Legal Technology and Data – Making yourself a good target for Acquisition

This article is the first in a three-part series exploring the IT and data implications that arise from M&A and investment activities in the legal market,

The series aims to offer practical guidance for firms preparing to be acquired, those looking to acquire and investors assessing potential options.

• 1. Making yourself a good target for Acquisition – How law firms can strengthen their technology and data posture to attract investment
• 2. Auditing the technology of an acquisition target – How acquirers can evaluate the digital maturity and data integrity of a target firm.
• 3. Auditing an investment target – Assessing a firm’s readiness for rapid yet scalable and profitable growth.

Legal Technology and Data – Making yourself a good target for Acquisition

For law firms, planning to be acquired involves more than demonstrating financial stability and a strong and loyal client base. In today’s market potential acquirers place significant weight on the quality, security, and scalability of a firm’s IT systems and data hygiene. 

A firm that can demonstrate technological maturity and well-governed data not only reassures potential buyers in the negotiation stage but also gives them confidence in a smoother post-deal integration. Conversely, firms with fragmented systems, poor controls or inconsistent information can see attractive investment delayed or derailed completely if the acquirer judges the risks too great.

Below are five practical steps to help make your firm a stronger acquisition target, spanning data quality, cybersecurity, system modernisation, compliance and cultural readiness for change.

The Evolving Landscape of Legal M&A

The legal services market continues to see consolidation. Larger firms seek to acquire specialist practices to expand into new regions or service lines; mid-sized firms look to merge in order to achieve economy of scale and smaller firms look for operational support or exit opportunities.

Across all scenarios buyers increasingly expect to see a digitally mature organisation with secure systems, high-quality data, and a demonstrable record of compliance. A poorly prepared IT environment can reduce valuation, complicate integration and even cause a deal to fall through.

It is also important to consider the type of firm you are seeking to attract. There are several well-known “consolidator” firms operating in the legal sector. These firms have delivered their own approach to merging firms into their model. Often, these firms will not focus on the infrastructure of the target firm as that will be disposed of, instead they will be focused on data structures and ease of migration onto their platform.

Step 1: Strengthening Data Quality and Management

Why Data Matters in M&A

Client and matter data is the lifeblood of a law firm. During due diligence acquirers will closely scrutinise how data is stored, structured and managed.  Fragmented, duplicated or inaccurate records immediately raise red flags and indicate inefficiency, risk, and additional cost in cleaning and migrating records.

Typical Issues We Encounter

• Multiple versions of client and entity records within a system and/or spread across systems.
• Missing or inconsistent entity and matter details.
• Legacy datasets with no clear retention or disposal policies.
• Unstructured data stored in email archives or local drives.

Steps to Take

• Data Audit: Review all sources of client and matter data, mapping where it is stored and identifying gaps.
• Standardisation: Introduce consistent formats and fields across systems.
• Deduplication: Remove duplicate records to create a single source of truth.
• Retention Policies: Apply retention rules to remove outdated or irrelevant data.

The Result

A cleansed and consolidated dataset demonstrating professionalism, reducing integration costs, and ensuring acquirers can quickly realise value from the acquired client base.

Step 2: Demonstrating Cybersecurity Maturity

Rising Concerns About Cyber Risk

The legal sector has become a prime target for cybercrime due to the volume of sensitive data firms hold and the value of transactions that they deal with.  Acquirers are acutely aware that inheriting a weak cybersecurity posture exposes them to immediate regulatory, financial, and reputational risk.

Key Areas of Focus

• Access Controls: Implementation of multi-factor authentication and strict user permissions.
• Endpoint Security: Protection for laptops, desktops, and mobile devices.
• Network Security: Firewalls, intrusion detection, and monitoring.
• Incident Response: Documented plans and evidence of testing.
• Staff Awareness: Training programmes to reduce human error.

What Buyers Want to See

Acquirers will expect firms to demonstrate compliance with recognised standards such as Cyber Essentials Plus and ISO 27001.  Evidence of penetration testing, vulnerability assessments, and remediation plans strengthens credibility.

Step 3: Modernising and Rationalising Systems

The Risk of Legacy Systems

Many firms continue to rely on outdated practice management or case management systems, sometimes customised beyond recognition. While these may continue to function, they represent serious challenges during M&A as these outdated solutions often have limited support and integration or migration of data to more modern systems becomes costly and is a significant risk.

Rationalisation in Practice

• System Inventory: Map all business-critical applications, from PMS to HR.
• Redundancy Identification: Retire systems with overlapping functionality.
• Cloud Readiness: Assess whether systems are cloud-based or suitable for migration.
• Vendor Assessment: Document all product and services providers and have contracts to hand.  Review contracts for flexibility and potential transfer restrictions.

The Outcome

A modern, streamlined technology landscape reassures buyers that integration will be manageable. It also improves efficiency within the firm, reducing operating costs long before a deal is finalised.

Step 4: Compliance and Regulatory Assurance

Why It Matters

Regulatory compliance is a central concern in any M&A. Firms must demonstrate compliance with GDPR, SRA regulations, and client-specific confidentiality obligations. Failure to do so can not only stall a deal but create significant liability for acquirers.

Areas to Evidence

• Data Protection Impact Assessments (DPIAs).
• Information governance frameworks.
• Policies including retention, destruction, and access.
• Audit trails for data handling.

Client Expectations

Demonstrating robust compliance frameworks not only supports transaction readiness but al so builds trust with clients and regulators alike.

Step 5: Cultural and Change Management Readiness

Technology Is Only Part of the Picture

Acquirers are not just buying systems, indeed, often the systems are a secondary priority, more a barrier to the transaction successfully completing, — they are buying a business, its people, its expertise and client base. A firm may have invested in technology, but if adoption is poor, acquirers will see risk.

Signs of a Digitally Ready Culture

• Staff consistently use centralised systems rather than local workarounds.
• Training programmes ensure high levels of digital competence.
• Senior teams articulate a clear vision for digital transformation.

Demonstrating Readiness

Firms that can show evidence of digital adoption — such as usage metrics, satisfaction surveys, or documented change programmes — strengthen their appeal.