The “3-Legged Barstool Method” for Law Firm Combinations: How to Game Plan That First Meeting. Howard Cohl

In my conversations with boutique law firms across the country about combinations with other firms, there is often both high levels of interest and high levels of concern. The concern often stems from the fear of spending an inordinate amount of time with a potential suitor only to come to the realization that they are not the right fit. To help address this potential fear, I advise firms to consider the “3-Legged Barstool Method” as a game plan for the first meeting or two.  The essence of the method was first brought to my attention by a consultant in another service industry sector, and I found it to be equally useful in the law firm setting.

What is the 3-Legged Barstool Method?

The 3-Legged Barstool Method is my metaphor for assessing the viability and compatibility of two law firms that are considering a combination. The method is based on the notion that a barstool needs three sturdy legs to stand firmly and balance the weight of the person sitting on it. Similarly, I have found that there are three essential criteria in evaluating potential combination target compatibility. These criteria are: (i) Strategic Fit, (ii) Economic Fit and (iii) Cultural Fit. And, by asking the right questions that address each of these legs early on and actively listening, initial conclusions about each—and about potential compatibility or lack thereof—can be drawn relatively quickly.

Strategic Fit

Strategic fit refers to the alignment of the market position, practice areas, client base, geographic reach, growth potential, and competitive advantage of the merging firms. A strong strategic fit means that the firms complement each other's strengths, fill each other's gaps, and expand each other's opportunities.

Economic Fit

Economic fit refers to the alignment of the financial performance, compensation structure, billing rates, cost management, profitability, and revenue distribution of the respective firms. A strong economic fit means that the firms have similar or compatible financial metrics, rates, reward systems, expense controls, profit margins, and income allocation.

Cultural Fit

Cultural fit refers to the alignment of the values, vision, mission, goals, norms, expectations, and behaviors of the lawyers and staff of the potentially merging firms. A strong cultural fit means that the firms share a common identity, purpose, direction, and work ethic.

While the Barstool Method will not guarantee success, it will help ensure that unproductive time exploring a combination is kept to a minimum.