Mergers and Acquisitions – getting “IT” Right

Maintain two Practice Management Systems (PMS) or migrate the data? The former can seem like the simple solution as it involves no costly and complex data conversion; however, with the continual upward pressure on PMS annual licence fees, it won’t take long for the duplicated costs to eat into any additional income gained from the larger fee generation capacity.

Not having a single client matter database is also likely to increase your COLP’s blood pressure who will need to be confident that the firm has watertight processes (multiple conflict checks, duplication of client records, for example) to ensure you don’t create a regulatory situation by acting where you shouldn’t.  Your COFA and the finance team will also need to find ways of ensuring that the reports aggregate the data, (recorded hours, fees, debt and WIP, etc), as well as nominal data, for fee earners, teams, etc. and the firm as a whole. Having data split across two or even more systems can easily lead to chaos without considerable effort in terms of planning and data reconciliation.

Conversely, merging the data sets into one for future use will be a major task in itself and will likely involve both PMS suppliers and possibly a third-party data transfer expert who can do the necessary work to make the data fit into the new location.  There is also the question of how much data to transfer – just the various balances as at the date of completion, or the entire transaction history?  The former is quicker but means you’ll need to think about how to store the pre-completion records such as ledgers and matter details from the old system, (so you can deal with any future queries about pre-completion time or financial transactions), the latter is a much more complicated process to ensure you don’t create imbalances in the new system, if your PMS supplier even supports it.

The cost of migrations reflects the complexity of the work undertaken, with “opening balance” only style migrations typically costing between £10k to 20k, some full transactional migrations could cost upwards of £75 – 100k. Equally, if a firm is using a SaaS based solution, there is likely to be a minimum period for the solution and contracts need to be “bought out” or left to run unused.

These, often significant, costs are easily overlooked when producing the merger budget.

If you are lucky enough to be using the same document management system (DMS) in both firms then there may be a quick way to transfer all the required documents across.  However, it is more likely that there’ll need to be an interim process so that those transferring across can continue work on urgent matters without disruption; something the SRA is hot on.

An important part of this process is identifying compliance/regulatory issues, conflict identification, complaints/claims management, ethical walls, compliance with GDPR, agreeing policies and processes.  These all need to be considered and planned for in advance.

For example, records that may need to be subject to a different retention period (i.e. where the archival process at the acquired firm specified different destruction dates to the acquiring firm, it would be usual for the original retention periods as advised to the client when the file was closed to be adhered to, although this would be a policy decision for the risk and compliance team to be involved in).

Most firms now use Microsoft 365 in some form or other, which makes the transfer of data and email routing between organisations simpler than it used to be.  However, a common trip hazard is whether the additional licences needed by the transferring staff will mean the whole organisation has to move to a different Microsoft 365 plan due to the numerical limits on some M365 offerings (which could change the per user cost across the whole business, not just for the new staff).

The involvement of a good IT Managed Service Provider is invaluable in this situation, but while they should be fine to deal with the mechanics the nuances of law firm data retentions, protections and processes may be less familiar to them so expect to spend some time considering it. There will also probably be the issue of any data left in the old environment (for example departed staff mailboxes) and what to do with it, as you’ll want to shut down the acquired firm’s M365 environment as soon as practicable.

As with other SaaS considerations you may be surprised to find that even with Microsoft 365 licences are not transferable between different environments (tenancies in Microsoft lingo). This means you will probably be in the position of having to purchase new licences in your “go-forward” tenancy while continuing to pay for existing licences for a period.

This is particularly challenging if the firm had entered into long-term commitment licencing agreements (which reduce month-to-month costs at the expense of a tie in which will be difficult if not impossible to extricate yourself from).

Asset due diligence can identify whether the acquired firm has been investing in their tech and so has equipment (laptops, desktops, printers) that can be slotted into your organisation or whether the assets have been sweated to the point where they just need putting out to pasture and replacing with new. 

In either case, whoever is managing your IT will likely advise to you standardise the “build” of the user equipment as soon as possible so that the challenges of managing such a disparate IT estate are minimised; you don’t want to end up with a non-standard build computer being a vector for data loss or hacking due protection software not being updated.

Bear in mind this might mean buying more equipment than you ultimately need to facilitate the swap-out and swap-in process.

Even if you happen to have acquired a firm with exactly the same technology stack as you (which is highly unlikely), every organisation uses their technology differently and to a widely varying level of sophistication.  Beyond the initial induction training there’ll need to be a programme of regular handholding while those moving across get used to your processes, your systems, your way of doing things. 

I’ve seen acquisitions fail to realise benefits because there is a desire to have a “blast” of training on days 1 to 5, which people take in approximately 35% of, and then nothing beyond that.  Psychologically, people will be going through the famous Change Curve, and struggling with their new role and the technology they need to use to make a success of it can affect how quickly (or, indeed, if!) they move through the various stages and onto the exciting new world you’re offering them

When supporting users and systems there will always be the unique issues that occur where currently human interaction, judgement and problem solving is required. AI lacks the ability to think outside the box and apply judgment to resolve these occurrences.

With many working environments, system integration can be complex and issues involving the integration of multiple systems often require a deep understanding of the specific environments and configurations that AI cannot decipher on its own and so again human intervention would regularly be needed.

When communicating with an IT Support desk a human can provide empathy, reassurance, and effective communication, which is particularly important in high-stress situations. Additionally humans are better at understanding the nuances of user needs and can offer tailored training and guidance whilst dealing with support calls and users.

Adaptability is a key skill for any support desk technician and as new technologies and systems are developed, human experts are needed to understand, implement, and support these innovations. Microsoft Azure’s AI services are regularly updated to accommodate new technologies and systems, but integrating these technologies often requires human expertise. AI tools need to be properly configured and tailored to meet the specific needs of an organization, a process that AI alone cannot handle. This is because AI does not inherently possess the necessary skills for such adaptations and would require extensive reprogramming and remapping whenever new systems or technologies are introduced.

With unforeseen issues, AI can struggle when a problem falls outside of the data it was trained on. Constant learning, training and reprogramming would need to be built in to give an AI system a chance at being able to deal with new and unusual requests.