How law firms can tackle the impact to legal tech strategy in light of increasing merger and acquisition trends to drive better outcomes

What can firms do to ensure their longevity and success during period of economic challenges?  

A merger or acquisition can be desirable for many firms as a way to help them boost profitability, increase their customer base and access to talent, and give them access to technology and advanced systems and processes. It’s also a great way to spark innovation, by combining the expertise of a wider pool of talent to rethink the way that legal work is delivered.  

With 20% of the firm closures being a result of mergers or amalgamations and another 20% resulting from change of status, the recent level of M&A activity demonstrates that this is increasingly being used as a strategy for firms who struggled through the economic downturn to return to growth. 

While the opportunities are immense, merging two firms together brings with it many challenges. One of the key considerations is the legal tech and business software each firm uses and how it will integrate disparate systems across acquired or merged businesses. 

M&A activity was a key topic of discussion at the Alternative Legal Management Summit last year, as speakers talked through how firms could be shaped in the future with the increasing number of mergers, and how they can align cohesively with the new businesses they have acquired - with tech being a core focus. 

Have a realistic timeline 

Aligning legal tech and software between two firms takes strategic thinking. However, many law firms going through the process don’t consider this aspect of business integration until near completion on the deal. The risk is, delaying this consideration can lead to underestimating how long it can take to align technology, systems, and processes to a unified format that will optimise how the merged or amalgamated firm operates. 

When considering a merger or acquisition, law firm leaders will look at the practice areas of the other firm, the expertise and talent of the team, the profile of customers, and the risks that they may take on, but technology opportunity and risk do not make the top of the list. At least not yet. If a firm that is paper-lite and digital first considers acquiring a firm that heavily relies on paper, that difference in approach may be easy to see. But often, the different approach to technology requires more investigation to uncover and having it top of mind from the outset can not only make a firm more attractive as a business, but it can also highlight risks.  

The legal tech integration after M&A can in some cases take months, if not years, depending on the scale of the merger, the firm’s size and the legal technology they have in place. And that’s potentially the case even when a well-considered merger plan for legal tech is in place. 

Law firm leaders need to consider human impact of M&A and integrations too. While traditional M&A can often result in a focus on synergies and rationalising team size, the pace of change for remaining staff and adapting to the culture of a new business can take a toll. There will be teething problems as employees adapt to new technologies and different ways of working, and their clients may notice some small changes too. This all needs to be carefully planned and managed as change doesn’t happen overnight. 

Reduce the impact of change

Having the right internal teams and roles enabled to lead the change process and champion new ways of working is a crucial success factor for any merger.  

Our customer success team at Access Legal work closely with law firms and managers going through M&A to think strategically about how they will align their systems cohesively across businesses. Whether it’s their legal case management or practice management software, the compliance software they use, or the wider business systems they have in place to manage their finances or HR, they all need an integration plan that will help overcome hurdles or challenges along the way and experts giving them guidance on how best they can be solved. 

For firms that are undergoing, or plan to undertake, a merger, our teams have conversations with them about the systems they already have in place and whether they want their new businesses to be on the same platforms. Most firms want to align their legal software so that their experts can work seamlessly across a wider set of customers allowing fee earners to collaborate on case files. To make this happen, they need to ensure their staff can spend the time learning a new system and taking advantage of any internal or external expertise to accelerate their adoption.  

In the last few months, as the M&A activity has gathered pace, we have worked with customers to help reduce any worries or frustrations they have had with the merger process. It’s something we experience all the time, and we often try to think of things before our customers do and guide them through, while also learning how to overcome the hurdles with them, that we can then use to build our experience to support more firms. 

Change management isn’t a natural role within many small and medium sized firms. Some firms have even started bringing in consultants who will purely deal with the merger and take on all the decision-making to avoid this issue. This helps in having one point of contact and can sometimes even speed up the integration timeline. 

Firms also need to consider the impact any changes can have on their own clients. For example, conveyancers want to make sure that property transactions can still proceed smoothly and are not hindered by any M&A activity, criminal, family and employment lawyers won’t want to risk losing track of any of their case work during any transitions which could affect proceedings, and firms, which are still businesses at the end of the day, will want to avoid any potential delays being passed onto their clients, affecting reputation. 

These are just some of the elements that are often overlooked around legal tech when the conversations about M&A first start to take place. Law firms need to make sure they are fully aware of the possible hurdles they could face and the lengthy process they are about to embark on when merging a firm's legal tech with their own, before that process begins. It has to be well planned and considered before completion is set on any acquisition of another law firm.

---