Initially there was a startled pause in M&A activity as the world froze in reaction to the chaos erupting. But this temporary dormancy was soon followed by a significant stream of activity. Some firms recorded one of their busiest summers ever for M&A transactions.
But how did law firms, with their work practices thrown upside down, cope with the influx of transactions? Did technology have a role in convincing clients their deals were in safe hands? And if technology was a differentiator, did competitive advantage shift to those firms that had prioritised innovation during the preceding years?
Recently identified by the Financial Times as a ‘pacesetter’ in the legal sector for its approach to digital transformation, Addleshaw Goddard’s progressive mindset definitely pre-dates the pandemic. We asked Chris Taylor, a partner in the firm’s corporate department, to share his thoughts on how being tech-positive helped them to seize the opportunity presented by the unexpected surge in activity of 2020.
“The pandemic has been very strange and hard to read,” Chris says reflecting on the market in 2020. “We originally thought that M&A would have a tough time. But as pressure was applied to the economy and our clients, it actually led to surprising levels of transactional activity. Some was out of necessity – rescues, fundraisings and the like – but equally opportunity. We've seen both in abundance over the course of the last 12 months.”
With this explosion in M&A activity came the realisation that the pandemic wasn’t only going to be about finding ways to maintain some semblance of business continuity. Suddenly, corporate teams were having to hastily shift their mindset, because they also faced an influx of business opportunity. Adopting technology to deliver deals in a more ‘digitally’ enhanced manner became a necessity almost overnight. While some firms struggled to gets to grips with this, others were already prepared to accelerate the digitalisation of their delivery models. For example, pioneering firms, like Addleshaw Goddard, had initiated a major focus on technology years earlier.
“Go back to the period following the financial crisis in 2008, and there was a huge clamour from our clients wanting more for less – we were undoubtedly struggling to deliver this with a purely human delivery model,” Chris recalls. “We recognised then that the only way we could address this challenge was to be at the forefront of developments around technology. So, in many ways, we'd already been through a first big wave of change in relation to technology following the financial crisis and so, when the pandemic hit, we were ready to go again and propel our use of technology forward.”
So, it seems having an innovation-friendly mindset could have been a significant advantage for firms as they competed for a share of the 2020 M&A spree. But will this continue into the post-pandemic recovery?
The pandemic certainly revealed to law firms the risk of not keeping up with technical developments. But an equally significant impact could be how the pandemic changes what clients demand from their advisors in the future.
“What the pandemic has certainly done is demonstrate that, in times of acute pressure, you can use technology to deliver transactions very successfully for appropriate fees,” says Chris. “Clients feel like they’re getting both a very good professional service from their lawyers, but equally a service that is at the correct pricing point.”
“Clarilis automation has had the most demonstrable benefits in terms of time and money saving. Working with Clarilis has significantly reduced the cost of first draft production and the roll out of ancillary documents. We've been very impressed with Clarilis, as their solution has enabled our people to spend more time on work which is really valued by clients which is beneficial for both our clients and our lawyers”, he added.
Seeing the efficiencies that have been achieved by using technology more innovatively during the pandemic, law firms are likely to find their clients have new, digitally-enhanced expectations. As a result, firms that were once tech-wary are now looking to ‘pacesetters’ like Addleshaw Goddard for inspiration on how they can best invest in technology. Automation is one of the areas that’s coming up with increasing frequency.
“When we talk about technology, what really stands out for me is the ability to accelerate first draft production of complex legal documents through automation – this has proved a business game changer for our SPA suite and private equity documents in particular.” points out Chris.
“Some clients could never understand why we didn't have a perfect share purchase agreement that we could just take off the shelf, change the name and give it to them. We can't quite do that. But the advent of automation has drastically cut the cost of producing that first draft. That’s a very obvious saving for clients, so I think clients really get it.” he reflects.
The increase in M&A activity that emerged in response to the pandemic led to a period of fast and furious innovation decisions. Technology stepped up and took the burden of fixing many of the challenges unearthed in a crisis. But now as we emerge from the worst of it, could the innovation mindset unlocked during the pandemic be what differentiates your firm in the future?
“I'm surprised that our peers are not all at the stage we are at with Clarilis. It’s not only differentiated us a business, it’s a huge selling point when attracting new talent to come and work for us to be able to offer this sort of technology.” Chris concludes.