Law Firm Merger Has A Side Benefit: Stronger Ties With Top HBCUs

In addition to strengthening client relationships, a law firm merger can help firms overcome saturated markets and reduce competition for work. Firms should carefully consider the implications of a merger before pursuing it.

Reese graduated summa cum laude from Spelman in 2021 and spent two summers with the firm as a paralegal. She’s now a rising 3L at the University of Virginia School of Law.

Strengthening Kostelanetz’s Ties to Spelman College

Kostelanetz LLP has had a long-standing commitment to recruiting and retaining exceptional talent, which is why it made sense to expand its Pre-Law Paralegal Program in 2021 by including an internship for Spelman College students. The program has proven to be an effective way to attract and retain top talent, as evidenced by the success of Destiny Reese and Grace Hall. Both Reese and Hall have recently been accepted to law school at top HBCUs, a testament to the quality of the internship program.

The merger with WELTY PC, a nationally recognized boutique tax and white-collar criminal defense firm based in Atlanta, has strengthened the firms’ national powerhouse tax controversy practice and deep bench of attorneys. The combined firm has extensive experience representing clients on domestic and international civil and criminal tax controversies, government investigations, complex commercial litigation, estate and tax planning, and government procurement and contracting.

In addition to its strong roster of lawyers, the firm also has an extensive network of seasoned paralegals, which is important for its high-profile tax litigation and government investigations work. Many of its paralegals are former government lawyers, bringing with them significant expertise on the inner workings of IRS and DOJ investigations and prosecutions. As a result, the firm’s clients receive superior and timely service with minimal disruption to their business operations.

Developing Future Leaders

A law firm’s future depends on a pipeline of talented young lawyers. Many firms prioritize mentoring and developing the next generation of leaders, but not all do so effectively. One firm that is working to change that is Kostelanetz, which recently combined with Atlanta boutique Welty PC. The new firm is leveraging the partnership with Spelman to build a leadership development program that focuses on diversity and inclusion.

The partners of the newly formed firm want to make sure that they have a diverse team, including women and minorities. They also understand that it is important to foster an inclusive culture that encourages people to bring their whole selves to work.

In addition to mentoring, the partnership is investing in a leadership development program that focuses on training and developing future partners. The program is a year-long series of workshops and panels that covers various topics, from recruiting to managing a successful career at a law firm.

The partners are hoping to see this program grow as they continue to attract young talent to their firm. They also believe that it will help them to retain their existing talent, which is a key goal as merger activity picks up. The recent issuance of final regulations on the 199A pass-through deduction and the lower tax rate may increase profits and give some law firms the cash they need to buy up other practices.

Enhancing the Firm’s Technology Strategy

At a time when firms are trying to figure out how to boost revenue and appeal to clients, they need new ways of doing things. This is especially true for smaller firms, where lateral hiring can add to existing capacity without the expense of a full merger.

But this approach can create problems, as it often leads to internal conflicts that take away from the firm’s overall culture. Furthermore, many lateral hires bring only their experience, not their client list or even their staff, meaning that they need to be trained on the firm’s processes and technology.

This can be expensive, particularly for small firms, which may not have the resources to invest in this additional training. For these reasons, some advisors are predicting that law firm merger activity will pick up again in 2024.

The firm’s deep tax bench is one reason that it is attractive to larger firms looking for co-counsel in complex and sensitive tax controversy matters, as well as white-collar criminal defense work. It also helps that the firm’s lawyers have significant government experience, including in the Department of Justice’s Tax Division and IRS Criminal Investigation. This is particularly important for the practice of white-collar crime, where many of the attorneys at Kostelanetz have experience in federal prosecutions. In addition to the firm’s internal initiatives, it has launched an internship program at Spelman that gives students an opportunity to work closely with the partners and associates in the firm.

Investing in People

Law firm mergers are a significant investment of time and money. A merger should be carefully analyzed and assessed by advisors to ensure that the deal makes sense. It is also important to understand that there are certain costs associated with a law firm merger which should be factored into the cost/benefit analysis, including salaries and benefits. Salaries and benefits are the largest overhead costs for a law firm and, when two firms merge, they must equalize their salary and benefit levels. Depending on the size of the two merging firms, this can be a very expensive process.

A law firm merger may also result in increased overhead costs, which can be a real concern for smaller firms. This is particularly true for firms that use a mix of full-time and part-time staff. In a law firm merger, the costs of both types of personnel must be accounted for and the firm must decide whether to retain the full-time employees or let them go.

A law firm merger may also have a negative impact on the culture of the new combined firm. This is a significant consideration for small firms, as they often have a strong culture and want to maintain it. This is one reason why many small firms favor lateral hiring strategies to acquire new talent, clients and revenue streams rather than a full-scale merger.