I’m not a big fan of comparing law firm mergers to marriages. All those torturous metaphors and incongruous imagery. But in assessing the three-year old union between Lovells and Hogan & Hartson, it’s hard to escape the nuptial motif. The deal was forged amid high expectations and a simple analysis: both firms were better off together as neither looked compellingly positioned for an emerging elite of global law. Putting together a transatlantic merger of equals with two large firms that ranked just below the top tier in their respective markets made sense and was arguably a first for the profession.
But, as we address this month, the problem with raising expectations is that you’ve then got to meet them. And on that yardstick the firm has faltered. Three years in Hogan Lovells is still struggling for growth, the gap between its profitability and other global 20 peers remains too wide and the break-through in transactional work is elusive.
Perhaps worse are the thorny cultural issues. The deal was initially sold on the basis of a spookily similar culture between the pair. Charitably, that was stretching it a bit. Uncharitably, Lovells’ management sacrificed trust with a partnership who now feels it didn’t get a straight account of who they were hooking up with. With the conservative Lovells partnership sullenly dealing with an unpopular move to Hogan & Hartson’s merit-driven pay model, it’s clear that Hogan Lovells is well past the honeymoon period.
But even good marriages are hard work. Building something worthwhile takes time, effort and commitment. And what looked like the right move in 2010 looks just as right in 2013.
And if the legacy Lovells management was guilty of mis-selling its US suitor, that wasn’t due to Hogan being less than billed – a problem which really does play havoc with mergers. Hogan was just more culturally distinct than depicted, and in some cases different in a good way. There is also a peculiarly London character to many of the complaints, reflecting the fact that Lovells’ City partnership did historically veer too often towards cosy collegiality over decisive action. Some of the cultural discomfort is welcome, though there have been times when the individualism of Hogan has met the committee-laden governance of Lovells and produced the worst of both worlds. In some areas Hogan Lovells’ management has become frustrated dealing with a frustrating partnership and stopped engaging sufficiently.
The various parties to this union must rediscover why they got together. Quickly. The firm is well positioned in the global market, in some ways better than many of its partners believe. But Hogan Lovells needs to find some fresh momentum and vigour if it is not to waste the opportunity still in its grasp. And that is rather like a marriage.
Click here for an in-depth analysis on Hogan Lovells’ post-merger performance