72 / 244
GAZETTE
JULY-AUGUST
1979
to be made as to who will continue to be a Receptionist
and who will be offered a job in another area.
The integration of staff salaries and staff pensions will
also have to be considered. It is desirable that the level of
salaries and pensions in the two firms be streamlined so
that persons of similar status receive similar salaries.
The working hours for the new firm will also need to be
agreed. I am afraid that in matters of streamlining of
salaries, pensions and working hours, the new firm is
likely to come off worst because it is the law of human
nature that no one will agree to a reduction in salary or to
an extension of working hours!
(4) Partnership Agreements
It will probably be wise prior to the merger to give
some consideration to the drafting of a partnership agree-
ment. It may not always be possible or even advisable to
attempt to complete a partnership agreement before the
merger. Consideration of a partnership agreement will
however highlight various matters and make sure that the
parties are not in conflict. The most important factor in
any partnership agreement is of course whether there is to
be any restriction on the partners practising locally in the
event of the partnership splitting up. My view is that there
should not be any such restriction but it is of course im-
portant that this should be agreed with the other partners.
It is I think also desirable to create a situation that on
retiral or death the retiring partner or his dependants
should not be entitled to any payment for goodwill. It is
also I think wise to agree in principle that partners will
retire at a specified age.
Consideration must also be given to what pension
arrangements exist in the two firms both for partners and
for staff and to consider what further pension arrange-
ments need to be made and what the cost will be.
GENERAL
It is not hard to see that not only is an immense
amount of work and planning necessary for the successful
merger but there is also a lot of expense. The reality is
likely to be that the new firm will have new equipment
furnishings and systems. The burden of the capital
expense of this may be lessened by renting or leasing.
I would hazard a guess that in most cases, far from
there being a saving in overheads by a merger, that there
is an increase in overheads. This is because so much new
equipment and furniture is involved and the rent on the
new premises is likely to be heavy. The merger will hope-
fully produce greater efficiency and lead to cost saving
ultimately. In the short term however the expenses will be
much higher than the previous firms have been used to.
MERGE IN HASTE . . . LONG TIME DESIRABLE
There is so much work to be done in organising a
merger that it is desirable to leave plenty of time and not
to attempt to rush a merger through in a period of a few
months. I would feel that a one year period is a minimum
and the time taken may well exceed two years.
SPECIALISATION
The law is now complex and covers such a vast field
that it is impossible for any one Solicitor to hope to be
able to cope adequately in all these fields. This is the
reason for specialisation. This will probably be one of the
objectives of the new firm. It may not however be
immediately achieveable due to the necessity of not inter-
fering with the client relationship. The non commercial
client is likely to resent the merger and to be ready to
suspect that it will interfere with the personal service he
has had before. He will not want to be told you must go
and see Mr. So and so. It will be necessary to introduce
the specialist in the other department slowly and let the
client get to know him and get confidence in him over a
period.
Specialisation in a particular field is undoubtedly help-
ful to efficiency in that field. There are however dis-
advantages. The specialist if he has not already had a
very wide grounding in the other fields of practice can
become very narrow in his outlook and restrict very much
his value as a general advisor particularly to a non
commercial client.
It can also be very aggravating when dealing with a
firm which is departmentalised to find that you have to
deal with two or three different persons, none of whom
appears to have an overall grasp of the case. Specialisa-
tion seems to me to be most worthwhile in the commerical
field.
A merger does however enable specialists to be re-
cruited. This is not only in the specialist fields of law such
as taxation, company law and commercial law, litigation,
probate and conveyancing, but also in the field of office
administration. It is possible in a merged firm to afford
specialists in the accounts department. Indeed in my
opinion, a good Financial Controller is a necessity in a
firm of any size.
DO MERGERS WORK?
It must be clear from what I have said so far that the
merger of two firms highlights and confronts the merging
firms with many important decisions that should indeed
face existing firms. These include improved accountancy
systems, use of computers, time costing, whether or not
to employ an Office Manager, whether or not to have a
Managing Partner, or the extent to which specialisation
and departmentalisation is desirable, the improvement
and standardisation of documentation, the organisation of
proper library facilities within the firm and of course the
ongoing recruitment of staff. The new firm will create the
opportunity and the structure on which to build. In a
smaller firm many of the matters to which jl have just
referred may not be possible. In a larger firm not only are
these matters also possible but also it is important that these
matters should be actively considered and implemented
where desirable. It is not my intention to go into detail on
each of these matters. It is my experience that there is a
reluctance in the early stages of the new firm to make
more drastic changes than are immediately necessary.
The more partners there are in the new firm, the more
difficult it may be to get agreement on changes.
The answer then to the question, do mergers work, is
that they do work if the necessary thought and planning
are done prior to the merger and if this work is continued
after the merger. If it is not done then the larger firm is
likely to be chaotic and the end result will be a much less
efficient firm than the two former firms. If the work is
74