The Dewey-Orrick merger that was supposed to have closed this month has fallen through, and for reasons that seem to reverberate repeatedly over the law business landscape: retention and culture. Leading up to the announcement, at least ten Dewey partners left the firm, including rainmakers in the coveted M&A department. This is Orrick’s fourth failed attempt at merger over the last few years.
It looked like a good match–both venerable firms with complimentary specialities, similar per partner profits and each with rising revenues. They had successfully negotiated the details at the top– the name would be Dewey Orrick, the two chairmen would serve as the combined firm’s co-chairs, with Orrick’s chairman also named as presiding partner. But, as the New York Times noted the obvious, "law firm consolidation involves combining two organizations whose main assets are their people"– tricky assets to nail down on the balance sheet.
With their particular personality traits, lawyer buy-in can be an extra challenge to obtain, and then to keep. Perceptions in the ranks as to the new firm details, such as heirarchy– Orrick appeared to be retaining management control over crucial matters, compensation–Orrick partners would end up funding Dewey’s unfunded pension system, and culture can undo the best efforts of leadership.
It takes not only economic due diligence, but diligently assessing and closing the deal up and down each firm’s ranks before a merger can successfully occur. And then it takes a well-planned and well-executed integration to keep that success over time. Shouldn’t we know that by now?