Opinion

Law firms considering a merger or recently emerging from one should take notice of a recent article published by McKinsey & Co on why mergers fail (The McKinsey Quarterly 2001, No 4)

In its study of 193 mergers between 1990 and 1997, it found that a dismal 12 per cent succeeded in maintaining revenue growth in line with their non-merged peers. The reason? McKinsey cited an overemphasis placed on post-merger cost-cutting and an underemphasis on revenue generation. It concludes that success is determined by an organisation's ability to protect and generate revenue growth just after the merger.

What does this mean for law firms? While taking advantage of cost-cutting in the post-merger entity should be explored, it is more important immediately to seek out new revenue opportunities resulting from the synergies of the merged entities.

This is a function ideally suited for next-generation client relationship management (CRM) software capable of delivering 'relationship intelligence'. Relationship intelligence is a firmwide asset that reveals the unique and complex connections between people, companies, relationships, experience and expertise, empowering professionals to leverage who and what they know to uncover new revenue opportunities, differentiate themselves from the competition and enhance client service.

What follows are examples, illustrating how the relationship intelligence provided via CRM packages has helped customers generate increased revenues post-merger:

•Uncovering new strategic relationships: lawyers' ability to leverage strategic relationships with clients and contacts is fundamental in business development. After a merger, the number of potentially valuable relationships a fee-earner can access multiplies, but without the IT infrastructure to identify all the contacts and to reveal who within the firm knows them, it is difficult to tap into this new resource. A CRM system will instantly reveal this information.

•Enhanced cross-selling capabilities: cross-selling serves as an effective and inexpensive way to generate revenue after a merger. To succeed, lawyers across different practice groups must have a 360 degree view of the client's relationship with the firm. For instance, with visibility into the client history of the combined firm, a partner in one practice group suddenly has new prospects for expansion of their practice. But without a relationship intelligence infrastructure, visibility is limited to the firm's expanded client base and the potential opportunities hidden within, whereas relationship intelligence software provides a clear insight into the newly-combined clients.

•Experience and expertise tracking: appropriate staffing to accommodate the client's needs can be tricky following a merger, as new experience and expertise, of which a lawyer might not be aware, is now available to clients. Therefore, access to information about the collective experience and expertise of all professionals in the newly merged entity is critical if the firm's combined resources are to be adequately utilised. The right CRM solution can make this intelligence available.

•Maintaining high standards of client service: after the merger, client service often suffers as lawyers and staff, suddenly exposed to an entirely unfamiliar client base, struggle to learn new preferences. This learning curve can be avoided with CRM software, which provides a centralised knowledge resource that enables anyone who touches the client to access client history, past work provided, and client profiles detailing specific requirements.

A merger can be a shrewd business move if executed properly, with revenue growth as its primary objective. However, a poorly-conceived information infrastructure can wreak havoc on an unsuspecting organisation after a business combination, creating lapses in service, unexploited growth opportunities and a misallocation of resources misdirected away from strategic business goals.

To achieve the objective of maximum growth and revenue generation, firms must have the right infrastructure in place to aggregate, manage and share relationship intelligence. A robust CRM solution with relationship intelligence capabilities is essential to building that infrastructure.