Headline: Leading firm eyes rapid growth by building “house of brands”
Main sources: https://www.legalfutures.co.uk/latest-news/leading-firm-eyes-rapid-growth-by-building-house-of-brands (dated 17th November 2020); https://www.thebusinessdesk.com/eastmidlands/news/2042928-law-firm-reveals-plans-to-double-in-size-by-2023#.X7KSBLm-EhM.linkedin (dated 16th November 2020); https://www.shma.co.uk/our-thoughts/shakespeare-martineau-announces-house-of-brands-strategy/ (dated 17th November 2020); https://www.lawgazette.co.uk/practice/national-firm-on-buying-spree-but-will-let-new-acquisitions-keep-identities/5106442.article (dated 17th November)
The facts:
The full-service law firm Shakespeare Martineau LLP ("SHMA") has outlined a strategy to attract mergers, acquisitions, team recruitment and lateral hires, but with a difference. Its strategy is to become a "House of Brands" and double in size by 2023.
SHMA is offering firms the chance to have the benefits of a larger organisation while retaining their brands and their identities.
Sarah Walker-Smith, the CEO of the firm, says "What we’re trying to achieve, for the brands we have and those likeminded people who join us, is the best of both worlds".
Like she says, it tends to be that "large and aggressive businesses will acquire smaller firms and destroy the heart of that brand and the reason they have loyal clients".
This is sadly not uncommon. In recent years Knights Group Holdings Ltd, the holding company of the firm Knights plc, has been on a shopping spree to grow its presence across the country in line with its vision to be the biggest firm outside of London. This has involved acquiring several smaller or independent firms such as
Spearing Waite in Leicester in October 2018,
Emms Gilmore Liberson in Birmingham in November 2019,
Fraser Brown Solicitors in Nottingham in February 2020,
Shulmans LLP in Leeds in April 2020, and
OTB Eveling LLP in Exeter in December 2020.
Ms Walker-Smith says that she wants to reverse that by seeking out teams, individuals and brands similar to that of SHMA to enhance the existing teams and join the professional services group.
"They would benefit from economies of scale, bigger buying power, higher profile and access to a wider client base while maintaining their own personality, identity and what makes them special”.
SHMA already has multiple brands, with debt and loss recovery business Corclaim, personal injury and clinical negligence specialist firm Lime Solicitors, and town planning consultancy Marrons Planning.
The firm said the immediate priority was to grow those brands as well as to welcome new brands under a new group holding LLP, across both legal and complementary services.
Key quote - “We don’t want to go back to before, we will go back to better.”
Further background
Sarah Walker-Smith is the first female non-lawyer CEO in a top 50 law firm [1]. She is a trained accountant having worked at PwC and Deloitte before beginning her role as CEO at SHMA in December 2018.
As well as appearing on the firm's vlog and interview series SHMA Talks, Sarah has created her own light-hearted vlog series called Shed Life as, since lockdown was announced, Sarah has been leading the firm from her home office which has been converted from her garden shed!
Sarah encourages everyone to be confident in bringing their authentic selves to work. The idea of being able to bring our whole selves to work means we are able to focus all our energy on our work, our colleagues and our own training and development and not have to spend energy on masking or concealing who we are just to "fit in". If we are accepted for who we truly are, we are more likely to enjoy our work and want to go above and beyond for our employer, our colleagues and our clients.
It appears that she is taking that approach and bringing it to the firm's goal of creating this House of Brands with a portfolio of sub-brands with their own individual character
If you want to learn more about the different brand strategies that companies consider, then have a read of this Jargon Buster (here).
As SHMA has opted for the House of Brands approach, let's do a quick SWOT analysis and consider the potential risks of this approach.
SWOT ANALYSIS
STRENGTHS TO THE APPROACH
Name and reputation - SHMA is a top 50 law firm in the country and has built up substantial goodwill amongst its clients and the profession as a whole. The firm, Partners and Associates have received awards and recognition for their work and their contribution to the profession. The Target brands can take advantage of this name and promote themselves as being part of the House which could see an increase in standing and reputation within their individual communities and their own clients.
National reach - the Target brands can take advantage of SHMA's national presence and potentially gain access to clients from all parts of the country seeking services that they can offer.
Strong financial position - SHMA must be in a good position here to suggest this approach as entering into agreements with the smaller firms to join its "House" might be costly and time-consuming. Also, as we've seen with the LVMH-Tiffany's saga, it is likely that there will be an upfront lump sum offered to the Targets to join the House.
Mitigation of risks - having a wider sector and service offering means the SHMA House will be in a better financial position to weather any future economic shifts, such as another recession, and enable the individual sub-brands to focus on what they do best without limiting the House's broader trajectory. Basically, SHMA brings in more profit to keep stashed away for the House should there be another economic downturn, and the House sub-brands can feel safe in the knowledge that they can continue to operate as normal with the support of SHMA and the rest of the House brands.
WEAKNESSES TO THE APPROACH
Impact on character and identity - brands that have built up a lot of goodwill in the community may run the risk of being seen as "selling out" by the community and its clients. Depending on the nature of that firm, such as a small high street firm or a medium-sized independent firm or a boutique firm, perhaps being seen to be "in bed with" such a big name might give clients the impression that that brand has become "too big and important for them". Press releases from SHMA can say that the sub-brands will keep their identity, but each sub-brand's clients' feedback will tell a much clearer story.
