Technology in M&A transactions
By Robert Thompson, Ward Hadaway LLP
Ask any senior M&A lawyer how transactional work has changed over their career and most will point to the impact of technology. For the older generation this all started with the demise of the fax in favour of email and electronic documentation. The legal environment has since been subject to a massive sales push with due diligence software and programs, precedent creation software and project management systems all in theory designed to make the working lives of M&A lawyers easier, improve efficiency and profitability as well as meeting ever increasing client expectations in terms of service delivery and integration.
More recently and as a result of Covid the use of technology has significantly increased, firstly out of necessity but latterly out of seeing the benefits that some of the technology has brought to the transaction process. Currently most meetings are being conducted virtually through Teams, Skype or Webex. In person meetings, where possible, are limited to those where an in person dynamic might add value, such as key negotiating or critical due diligence meetings. In the due diligence arena, Litera, A legal tech provider believes some 57% of legal firms are now using some form of artificial intelligence products to automate elements of transactional due diligence work.
In terms of document production preliminary formats can now be produced largely automatically with minor tailoring. Most precedent production platforms come with embedded notes to aid the preparation of a near perfect document by more junior fee earners which then senior fee earners can quickly review, tailor and adapt to produce a very good first draft in a fraction of the time previously needed to be spent on this. This all improves efficiency and substantially eliminates errors of transcription or referencing an incorrect precedent. Most platforms are sold with an update function which means changes in law and procedure are automatically updated, again saving substantial amounts of professional time.
Sophisticated clients are aware of these improvements and expect their law firms to invest in this technology and pass the savings on to them.
The number of in person all party closing meetings are also on the decline with the adoption of electronic signatures on legal documentation, which now enable parties to sign legal documents from anywhere in the world from their smartphones with the likes of DocuSign. Despite initial hesitancy in the UK some 61% of closings are now being effected via digital signatures. Savings in print costs associated with electronic closing and bibles versus in person and paper ones are substantial.
For lawyers used to charging on a time spent basis by reference to hourly rates these changes are now impacting adversely on the fees per transaction that they were able to earn before these advancements. This is resulting in changes to the way lawyers charge for these services with many going to a set fee for given parts of the transaction process or even to fixed fees for a given transaction.
Automation and technology only go so far however, the need for critical thinking, careful in context analysis and negotiation can still only be undertaken by skilled lawyers. Their job can however be made that much more pleasant and enjoyable by embracing some of the technologies to remove some of the “drudge work” from their day to day role leaving them to focus on the aspects that require the most care.
The willingness or otherwise of firms to embrace the best of technology within the M&A market also has a direct effect on the attractiveness of the firm in terms of recruitment, particularly for young tech savvy lawyers, who being used to working with a decent precedent production system or the latest due diligence review are not likely to join a firm who does not have these systems.
Technology is even having an impact on payment systems outside of the traditional banking system, where banking systems rely on working days to effect payment. Payment platforms like Lighting Network are making reliance on banking hours a thing of the past and removing the monopoly traditional enjoyed by the banks.
Technology within the legal sector is here to stay, those firms that are able to carefully balance the use of technology as part and parcel of their service offering in order to meet their clients expectations in terms of quality and service delivery at the right price have a prosperous future, those that try and hang on to the past and deploy outdated procedures and practices risk being left behind. An estimated 84% of law firms are set to increase their spend on legal tech over the next 12 months. However it is important to ensure that the legal offering is always tech enabled rather than tech reliant as no amount of tech can replace a skilled M&A legal practitioner.
Robert ThompsonGGI member firm
Ward Hadaway LLP
Advisory, Law Firm Services
Newcastle upon Tyne, Leeds, Manchester, UK
T: +44 191 204 4000
Ward Hadaway is one of the largest full-service law firms in the North of England, with a reputation for quality, innovation and a practical approach to meeting their clients’ needs. With 90+ partners and over 450 staff, the firm’s approach of partner-led relationships with all clients is supported by a resource that has real strength in depth.
Robert Thompson is the Head of Corporate at Ward Hadaway LLP, a top 100 UK law firm. He has over 35 years M&A experience and edits “Sinclair on Warranties and Indemnities on Shares and Asset Sales” 11th Edition, regarded as the UK lawyers’ dealmaking bible. Recognised in Legal 500 Hall of Fame.
Pbulished: M & A Newsletter, No. 03 Autumn 2022 l Photo: BalanceFormCreative - stock.adobe.com