MERGERS AND ACQUISITIONS IN THE LEGAL BUSINESS: ECONOMIC ASPECT OF PROBLEM
Journal Title: Економічна теорія та право - Year 2017, Vol 1, Issue 28
Abstract
Problem setting. The current legal business operates in a competitive environment. This forces lawyers to create large regional, national and international law firms (LFs) through mergers and acquisitions (M&A) of business. Recent research and publication analysis. The problems of legal entrepreneurship have been researched in scientific papers of economists of the Yaroslav Mudryi National Law University. However, the subject of consolidation of LFs is represented mainly in Ukrainian business press. Many theoretical aspects of this problem remain unexplored. Paper objective. The article’s purpose is to analyze of mergers and acquisitions in the legal activity in foreign countries and Ukraine. Paper main body. The author analyzes the features of mergers and acquisitions in the legal business. 1. Combining of LFs is mainly within its industry. 2. An excepted synergetic effect is traditionally considered as an incentive for consolidation of LFs through mergers and acquisitions. This effect comprises: combining intellectual capital of consolidative law firms; cross-selling of new legal services to clients; expansion activities; opening access to new markets of legal services, increasing their «geographical coverage»; strengthening the financial condition of the company by reducing costs for the organization and management of corporate business by eliminating redundant departments and economies of scale; improving management of the law firm. However, experience of consolidation of foreign LFs shows that not all firms achieve economies of scale in legal practice and high long-term profitability. 3. The consolidation of LFs in most cases has a competitive nature. Only large LFs with a wide range of highly specialized areas and the ability to coordinate large teams, meet the requirements of consumers of legal services. The international LFs are the most competitive players on the legal market. 4. M&A of LFs may have anti-crisis nature, even in successful LFs there are crises with intervals of 6–7 years. Most of them are internal management crises. That is why the consolidation of LFs requires special management and should include: management training to association law firm; management by the transition from the current state to the desired LF; management of newly established law firm, calculations of economic efficiency of integration processes. Particular attention should be given to overcoming resistance to organizational changes. Conclusion of the research. Many risks influence in the decision on the consolidation of LFs. Because of this, law firm partners and managers resort to alternatives of consolidation of legal business. They include strategic alliances, joint ventures, partnerships and other agreements. This requires further research processes of consolidation of the legal business. Short Abstract for an article Abstract. The article analyzes the sense of the merger and acquisition processes in the legal business. The author has examined the experience of M&A of law firms in the foreign countries. The author pays special attention to management of consolidation of law firms.
Authors and Affiliations
Людмила Степанівна Шевченко
Keywords
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