Merger reverberations: Manage communications on cross-border mergers
Ben Rigby reveals how law firms are managing internal and external communications on cross-border mergers
Ben Rigby reveals how law firms are managing internal and external communications on cross-border mergers
There is a seemingly inexorable drive for tie-ups with ambitious mid-market firms.
Take Norton Rose: it followed 2010’s merger with Australian firm Deacons with a proposed July 2011 merger with Canadian law firm Ogilvy Renault and South Africa’s Deneys Reitz.
It’s no mean merger, with 38 offices worldwide, nearly 800 partners and combined revenues close to US$1 billion.
That complexity poses challenges for marketing and business development professionals. Where do you start? Where does it end?
Early engagement
Beverly Landais, CEO of Devereux Chambers and formerly director of business development (BD) and marketing at Baker & McKenzie, stresses the importance of early engagement by senior marketing staff.
This “goes beyond making people feel excited from ‘day one’, i.e. when the lights go on and the signage goes up,” she says.
She advocates being involved from the earliest possible stage, at senior level, “not just drafting press releases the week it all happens”.
Caroline Rhys Jones, Norton Rose’s group head of BD agrees: “marketing staff are part of the core team on the merger, as their input will be integral in conversations about the proposed deal”.
It means, as Clare Rodway of Kysen points out, “they need to understand in acute detail the rationale for the merger”.
James Martin, director of BD and marketing for EMEA at White & Case, says the key senior management positions are equally important in communicating their understanding of what the firm is trying to achieve.
He cites Harvard Business School professor John P. Kotter: “one of the first key steps in a successful change management process is to have a close group of leaders with a shared vision”.
To him, this requires personal intervention from partners and staff. Integration “does not occur through written or mass communications alone,” he says.
Strategic involvement
Landais notes that senior BD staff should steer away from purely tactical approaches and be more involved in decision-making. “A senior marketer’s best place is to be involved in the merger process strategically,” she says, alongside senior management.
While some senior BD heads may be well entrenched in the firm’s senior management team and so their understanding is developed organically, “in very many firms, even quite senior marketing and BD professionals are held at arm’s length from the real business of the firm,” notes Rodway.
In that instance, it may be harder to grasp the merger rationale. However, Landais notes that “a savvy marketer should make it their business to get to know other professionals”.
She urges her peers not to “sit in a silo and just rely on their network of marketing contacts,” but instead “use their experience to become business advisers”.
In a role in which the individual is arguably a consigliore to the partners, marketers have to “be prepared to move out of their comfort zone”. This means volunteering to work as part of the planning team on issues such as staffing, integration of operations and finance.
Landais does not forget the day job either. To her, the senior marketer should show leadership on branding and communications, demonstrating “they are capable of thinking about these matters – as part of the bigger picture”.
Global internal communications
Communication necessarily involves language and a choice as to which one is used.
Martin says English is the common business language at White & Case, although many different languages are spoken, reflecting the firm’s ethos to ‘think global, act local’.
His advice is that global communications be stripped of idiom, with the focus put on directness and simplicity. “It makes you focus on meaning and content, as people won’t necessarily understand local references. Words and meaning can be different things and you must be much attuned to the market in which you operate.”
As well as communicating clearly, Landais says it’s important to listen both ways. “Mergers and laterals can suffer where people don’t listen more and spend more time together; it’s like any new relationship,” she notes. “Everything is fresh and new at first, but once the initial excitement wears off, things can fall apart.”
The key is to take time to build the relationship together, by continuously working at it. Landais says the secret to that kind of relationship building is to be superbly organised and to focus on understanding and listening.
She advocates a bottom-up approach in communicating openly and honestly with incumbent staff, not just partners, as: “you shouldn’t assume people will automatically understand what’s important”.
Oversights can be damaging: “If you assume that someone else will tell the staff, the same staff can very quickly feel isolated and become disengaged, just at the point when you most need their support,” says Landais.
Therein lies the need for consultations on the merger. Landais takes a pragmatic view, noting that while consultations generate natural concerns, as “people get scared that people will leak information, or get the wrong story out,” that needn’t necessarily happen.
Communications staff can manage the process through being briefed early and properly on priorities and potential ‘hotspots’. As a result, they can help to manage the process by providing the means to enable those who want to participate to do so and to defuse those who are disaffected, says Landais.
“Allowing people to contribute their thoughts enables an expression of positive, creative energy, which gives the staff a voice in the process,” she says. “Whatever the forum, it is the senior marketer who should take responsibility and lead the process in spotting opportunities to engage with people”.
Rhys Jones adds that “it’s important that staff know about how they might be affected”.
She notes that at Norton Rose “intranets, plus video messages – where the CEO spoke to staff about what’s involved – were important so everyone got the same messages at an early stage”.
Combined with emails, these made the whole process seem more accessible, as “the videos helped it seem more human as a result”.
Client communications
Alongside client databases and assessment of the respective figures, strategic fit and BD opportunities, client relationship management is also a frontline process.
Landais says practice area personnel should get together with BD and finance staff so that “everyone is engaging with clients of both merged entities in various sectors”. In essence, she says, “what you seek is a holistic interconnectedness between all relevant teams so they all feel a responsibility to pull together for all their clients”.
Clients must also feel that effort is being expended to inform them of how the changes will impact on the service they experience and why the merger is of direct benefit to them. This means addressing the strategic value of the merger to clients.
Notes Rhys Jones: “synergies between the firms’ clients provide the backstop to any merger”. It is all about “seeing that they understand that it genuinely is the best of old and new.”
Engagement with top-tier clients also needs to be thought about creatively. As such, it makes sense to consult with key players, as “not only are they likely to have insights which assist, but will also feel more of a stake in the outcome,” suggests Landais.
