Assessing Technology

Merging Firms, Merging Technologies

Effective planning for the merger of two firms involves sensitivity to both systems and people.

By Richard P. Hellers

THE BUSINESS logic driving law firm mergers is seductive in its simplicity: Economies of size reduce costs and economies of support organizations leverage time and talent.

Consequently, it's not surprising that we see mergers getting bigger (Dallas-based Locke Purnell Rain Harrell with Liddell, Sapp, Zivley, Hill & LaBoon of Houston) and more complex (London's Clifford Chance and New York's Rogers & Well).

Often lost in the public hoopla are the challenges of consolidating the often-disparate technologies of two merging firms.

A firm's information and communications technology infrastructure permeates almost every aspect of operations, from legal research to document management; from litigation support to time and billing. It's not just internal operations that are affected -- clients' expectations about the use and support of electronic communications are rising as public familiarity with new technology grows. In this complex environment, the need for a disciplined approach is evident.

Wise firm leaders will encourage IT management participation early in the process of merger planning, because technology issues cannot take a subordinate position in the planning process. Pre-merger activities are often dominated by financial "due diligence," examining the firms' individual cultures and anticipating public and client reaction. Extensive discussions take place on the management structure, committee participation and the proposed name of the new firm. While all of these activities are important, technology issues must also be brought to the forefront to ensure operational continuity.

Assumptions, promises and expectations made without IT participation fall heavily upon the shoulders of the technical staff to resolve and honor. Early and high level IT participation in the merger evaluation and planning function will help identify and address the issues and costs that will be encountered.

I. Establish an evaluation and planning team

Successful technology installations often are the result of adequate time spent planning and analyzing business goals and objectives. Merging firms are likely to have differences in how they approach and use technology.

Several different scenarios can exist:

• Both entities are satisfied with their current technology.

• Neither entity is satisfied with their current technology; and may or may not have plans to make changes.

• One entity is satisfied with current technology; one entity isn't satisfied with technology.

Your evaluation team can identify and resolve these differences or develop co-existence strategies. Be sure to include the top technology partner or managing partner on this team. The support and understanding of a senior, non-technical manager will reduce the inevitable organizational anxiety resulting from new procedures, new people and new structures.

Depending on the size of the organizations, and the magnitude of the changes involved, the evaluation and planning process can take weeks or months; without it, the results can be unpredictable, or disastrous.

II. Focus on five major technology areas

Separating your technology consolidation plan into five primary areas helps compartmentalize the myriad tasks and creates a structure that ensures all vital elements are addressed. For each area, migration and conversion strategies must be established, tested and benchmarked. These five areas and representative elements are:

1. Infrastructure: The technology that "binds together" applications and data and enable the flow and exchange of information across platforms and organizations is perhaps the primary technical concern for merging firms.

   • Protocols: Because system addresses cannot conflict, integrating two different organizations must first be done at this root level. This may require major and often requires the assistance of outside organizations.

   • Hubs, Switches, Routers: These components make up the internal "plumbing" of your system. Certain technologies have improved performance but made it more difficult to combine and move data between equipment supporting different speeds.

   • Naming Convention: A consistent naming convention is the cornerstone of a solid system. Implemented correctly, it allows for automating various aspects of desktop management, control and update. Proper naming provides logical identification and grouping of servers, workstations, directories andusers by function and/or physical location.

   • Network Management: Although not the primary concern when bringing two systems together, it is important to document the tools, and procedures used to detect and solve problems.

2. Connectivity: Accessing data across systems and moving data from one system to another must be transparent, quick and reliable. Various components provide this functionality.

   • Wide Area Network (WAN): Connection types and speeds must be balanced with the cost to create a system that provides access to data throughout locations.

   • Internet Connection: Connectivity to the Internet has become common, if not necessary, and encompasses issues of security, bandwidth and reliability.

   • Remote Access: Remote access to data has become a necessity. Web enabled applications, such as document management, are emerging. Dedicated online systems, such as the U.S. Bankruptcy Court's "PACER" docket system, require dial-out communications beyond simple Internet access.

3. Hardware Server Architecture: Balancing applications across standardized servers is critical to ensure performance, enable access to those who need it, and prevent access to those who should not.

   • Workstation Architecture: A common architecture will help standardize the installation of technology and support of client software and maintenance utilities.

   • Printers: Printing documents to multiple printers can produce different results (specifically in formatting and pagination); print drivers should be standardized in the merged system.

4. Central applications: These defined as those servicing the firm as a whole or generally available to all firm personnel.

   • Accounting: This is one of the first systems that must be consolidated. Combining client databases is essential for conflict management, time and billing, and financial reporting. Combined systems should be structured to track the pre-merged entities activity separately along with the new combined entity.

   • Word Processing: Moving to a single editor and a single version requires not only the migration of documents to a common system, but often the cross-conversion of files between editors. Additional challenges arise when faced with multiple versions, especially working across 16 and 32-bit editions. For example, moving from Corel's WordPerfect to Microsoft's Word involves different file formatting, document conversion routines, as well as document structure cleanup utilities.

   • Document Management System: Active sharing of documents and other file-based information throughout the organization requires seamlessly consolidated DMS systems. Both metadata and document repositories will need to be merged, altered or rebuilt.

   • Groupware/Electronic Mail: Using collaborative applications effectively demands both a common platform and a common product. Combining unstructured data may require assumptions on use, purpose and necessity. Supporting multiple programs, such as Lotus Notes and Microsoft Exchange, raises the complexities of support and reliability. Easy data transfer between systems is often difficult, if not impossible, to achieve.

5. Narrowly used applications: Specific programs (such as a ProLaw, Concordance, Folio or Interaction) used by individual practice groups, continue to grow in popularity and complexity. Ghey cannot be neglected in the merger process.

   • Litigation Support: It is not uncommon to find multiple systems and methods in use for litigation support even within a single firm. Maintaining and supporting multiple systems comes with a price, and consolidation should be considered where practical.

   • Case Management: Consolidating case management software can require an extensive effort, particularly when across brands and platforms, or both.

III. Communicate and execute the plan

Once careful coordination of critical and dependent events are developed and agreed upon, it's imperative they be communicated to all involved -- technical staff, practice management and system users. Establishing realistic expectations and well-understood milestones is essential. Even more important is meeting the expectations consistently and communicating those successes to the organization. These successes breed the credibility and confidence that an IT group must command to be effective in the long term.

IV. Don't forget the organizational issues

So much emphasis is placed on implementing the operational aspects of a technology merger that staff issues are often ignored. This can create both short and long term problems in the IT team. Changes in the workplace create a natural stress; compound that with high expectations and short timeframes and you've got a potentially explosive situation. An adequate staffing plan that provides not only the bodies but also the technical skill sets to meet the demands of the project is essential. The effective IT plan addresses the human aspects as well as the technical ones.

Technology enables law firms to highly leverage time and talent to the benefit of clients. It is deeply entrenched as part of the business of law as well as the practice of law. As such it represents a substantial asset of any firm and merit the same weight as the more visible financial, capital and intellectual assets of merging firms.

A thoughtful and deliberate consolidation of the technology assets of two firms lays the foundation for realizing the anticipated economies of operation in the new entity.

Richard P. Hellers is vice president of TechLaw's Information Technology Services Division, and is based in Phoenix.