6 Major Benefits Of Law Firm Mergers

6 Major Benefits Of Law Firm Mergers

The merger of a law firm can be a bit of a problem. Mergers take place in every sector of business, but there is a widely accepted belief in the legal world that they might be hindrances to efficiency, increased profits and growth. Depending on the economic condition, the mergers will have a growth or decline in popularity. The UK legal field is facing an all-time competition. Thus, we have to understand whether the top mergers and acquisition law firms make sense or not.

The mergers are increasingly becoming popular

Feedbacks from many law firms prove that around 50% of the firms are interested in mergers or get acquired within the next year. This resulted from the new boutique practices. More than 60% of firms agree that the pressure to stay in completion has increased magnificently for the last year. Studies also indicate that the firms are shifting towards focussing on specialist sectors and considering them the biggest opportunities in the coming years.

Why should a merger be considered?

Before considering the benefits of a merger, we should consider the following points:

• A merger is not a panacea, which will be able to solve every problem of the firm. It can be a launchpad for a new organization to grow with competitive edges over the others.
• A law firm merger is never meant to be a business strategy. They are just routes to gain competitive advantages.
• A merger should be able to create a differentiating factor from the other entities.
• The merger should also be capable of catering to the specific needs of the clients. This could either be an improvement in the efficiency or the capability to provide new kinds of services.
• There should also be cross-selling of services to the clientele of both the parties to the merger.

The 6 benefits

Top mergers and acquisition law firms do take up a lot of planning and time. Still, one might wonder, why take the effort at all? The primary reason is the global market is increasing in competition and the bigger firms do well in the competitive pressure. There are various other benefits of merging. Some of them are as follows:

A bigger and better name

Brand value is an important attribute for any business. When two companies merge, their power to sell automatically increases manifold. Two law firms, medium in size, can combine with each other to create a bigger and better name. Who knows, it could be a big name in the legal field. The two law firms might have been doing just fine individually but with the help of the merger, it could turn into a company with greater brand value and can reach hundreds of clients.

Diversify the practice areas

This is one of the most encouraging reasons for law firms to merge. Each of the firms may have unique areas of specialization and when they combine there will be a diversity in the areas of practice. There will be more m & a lawyers and a variety of legal specialists in the merged company. The clients will get access to greater number of areas, thus the portfolio will expand. This will also increase the chances of earning profits. Both the companies will work together in the pursuit of serving a huge clientele in a plethora of fields.

Standing high in the competition

Nowadays, businesses are highly competitive. The same type of boutique law firms may exist in the same area. All of them will be keen on attracting clients. To bring in more clients, a merger is often useful. If a smaller firm joins hands with an established name, it can thrive well in the competitive world. It will also start reaping the benefits of being a big name in the legal field.

Covering a greater area

In large countries, often it becomes difficult for law firms, to cover greater expanses. The legal firms, which want to foray into the foreign market, should set up offices in those locations. If the firm gets a chance to merge with an already existing bigger name out there, it can save the hassles of setting up an office there.

Economies of scale

The mergers will always result in economies of scale for the company. This is nothing but the benefits of the cost that the companies will attain due to a merger. As a result of the merger, the size of the company increases. Thus, it can buy materials on a large-scale and also get discounts on prices of products.

Benefits in tax

The mergers will also help to reap large tax benefits for  M&A law firms. A merged company will get benefits of tax when a loss incurring company merges with a profit-making firm. The company will also enjoy a subsidized rate of taxation.

Though mergers may not always be beneficial, various law firms can decide for it to reap certain benefits, which might not be possible when operating alone.