SHMA taking on liabilities - it is likely that Target brands may have more financial liabilities as a result of decreased business during the COVID-19 pandemic. SHMA taking these Targets on will mean taking on the brands' assets and liabilities, unless otherwise agreed.
Strategy - the "House of Brands" approach is where the holding company, which here would be SHMA, operates like a holding company and manages each brand as a separate company dealing with all the necessary requirements of each company, which could become very complex and time-consuming very quickly. Could a different approach have been more straightforward? Maybe the Branded House approach where the firm could rebrand each Target to reflect a particular service? For instance, in the SHMA Group you could have SHMA Wills and Succession Services, SHMA PI Services, SHMA Property Services, SHMA IP Services, and the different Targets can be rebranded to these SHMA services in their current locations? Maybe even follow FedEx's example with the logos? That way, the SHMA brand becomes much stronger and much more easily recognisable when compared to its competitors.
OPPORTUNITIES FOR THE APPROACH
SHMA's position in the legal and business services sectors will be strengthened with each new brand that joins the House. For instance, a dedicated Will writing firm joining the House can strengthen and complement SHMA's existing will writing teams, and that firm can benefit from being affiliated with a nationally renowned firm.
Each Target's goodwill and reputation will receive a boost as it aligns with SHMA as part of its House. This is because SHMA has made a point of only considering brands that share its own values and purpose, so if SHMA wants to include a brand as part of its House then it is because the Target's values and purpose reflect its own and SHMA wants to work closely with them.
Cross-referrals - with a variety of sub-brands as part of the House, there will be opportunities for sub-brands to refer to fellow sub-brands and increase each others' client bases.
Upgrades and advancements - SHMA encourages its staff to WFH during the COVID-19 pandemic. This means there are sufficient systems in place, such as the Cloud, to enable staff to continue working and be safe at home doing so. Do these smaller sub-brands have the same technological capabilities? If not, there is the opportunity for them to take advantage of a standard approach to working during this pandemic that is being championed by SHMA.
THREATS TO THE APPROACH
Unknown territory - SHMA will be entering new territory with this approach as it hasn't been done by a law firm before. They will essentially be a guinea pig to a brand new venture in expanding in size and in service offerings, both by offering brand new services and offering complementary services from its sub-brands. It could succeed and see the approach take off with other firms, or it could fail and SHMA could be seen as a learning point in history.
Synergies between brands - [2] Priorities for SHMA and each sub-brand may be very different. So in order for House brands to synergise, there needs to be a common purpose and goal. A framework needs to be created in order for SHMA and its sub-brands to accommodate everyone in the House and allow everyone to work happily together towards this common goal. They can't be forced, they have to come organically by engaging everyone involved. If this can't be done then there is the risk of either those sub-brands splitting off entirely and the work put in to bring that sub-brand on board going to waste.
Training required - for staff to successfully cross-refer to other sub-brands in the house, proper training will be required. This will be a further time and money cost to SHMA as well as the other sub-brands. It requires training and awareness about the other sub-brands in the House. But further to the above, if synergies can't be made between brands, would that training to learn how and when to cross-refer be for naught?
Sharing of information - assuming the process of a sub-brand joining the House is akin to a Target being acquired in an M&A transaction (like with Tiffany's being acquired by LVMH), information will need to be shared as part of the due diligence process. As the process will involve a deep dive into a Target's records, both financial and social, there may be the risk that something is found out about the Target that goes against SHMA's values and purpose, despite assurances given by the Target. Maybe a tweet or a social media post that isn't in line with SHMA's values, or that hasn't aged well, could be the loose brick that brings the wall crumbling down!
HOW TO MITIGATE RISKS
Cyber-security - an ever-present threat to all businesses, not just law firms. More brands in the House can mean more ways in which cyber-threats can affect SHMA and the sub-brands. So all will need to have up to date anti-virus software and effective systems to keep confidential information confidential!
Human error - more sub-brands means more people, and more people can mean a greater chance of mistakes being made that could impact the main brand. Becoming a part of something bigger can be a big learning curve, perhaps even daunting. So for anything that pervades the entire House, proper training will be required across the brands that come into the House.
COVID-19 - can't get away from this just yet! Consumer spending habits have changed as a result of the pandemic, which means legal services may be seen as more of a luxury purchase rather than an essential one like groceries. Whilst SHMA may be in a reasonable position to weather this storm, the smaller sub-brands might not be. The smaller firms might be struggling financially in getting people through the door, but the upside of the House of Brands approach is that these risks can be mitigated across the House and liabilities of one or two sub-brands can be offset by other sub-brands in the House, such as those who are still getting people through the door like Will writers and personal tax advisors.
Over the next few years, it is worth monitoring SHMA and this approach to see if it does indeed work out well for everyone involved. It is an exciting proposal and will be a good opportunity for an acid test of a law firm becoming a House of lots of complementary sub-brands.
Be safe and be well! :)
P
Credit: - Cover image photo by Nik Shuliahin on Unsplash