Cultural differences
Steven Ongenaet, a senior BD adviser at Linklaters in Brussels, commenting personally, notes that cultural differences are one of the biggest obstacles to achieving success in a firm merger.
Given that the law is quintessentially a people business, it is even more susceptible to “pernicious consequences of overlooking that cultural dimension,” he says.
In legal mergers, he notes, cultural differences are sometimes looked at in the due diligence phase and pre-merger negotiations. Once the merger is completed, firms try to seal the deal with rebranding efforts and usually turn their backs on the past.
“Yet the cultural differences between the merged entities often linger on for many years,” warns Ongenaet.
This, he says, is a mistake. While there is “a thin layer of international business culture that all global business law firms already share,” Ongenaet says, “like an iceberg, people’s behaviour, assumptions and values are largely determined by an invisible but much more profound body of cultural coding”.
This cultural framework, he says, “heavily influences expectations of leadership, decision-making approaches, work-life balance and attitudes to conflict”.
Mundane issues, such as meeting protocols, communication styles and use of technology are influenced by corporate culture. So the scope of risk is large.
One way around that, he says, is reinforcing corporate culture during induction programmes for new recruits and on global training courses. Such programmes, he says, should be regularly referred to in decision-making processes and be internalised by both fee-earners as well as business services. That way, having agreed a post-merger corporate culture with common core values and fundamental principles, the firm will have a strong foundation.
Ideally, he says “the new culture combines the best of both worlds, but reality often has a less attractive look”.
He is sanguine about that reality, as it is “a tedious process that can take quite some time,” requiring an assessment of “a variety of organisational processes very much linked to the firm’s culture”.
Not doing it, however, means “failing to recognise the cultural context …[and] will almost certainly lead to poor decisions and put successful integration at risk”.
Brand development
Another important consideration in a firm merger is branding.
Landais advises thinking about branding from the very start, particularly the consequences of expansion and mergers.
Firms should think about who should work with this process, how any new branding should be communicated, what is different about the enhanced brand, why it is important and what the benefits are to clients and other stakeholders, she says.
Ongenaet agrees that, post-merger, firms will usually embark on extensive marketing and branding campaigns to get their brands out there and to (re)position them. Yet he sounds a cautious note, as such exercises “should be rooted in shared values and truly reflect and embody the organisation’s corporate culture”.
Martin adds that, in developing a global brand, 60 per cent of awareness is driven by client services, according to market feedback exercises which White & Case participates in. Fundamentally, it “means looking at what clients buy and value and [fitting] the level of expertise to those values accordingly,” he says.
Building long-term success
Long-term success is the biggest prize and risk when undertaking a cross-border merger.
Martin cautions potential merger partners, noting: “you should not be fooled into thinking that what you do in one office is going to be done worldwide”. To him, it is an all-too-easy mistake to believe that what happens at the ‘hub’ is somehow central and universal.
Ongenaet says firms “must be mindful of the tensions that arise when marketing a unified, single brand in a variety of cultural environments”.
Otherwise, “it will be an uphill task to ensure lawyers remain engaged and synergies are achieved”.
A failure to harmonise corporate cultures poses a serious threat to brand equity and return on investment on strategic marketing projects, he warns.
Landais warns against “an office outside the partnership feeling like an outpost”. Her solution is an integrated communications plan, buying in both internal and external communications, utilising all relevant channels.
“You don’t need to be a slave to a homogenised approach to BD and marketing in an international firm,” adds Martin. “It is essential to have clear shared goals, but how you get there must be decided in conjunction with the teams in all the markets you operate in: one size will not fit all.”
This means not rushing to integrate the BD function immediately following cross-cultural mergers. Otherwise, “damage done by moving too quickly could take a long time to heal,” he says.
Case study: Norton Rose
Norton Rose has gone through one celebrated merger and is involved in two others. So what has the firm’s approach been to managing communications?
Caroline Rhys Jones, Norton Rose’s group head of BD, is clear where she and Laura Shumiloff, group director of corporate communications, fit within Norton Rose’s structure.
“To repeat a phrase our CEO uses, we provide the glue that binds the structure together. When people ask questions about the merger, we are the people that give the answers and so bind people together,” says Rhys Jones.
Norton Rose was very much in control of that message. For example, Shumiloff worked with other professionals on a daily basis. This enabled her to speak with integrity when people asked about the actual implications of a merger.
Shumiloff notes that it is important to be patient with people and their cultural sensitivities. Adds Rhys Jones: “you’ve got to give people the benefit of the doubt in understanding different cultural perceptions. So we adjusted what we had to do to meet local concerns from what we learned in the process of talking to people”.
“That very act – picking up the phone – was key” she says. “We used webcasts and videoconferencing so we could have people ‘see’ each other and gauge reactions.”
That approach helped the firm to manage client relationships as well. “Clients have to be brought in preferably as early as possible. That might mean joint activities between both legacy firms and clients, such as holding a reception or joint briefings,” says Rhys Jones.
Adds Shumiloff: “we had the CEO talking to clients a long way before the merger and, as the process continued, it’s interesting how many synergies unfolded, which also helped to reveal any client sensitivities”.
Both Shumiloff and Rhys Jones feel their efforts paid off. Says Rhys Jones: “Our staff stood up and were motivated to take that on and worked really hard for integration”.
Shumiloff remembers having a meeting in Perth and thinking: “that didn’t feel different from any other meeting I might have had in other parts of Norton Rose.” She says she then realised that “we were integrated, ‘mission accomplished’, precisely because we all felt part of the group and it was so natural”.
Ben Rigby is a freelance legal journalist