Imagine the scene if you will. You are a senior partner from US giant Piper Rudnick doing a tour of DLA's offices as part of the negotiations for a prospective merger.

As much as anything it is a charm offensive, but what you focus on most during a week of meeting would-be merger partners could determine the future success of such a merger. There is a lot at stake, but what are you looking for and what is the best way to go about it?

The latest Legal Week Insight survey, conducted in association with SAP, polled 100 senior partners in leading UK law firms on their attitudes to international expansion.

It not only asked why international expansion is attractive to firms, it also questioned partners on the best ways to achieve it, focusing particularly on structural factors that can often be overlooked.

What is most apparent from the survey is that most senior lawyers focus on the opportunities associated with international expansion.

They home in on the potential for increasing revenue, rather than 'cost savings', while concern about 'nuts and bolts' issues such as client relationship management systems (CRM), human resources (HR) and accounting systems are of lower priority.

Perhaps not surprisingly, the leading objectives of operating globally all relate to revenue generation.

The respondents were asked to rank suggested reasons for going global – ascribing them a mark of between 1 and 10.

The need to 'secure or enhance market position' received the highest ranking (7.3).

Second was 'increasing revenues per lawyer' (6.8); after which came 'the importance of taking on new types of work and addressing new areas of opportunity' (6.6); followed by 'increased global coverage' (6.3).

Interestingly, 'reducing costs per lawyer' was rated lowest of all (4.8).

But some of the respondents were not that convinced that global is the way to go. One managing partner, who asked not to be named, said: "The evidence is that firms are going in the opposite direction now, so I am not sure about the premise of firms increasingly seeking to globalise. The prevailing view is that being international in some ways allows firms to be more profitable, but it can involve a lot of management time. That is what we are finding with our overseas offices."

Nevertheless, a great many large law firms are either aiming to become global firms or, through imminent or intended mergers and acquisitions or alliances, are in the process of doing so.

The desire to meet the needs of global clients and the potential for expanding existing business and gaining new business are clear drivers to this process of globalisation and internationalism.

But for such firms the process is often fraught with problems. Growth means facing new challenges that are often hard to predict and difficult to solve.

Any firms seeking a global position face some very fundamental questions. What are the qualities needed to become a global firm? What aspects of infrastructure are most important? What is the best way to become a global firm?

And, when it comes to mergers, are there characteristics that would make international mergers more precarious than national mergers? And are there fundamental differences if the merger partner is US-based or European?

What is the relative importance of company structure, currency, billing systems, IT infrastructure and cultural factors? And what is the role of due diligence and how should it be targeted? Only one thing is agreed by all players in the industry. Growth and the management of change is by no means a perfect science. Corporate history is littered with examples of bungled attempts to go global that seemed like perfect marriages in their early stages.

The question for lawyers is whether their current attitudes and perceptions of the process of going global are appropriate and/or realistic.

Do firms' objectives sufficiently take account of real world issues in terms of combining one or more firm's existing infrastructure? How much do perceptions of geographical difference affect attitudes towards M&A and alliances?

Bearing in mind that most firms already have extensive CRM, HR and accounting systems in place, this raises interesting questions. Are firms underestimating the importance of ensuring a match in IT infrastructure when developing a global strategy? Are they fully util-ising the expertise of heads of IT, HR and accounting when trying to ensure the process is successful?

While the compatibility of systems is important, the key focus is invariably on the deeper aspects of how firms are matched and how well they are able, strategically, to work on the process of assimilating their cultures and remuneration structures.

This would suggest that, although many firms now consider the match of IT infrastructure and systems to be an important component, other non-technical issues invariably take precedence.

Henry Raine, a corporate partner at Herbert Smith, is perhaps typical of many respondents in this respect. He says: "The key issue is being able to focus on the client, not on the internal systems. I know some firms like to spend a lot of time on matching IT infrastructure, but invariably you just get on with that whether it is well matched or not."

And finally there is an interesting anomaly when it comes to attitudes to going global – that of cost saving. Although it is now the mantra of most firms, particularly in relation to IT costs, reducing costs appears to be way down the list of priorities when it comes to meeting the need to be a global business. Time and again cost reduction and issues of meeting the need to outsource simply do not rank highly in this survey.

When they were asked to identify potential benefits of international reach, the lowest ratings were given to cost reduction. The least popular factor was 'developing offshore resources for commodity work' (3.1). This was followed by 'reducing cost through outsourcing commodity work' (3.9) and 'reducing costs by shared service centres for IT, finance etc' (4.7).

Top of the list was 'improving revenues through cross-selling into existing clients' (7.9). This was followed by 'improving revenues through effective marketing to develop new clients' (7.5); and 'improving revenues by selective team acquisitions to enhance portfolio (7).

The respondents were also asked to identify the qualities law firms need in order to expand abroad successfully.

According to the survey the four qualities that stand out for lawyers are: 'Capability to plan and execute a single international strategy' (rating average 7.6); 'an ability to manage clients across different countries and time zones' (7.5); 'an effective knowledge management system that can leverage the firm's expertise wherever situated' (7.3) and 'a common view of clients irrespective of region' (7.1).

Perhaps highlighting the importance of a clear plan, one respondent said: "A lot depends on how well the client base overlaps."

At the other end of the scale, billing, accounts and HR are perceived as being of less importance, despite the relative high importance of the need for an effective knowledge management system. Lawyers gave 'a global HR system' the lowest average ranking (4.5); followed by 'a single set of accounts' (4.7); a consolidated set of country and regional accounts' (5); and 'a unified billing system' (5.6).

This is the first evidence in the research that lawyers are increasingly seeing the importance of knowledge management as a catalyst to going global. But, while they rate the importance of an effective KM system highly, they do not make the link through to HR, billing and accounts.

