  • How can existing frameworks (such as the LLP deed, appraisal criteria, policies and performance metrics) work to support the integration of lateral hires into the firm?
     
  • The critical value of the hire being seen as a two-way process between the firm and the individual
     
  • What does success look like for both the firm and the individual?  

If you have any questions in relation to lateral hire integrations, please contact Corinne Staves or Zulon Begum.

CheckYourLLPAgreement – Online Tool:

Use CM Murray LLP’s free online tool to help review and update your LLP agreement, ensuring it is robust, aligned with best practice and agile. You can access the tool here.

In this podcast recording, Partner Zulon Begum and leading international law firm management consultant, Moray McLaren discuss new research by the IBA’s Law Firm Management Committee (LFMC) which explores recent trends in partner profit sharing, remuneration and reward. The research has been published by Harvard Law School and is available here.

Key discussion points from this podcast recording:

  • Is there such a thing as a ‘perfect partner’ and how do you define them?
  • Gaining a better definition of partner contribution with an increasing adoption of non-financial performance indicators
  • Introducing clearer guard rails and ensuring there is a fair process
  • Diffusing tensions around partner remuneration discussions and avoiding barriers to change
  • Providing leadership with “teeth” by revisiting and reinforcing governance
  • Moving from partner evaluation to partner development
  • A look to the future – how AI will move the goals posts on partner contribution and remuneration

If you have any questions arising from this podcast recording please contact Partner Zulon Begum.

CheckYourLLPAgreement – Online Tool:

Use our free online tool to help review and update your LLP agreement, ensuring it is robust, aligned with best practice and agile. You can access the tool here.

In this Ten-Minute Talk, CM Murray’s Partner Zulon Begum and Managing Partner Clare Murray discuss LLP agreements, focusing on how firms should update their agreements in preparation for a merger.

Key takeaways from this Ten-Minute Talk:

  • The three common ‘gaps’ in LLP Agreements in relation to potential future mergers or transactions are usually (i) unachievable decision-making thresholds for approving a merger/transaction, (ii) lack of clarity on how any capital proceeds will be distributed and (iii) how dissenting partners can be addressed in a manner that avoids the transaction being thwarted;
  • Failure to address constitutional gaps can mean that firms may miss out on any merger opportunities that arise as they are not able to move forward quickly enough; and
  • An obvious ‘work-around’ is to amend the LLP Agreement during a merger process; however, this can be a high-risk strategy and may leave the firm open to challenge by disgruntled partners.

You can access CM Murray LLP’s CheckYourLLPAgreement tool here.

In this Ten-Minute Talk, Managing Partner Clare Murray and Partner Zulon Begum discuss LLP agreements, with a particular focus on partner remuneration.

Key takeaways from this Ten-Minute Talk:

  • The importance of ensuring the firm’s partner remuneration system, metrics and procedures are clearly documented within the LLP Agreement and any associated policies and allow for a degree of flexibility to respond to issues such as exceptional performance or partner absences and reduced working time  
     
  • Current areas of focus for firms relating to partner remuneration include (i) ensuring remuneration systems encourage high performance and incentivise transition to higher tiers (e.g., fixed share to equity), (ii) aligning partner KPIs with firm strategy and (iii) ensuring a fair, transparent and clearly documented appraisal process, including an appeal mechanism in appropriate circumstances
     
  • Key trends in partner remuneration systems and how they are developing; firms with modified lockstep systems are placing a greater degree of emphasis on rewarding individual performance

Most ambitious law firms include merger as one potential route to achieve their growth plans, whether by way of acquisition of smaller, strategically relevant firms or a ‘merger of equals’.  

Please join us during the afternoon of 29 November as we gather law firm leaders for a workshop on law firm mergers.

The event will include:
 
Key-note address on the findings of an extensive, cutting-edge PhD research project into the drivers of success across 73 large law firm mergers that took place between 2004 and 2017.
 
Fireside chat between expert merger advisers, including how to achieve a successful merger and why potential mergers fail.
 
Interactive group discussion on handling common issues which arise during the merger process, and the challenges of managing and communicating with the wider partner group.
 
Places are limited to ensure the group is small enough to generate meaningful discussion among peers.
 
Event details:
 
Date: 29 November 2023

14.00 – registration opens
14.30 – event begins
18.00 – close and networking drinks

Venue: The Bingham Room, The Honourable Society of Gray’s Inn, 8 South Square, London, WC1R 5ET
 
Please RSVP here.
 
Who should attend?

  • Managing and senior partners
  • CEOs
  • FDs/CFOs
  • Law firm board/executive committee members

Speakers:
 
Zulon BegumCorinne Staves and Andrew Pavlovic of CM Murray LLP
Robert Millard of Cambridge Strategy Group
 
We look forward to welcoming you to this event.

In this Ten-(ish) Minute Talk, Managing Partner Clare Murray and Partner Zulon Begum discuss the key aspects of LLP agreements that professional services firms should consider updating in the current market, as well as showcasing our new online tool, CheckYourLLPAgreement.

In this video, Clare and Zulon discuss:

  • Why should firms care about their LLP agreements in the current economic market?
  • The importance of treating your LLP agreement as a living document, reviewing it regularly and ensuring it evolves in parallel with your partnership and strategy to reflect current and future business needs
  • Considerations to ensure nimble and flexible decision making, enabling your firm to respond to market opportunities or partner behavioural challenges effectively
  • How your LLP agreement can be calibrated to help manage cashflow and the impact of Basis Period Reform on firms
  • A preview of our brand new GC online tool, CheckYourLLPAgreement. The free, interactive tool will help GCs and management teams in professional services firms ensure their LLP agreement is robust, competitive, appropriate and in line with best practice