They say if you can’t beat them, join them. So in the highly competitive legal industry, it should perhaps be no surprise that mergers take place so frequently.
In 2017 alone, there were 16 mergers involving the UK’s top 100 law firms, while a further 12 mergers went through in 2018. It’s a trend that looks unlikely to end any time soon.
Indeed, the latest edition of PWC’s annual Law Firms’ Survey points to continued merger activity over the next two years. When questioned, 40% of Top 10 firms, 27% of Top 11-25 firms and 46% of Top 26-50 firms all indicated the possibility of a merger before 2020.
Intriguingly, when the same report asked respondents to name ‘the most significant challenge facing the legal profession’ in that time period, the Top 10 firms all gave the same single answer: Technology.
Yet when law firm mergers take place, technology is one area that’s often overlooked. With firms focused on combining workforces and unifying objectives, little attention is paid to the complex task of merging two separate IT suites and systems.
In this blog, we’ll look at why technology should be one of the first things you think about when you’re considering joining forces.
A potential deal breaker?
Mergers can happen for any number of reasons, all ultimately rooted in the quest for either growth or survival. The move might be based on specific strategic goals such as increased presence in a certain location, or to alleviate financial pressures and achieve operational efficiencies.
Whatever the drivers behind the merger, a vast body of work will always go into the deal from both sides of the table - but rarely does this involve a thorough consideration towards IT infrastructure.
However, unforeseen IT complications can easily dampen the appeal of an otherwise green-lighted merger.
For example, on investigation, one of the parties may be found to be tied into long-term contracts with suppliers or software, which could carry significant financial penalty clauses.
Or, IT systems in the two organisations could conflict to such an extent that their rationalisation (and the consequent merging of key data) proves an overwhelming challenge.
There’s also a human element to consider. How likely or capable are the users in both firms to adapt quickly to unfamiliar systems? What may be the cost of re-training users, to help them adjust to what could be an entirely different way of working?
Any or all of these factors could be a potential deal-breaker for a law-firm merger - which is why IT infrastructure is well worth exploring before the agreement gets too far down the line.
Always the last to know
It’s not just rare for IT to be involved early in merger discussions - in most instances, the deal is all but signed and sealed before IT Managers become privy to the details.
This leaves IT not only unable to flag concerns, but also left to deal with the technical challenges of the merger with very little notice.
Naturally, this will put any IT team under considerable pressure, and it’s exacerbated by the fact that they are often already engaged in significant existing projects.
The resulting workload implications can lead to a very over-stretched team, and all at a time when staff may be concerned about potential job losses. It’s a less than ideal mix that can make for a fraught and stressful experience.
How should firms be doing things differently?
In order to deliver a smooth and stress-free merger from a technical perspective, here are some of the steps you might want to take:
1 Recognise the value of IT
The data in your IT systems is second only to your staff as the law firm’s most valuable resource. Your IT support teams are the keepers and guardians of that data, so their value must be recognised in the merger process.
Involve IT Managers and support staff as early as possible, and accept that you may need to press pause on other IT projects in order to reduce the pressure.
2 Do your due diligence
Involving your IT teams from the off allows you to do your due diligence on the IT systems in play across both organisations.
Due diligence in this field should include a thorough review of hardware, software and data security provisions, and an assessment of potential system upgrades.
Produce an inventory of the applications, systems and infrastructure each company uses, noting supplier, contact and renewal information for each. This will help IT to keep track of systems, hardware and licences, and to create a strategy on which systems to merge and which to remove.
3 Consider synergy of systems
The search for synergies is key to mergers and acquisitions, and no shortage of them will be identified between the two businesses before a deal is agreed.
In today’s technology-driven environment though, the synergies between the two firm’s IT systems are arguably some of the most important.
As part of your IT assessment and due diligence, you’ll therefore need to investigate how systems could be combined, consolidated or integrated to maximum effect - both in terms of ease for the user, and availability and integrity of data.
When your law firm goes through a merger, you’re not just unifying workforces, objectives and ideas, you’re also merging what could be wildly different IT environments.
This consolidation is a major task in itself, and only by involving IT teams at an early stage can you adequately assess, plan and implement the necessary steps in line with the overall merger schedule.
Leaving it too late could be a missed opportunity. After all, a merger should be seen as a chance to evolve the current systems, infrastructure and processes to lay future-proofed foundations for the firms’ joint success.
As we discuss in our ebook ‘The evolution of the legal IT department’, the core purpose of IT in law firms is evolving anyway - so what better time to make your play than when a merger forces your hand?