The integration complication: how merging law firms can tackle the tech
With the legal sector experiencing a significant period of consolidation, the number of UK law firms either merging or acquiring has been steadily on the rise in the last few years, with scores of legal businesses electing for the ‘better together’ approach. But what many firms do not anticipate are the complexities – and frequent complications – involved when combining IT systems and infrastructures.
Lights-On Consulting explains the importance of a well-considered IT integration plan.
When law firms merge or acquire, the due diligence applied to IT integration is typically inadequate and can result in a whole host of unanticipated problems arising right from the get-go. Many firms fail to understand the length of time it takes to combine the technical infrastructure and IT systems of multiple firms, and, in failing to be prepared, these businesses will often suffer unexpected costs.
From our own analysis of M&A activity in the UK’s legal sector, we know that for big firms, the IT implications of a merger / acquisition are recognised as critical to the overall decision and as such are considered early in the process. This is an excellent blueprint to follow, not least as the cost of IT integration could make the difference between the viability, or not, of a deal. For smaller firms, the focus seems to be more on revenue, profit, clients and business, with the overheads and costs to integrate sometimes taking a back seat, but this can create some nasty surprises.
Strategise to minimise: lowering risk through planning
IT due diligence should be an early consideration for any firm considering a merger or acquisition. As part of this due diligence, we recommend addressing and understanding the following aspects of the IT and the IT infrastructure:
- Inventory of all IT equipment, systems, software and licenses, plus all relevant end of life dates, from all parties involved in the merger or acquisition.
- Where data is held and what CRM system is being used to avoid data liabilities and any GDPR compliance matters.
- Analysing each firm’s IT systems to help determine whether there is an overlap in functionality.
- IT contracts, break clauses and any financial penalties for termination.
- The growth plans for the new firm, and an idea of its IT environment and architecture.
The next step is to build an integration plan to ensure that the combined firms can work on live or new matters from day one. This integration plan should answer the following questions:
- What systems do we need to be up and running on Day One?
- What is required for full integration?
- What do we need to do in terms of training and onboarding?
- Do we need to plan for any staff changes or TUPE issues?
Security is also of vital importance to all businesses, so your plans should include an evaluation of the cyber security and protection of the firms involved, and a plan to ensure this security can be maintained, or even enhanced.
It’s vital the combined firms can work on live or new matters from the off, to ensure a rapid return on investment. Researching, identifying, evaluating and planning for combining IT infrastructures ahead of the deal completing is sage and highly recommended.
Lights-On Consulting is an independent IT consultancy that specialises in legal and professional services. We help firms to get more out of their existing systems and exploit new technologies that can future proof your firm, drive efficiency and better position you to compete in your markets. Our consultants have deep experience of law firm mergers and IT integration, gained through both in-house and independent consultancy roles. Find out more at www.lights-on.com.