Integrating two in-house legal organizations is a difficult task. The risks and potential pitfalls become even greater when merging two unique legal departments who are simultaneously managing ongoing high-stakes legal matters.
Merger Integration for Corporate Legal Departments
The post-merger integration of two legal departments is one of the most complex and high-risk managerial projects facing corporate legal leaders today. By itself, integrating two large-scale and sophisticated organizations is a difficult task. The potential pitfalls become even greater when merging two unique legal departments who are simultaneously managing ongoing high-stakes legal matters. Legal leaders charged with the task of securing the added value of a merger must consider a wide range of dynamic factors to ensure a smooth, sustainable transition.
Corporate Legal Department Merger Integration: Objectives
Mergers and acquisitions can create a climate of tension and uncertainty. For a corporate legal department, merely keeping up with existing responsibilities while navigating a rapidly changing corporate environment can seem like success in itself. However, the day-by-day “firefighter” approach is hardly sustainable and leaves recently merged corporate legal departments slow or unable to capitalize on the potential long-term value created through the merger.
Legal departments dedicated to a smooth post-merger integration have taken a proactive approach. This involves setting specific objectives, creating an execution plan and working closely with colleagues, new and old, in order to stabilize the new organization, integrate operational and cultural practices and streamline processes.
Corporate Legal Department Merger Integration: Overview
Corporate mergers and acquisitions demand senior legal executives to be adept at integrating diverse legal organizations. Legal department leadership needs to drive alignment around several key strategic and tactical considerations. At the highest level, leadership must be clear on the characteristics and goals of the merger. For example, is this a unification of peer organizations or a true acquisition? Will the value of this merger be realized in cost savings or growth opportunities? Will functions from both legal departments be consolidated or will some pre-existing practice areas continue to operate separately?
Once the nature of the merger is determined, legal executives must develop an appropriate approach. When should the integration start? Which aspects of the integration must occur rapidly under significant time pressure? Which aspects can be delayed if necessary? Similarly, leadership must decide on a communication protocol. Who are the decision makers, and how will decisions be communicated?
Only with clearly articulated goals, a timeline and a list of priorities can merging legal departments determine to what extent change management is required. In many situations, executives realize a need for change management too late. Sometimes the work performed in practice areas and by the legal professionals supporting them change very little, but a rigorous timeline or a negative perception surrounding the merger creates a need for increased managerial support. In other cases, deeper-seeded issues (e.g., geographic coverage, vendor consolidation, conflicts) may not become apparent until well into the integration. Our experience has shown that thoughtful reflection at the front-end of a merger goes a long way in reducing long-term transition pains.
Corporate Legal Department Merger Integration: Solutions and Savings
Argopoint has expertise in legal group integration that is beneficial during both pre- and post-merger periods. Our support helps our clients capture synergies and savings more quickly while minimizing the impact on “mission critical” day-to-day activities of the in-house legal organization. Though our initial framework for approaching mergers is always consistent, our experience has underlined the reality that every merger requires a customized solution. When crafting unique support tools for a merger, we consider several key criteria in both merging organizations including: organizational stability, corporate culture, operational competencies, technological competencies, key processes and geographic reach.
Close collaboration with our clients to better understand their organizations helps us develop a tailored implementation plan. Our experience has shown the importance of planning the post-merger integration plan as early as possible (ideally before closing) in the interests of establishing a consistent approach.
The next step is to implement the plan. Beyond supporting the actual execution of the integration plan, our role is to ensure that the precepts and objectives determined during the initial phase of the integration remain as guiding principles during implementation.
After the first (and arguably most critical) months of integration, we help our clients cope with unanticipated issues, providing strategies and tactics to ensure the merger yields long-term value. We acknowledge that legitimate factors, ranging from legacy legal matters to highly specialized legal expertise, often hinder the rapid integration of merged legal departments. In some cases, certain aspects of two merged legal departments remain “unmerged” even years after the closing. In those cases, our deep experience and broad industry perspective enables our clients to objectively revisit the original objectives of the merger, determine whether they have met those objectives, modify department-wide goals and implement action-oriented solutions.