The year ahead looks like it will continue to be busy for corporate departments. The deal spree that started in the summer of 2020 seems to have set a tone. Consolidation via mergers and acquisitions will continue to be an attractive way out of the crisis for some businesses and represents a significant opportunity for others.
In a fiercely competitive market, it’s dealmakers that can move fastest who will claim the market advantage. We asked Andrew Webber, Head of TLT’s Corporate Team, to share his perspective on the market that’s emerging from the crisis. In particular, we explore how TLT’s investment in innovation is helping them set a new and faster pace for M&A transactions in this new era of digital lawyering.
Government-imposed lockdowns and the general market disruption in 2020 has created a highly competitive market for the right deals in more pandemic-resilient sectors. For law firms battling to be recognised as the dealmaker of choice, using technology to drive up the pace of transactions is an important differentiator. As a result, we’re seeing a change in client and lawyer expectations when it comes to using technology to accelerate the execution of corporate deals.
“Speed is important in transactions and I think clients are becoming more aware now of the resources being used by advisors to increase pace,” Andrew explains. “If there's a desirable business being marketed, being in a position to transact quickly is really important. For law firms, it's about giving your client confidence that you can make it possible to transact quickly.”
Following a rollercoaster year for deal-making, being able to show clients how technology adds speed and certainty to a deal gives firms like TLT a very persuasive position.
“We can review a data room now in hours, whereas previously it could have taken days – and with automation, we know we can produce documentation quickly too,” adds Andrew. “We can move forward quicker and we use this competitive advantage to move other parties in the transaction forward as well. This not only delivers shorter timescales, but also gives clients a greater sense of certainty.”
Historically, there’s been an acceptance that M&A transactions typically end with clients and their lawyers couped up in an office together into the early hours of the morning wrangling over the finer details of the deal. This is often when frustrations with manual document churn hit their peak.
Last minute changes to the terms of a deal can trigger multiple minor (but significant) changes throughout an SPA and all the associated ancillary documentation. In the past, this inevitably resulted in clients sitting in one room wondering why it was taking so long for their lawyers to produce and cross-check new versions. In the next room lawyer anxiety levels would be soaring as they hastily manually updated documents against the clock.
But times are changing and using technology, such as drafting automation, is driving up the pace of document production. This is rewriting what’s acceptable and expected by clients from the transaction process.
“The market is changing in very exciting ways – it's really interesting at the moment,” says Andrew. “And I think those firms that are able to show clients that they're invested in innovation will benefit. Arguably, there are investment costs to being pioneers, but when those investments pay off, they will ultimately lead to a longer-term competitive advantage.”
With technology proving to be an important differentiator, the more visible the role and value of technology is to clients, the better. It’s no longer sufficient to claim you’re an ‘innovative firm’ and rely on shallow references to technology in your pitch documents to be sufficient proof of this. You need to be able to demonstrate how you’re applying digital tools and show the value to clients.
“At every point of the transaction, we demonstrate how technology is being used,” says Andrew, explaining TLT’s rationale for investing so proactively in digital transformation. “For instance, we’re able to demonstrate to clients that we have document automation that’s used every day. This includes everything from automating standard transaction letters with clients, right through to the SPA itself.”
But technology will only deliver on its promises if it’s implemented in a supportive culture. One of the biggest barriers to the adoption of technology we see at Clarilis is the fear from lawyers that the aim of automation is replace them, which isn’t the case.
“It’s about process simplification,” Andrew explains. “It's about using technology to take away the parts of the job that we don't really want to do and doing them more efficiently. We don't want people sat there doing document population or standard document review into the late hours when actually there’s a better way of doing it. It's about freeing people up to do different parts of the job that are more interesting and give them a better experience for career development.”
This raises the important role of applying innovation to enhance lawyer satisfaction. We often talk about digital transformation in terms of its value to clients and the position it puts law firms in to win more profitable work. But what can be overlooked is it may also help law firms to nurture loyal existing talent and attract the best of a new generation of more tech-discerning lawyers.
In a fiercely competitive market, the law firms that are taking proactive steps to adapt to a new deal landscape will outperform those who resist technology.