From Integration to Revenue
The First 180 Days After a Firm Combination
Lost in the mists of times is my first firm, which no longer exists. We pursued an aggressive growth strategy in which we would evaluate candidates for merger on an ongoing basis, and formally on a quarterly basis. Later, I would join Arthur Andersen, at the time the world's largest Big Six accounting, tax and consulting firm.
My last responsibility at Andersen was a competitor intelligence project. I was to evaluate the merger of two Big Six competitors, Price Waterhouse ($5.8 billion in revenue) and Coopers & Lybrand ($7.4 billion in revenue). The combined firm had over $13 billion in revenue and 135,000 employees. I wrote a memo to the Arthur Andersen board with seventeen projections, activities that I thought were necessary in the wake of a significant merger. Sixteen of the seventeen actions came true.
We quickly learned that firm combinations are judged first by whether the integration works. We would ask these questions:
Do the systems connect?
Are the offices aligned?
Have reporting lines been settled?
Are the new practice and industry groups functioning?
Has the firm managed the inevitable cultural friction?
All of that mattered, but it is wasn't the real test.
The real measure of a law firm combination is whether the combined firm creates revenue that neither legacy firm could have generated independently.
That required treating the first 180 days not simply as an integration exercise, but as a growth exercise.
Start with the clients, not the organization chart
The first step should be deceptively simple: map the clients of both legacy firms, as we referred to them "Legacy P" and "Legacy C" clients.
Then, we looked at them through four lenses:
Client × Practice × Sector × Geography
The objective was to find the white space.
A major client of Coopers & Lybrand may have used the firm extensively for corporate work in the United States but have no relationship with the tax lawyers Price Waterhouse brought in Europe or Asia. Legacy P was dominant in my area - we had all the major computer clients except Apple at the time, a fully dominant position in an industry where Legacy C had many highly regarded capabilities that had never been introduced.
Those gaps are not administrative details. They are the economic rationale for the combination.
Find the relationships that matter most
Not every client deserves equal attention.
We identified 82 combined client relationships with the highest incremental revenue potential.
The criteria included:
Current revenue
Revenue growth
Relationship strength
Number of existing practice
Geographic footprint
Growth trajectory
Transaction activity
Competitive vulnerability
Current service team
Proposed additional service team members
Client feedback
Client's likely need for capabilities newly available through the combination.
For each priority client, the question we asked was:
What can we now credibly offer this client that we could not offer six months ago?
If there is no compelling answer, the combination has not yet created client value.
Build pursuit teams around opportunities
Cross-selling rarely succeeds because someone circulates a client list or hosts an internal introduction.
It succeeds when firms organize around specific opportunities and engage in meaningful pursuit. Clients both want it and expect it.
That means creating cross-border and cross-practice pursuit teams with named relationship owners, target opportunities, next actions and accountability.
One legacy firm's sector strength must become the doorway for another legacy firm's capabilities.
A strong energy relationship might create an opening for project finance, regulatory, litigation, tax or M&A.
A technology client might create opportunities across privacy, intellectual property, employment, public-company work, disputes or international expansion.
The combination becomes economically meaningful when those connections become client conversations.
Put the first 180 days on a clock
Growth also needs deadlines.
I would establish explicit 30-, 60-, 90- and 180-day objectives.
At 30 days: identify the priority relationships and white-space opportunities.
At 60 days: complete internal relationship mapping and begin coordinated client outreach.
At 90 days: generate measurable opportunities and active pursuits.
At 180 days: show matters opened, expanded relationships and attributable revenue.
And measure the right things.
Not meetings.
Not introductions.
Not internal collaboration for its own sake.
On a broad basis, the new firm must measure:
Client introductions
Qualified opportunities
Pitches
New matters opened
Cross-practice penetration and revenue
Finally, ask the clients
One of the most important questions after a combination should be asked outside the firm:
What can this combined firm now do for you that neither predecessor could do as effectively before?
Client interviews can expose opportunities the lawyers themselves may not see.
They can also reveal something even more valuable: whether clients actually perceive the combination as creating additional capability, reach and value—or whether only the firm does.
That distinction matters.
I was with PricewaterhouseCoopers for those first seven years after the merger, and the clients believed in the value of the merger. Our original $13.5 billion in 1997 combined revenue ballooned, and after we sold our $6.3 billion consulting unit to IBM (reducing our audit, accounting and tax revenue to just over $7 billion), our collective firmwide revenue in 2005 was $21.8 billion (including Australian revenue).
A successful combination should eventually produce more than a larger firm. It should produce new relationships, new matters, deeper client penetration and opportunities that did not exist before.
That is when integration becomes strategy. And strategy becomes revenue.