Going global

When it comes to considering the best way to become a global law firm there was a clear order of priority. Of all the options, 'establishing an international network of offices' came out on top (31%), followed by 'a corporate style set of mergers and acquisitions' (27%). Lower down the scale came 'an informal best friend alliance of other firms in other jurisdictions' (22%), followed by 'an alliance of firms loosely tied together under one banner' (13%).

The rankings reflect the strategies the leading UK firms have chosen – most of the top 20 UK firms have set out to establish their own offices, either by growing them organically – the preferred option – or through mergers.

While mergers can get firms where they want to be in terms of coverage more quickly, they present their own challenges, as demonstrated by the problems Clifford Chance has experienced bedding down its US merger.

The respondents were asked to highlight the particular challenges associated with international mergers, when compared with domestic tie-ups.

Not surprisingly, 'cultural differences' came top with an average score of seven out of 10, followed by 'operational difficulties' (6.6), and 'a different approach to information sharing' (6.4).'Different regulatory structures' (6.3) also scored highly.

Lowest down the scale of significance was 'different billing structures' (5.5). This was followed by 'language' (5.7), and 'different business models' (average rating 6.2/10).

This shows that, while lawyers tend not to drill down on specific processes as being key (such as billing and overlapping practice areas) they do show concern about approaches to information sharing. This would suggest that firms are increasingly wary of operational differences and mismatches in KM systems.

"You have to respect cultural differences and practice differences between countries," said one respondent.

When it comes to considering a merger with a US firm, the respondents identified differing 'partner structures' as the most important factor (7.1), closely followed by 'cultural differences' (rating 6.8). The two are closely linked, with the US focus on 'eat what you kill' pay structures contrasting with the UK's lockstep tradition, although few UK firms now operate a pure lockstep.

Interestingly, IT infrastructure also scored highly (6.1). Of least significance was the dollar exchange rate (5.4), followed by Sarbanes-Oxley Act issues (5.7). Different billing systems and 'a lack of appetite among US firms for mergers' both received an average rating of 5.8.

In the case of European mergers, the same key factors came to the fore – although in this case, cultural factors came top (6.9), followed by partner structure (6.7). Of lower significance were billing systems (average rating 5.2) and currency exchange rate (5.0)

When asked to rank foreign law firms in terms of their technological strategy and ability there is a clear pecking order with US firms first (42%), UK firms second (32%) and firms in continental Europe trailing in their wake – German firms came next with just 3%.

IT consultant Neil Cameron, of Neil Cameron Consulting, disagrees with the findings. He says: "I think that the respondents are wrong. In terms of 'technological strategy and ability' UK (as in London) and Australian (as in Sydney) firms are way ahead of everyone else, including US firms."

Some respondents also commented on the differences between European firms. "There are huge differences between and sometimes within the European countries. In Switzerland there are differences between how you do business in Geneva and Zurich," said one.

Respondents also listed a wide range of other factors that are important in relation to establishing links with other European firms: relative scale; management structure; similarity of work type; understanding of each other's markets; relocation issues; similarity of career structures. The most common 'other' response was concern about regulatory factors.

Negotiations

The respondents were asked to highlight which aspects of a law firm's back office should be prioritised during merger due diligence.

IT infrastructure and billing come top of the pile with 90% and 80% of lawyers saying it should be part of the process. These were followed by marketing and regulatory system due diligence (both at 86%).

The lowest ranking is given to CRM (69%), followed by HR (73%) and KM strategy (81%).

The respondents were also asked who they thought should take part in merger negotiations.

Not surprisingly, managing partners came top of the list with 91% of respondents saying their managing partner should be on the team.

Seventy-nine percent of the respondents said a committee of partners should be involved in negotiations.

Of the non-partners, finance directors (27%) received surprisingly few endorsements, whereas IT directors were considered by one in two partners (49%) to be valuable contributors to the negotiations. HR (48%) and marketing (44%) also scored relatively highly.

HR and CRM systems

By far the majority of firms surveyed now have a single firm-wide HR system (76%) but a significant minority do not (16%).

Seventy-one percent of firms already have or are thinking of implementing a CRM system; 18% have no plans at present, while 11% of those polled were unsure what the current strategy is.

When asked about the key elements of a client information system, lawyers most favoured 'outstanding issues with the client' (8.2) followed by 'client interest in the firm's other areas of expertise' (7.9), 'potential conflicts across the world' (7.7) and 'the client's team and their relationships to one another' (7.6).

The lowest ranking was assigned to 'identity of previous lawyers' (5.7), 'identity of lawyers currently engaged on client business anywhere in the world' (6.9) and 'work in progress and clients funds' (7.2).

Role of technology

There is little doubt that there is a subtle inter-play between the enablers of global expansion and the infrastructure that underpins it. Although many of the respondents do not highlight technology in their responses, it is often implicit in their attitudes.

Cameron sums it up. He says: "It is interesting – but not surprising – that so many of the global 'enablers' are reliant on global integrated technology; after all, how can you have a global law firm without global matters, or without a single global view of all relevant client information?"

According to Andrew Miller, legal sector lead, SAP UK, the report shows that firms understand the interplay of strategy and IT infrastructure. He says: "The report gives some positive conclusions because people are focusing on the strategy of the business to become a proper global law firm. It is essentially forward thinking because they are focused on the upside of expansion, not about cost savings. From an IT perspective, it is encouraging because it shows that to go global you need firms that have a track record of a single unified approach with a strong platform.

"My advice to firms reading this is to develop the highest level strategy combined with under-standing of cultural and partner differences and to foster an understanding that to execute that you should not underestimate the importance of IT infrastructure."

Whether the greater emphasis on cultural factors and partner structure makes it more difficult for firms to face technology-related issues remain to be seen.

As one partner said: "You do not want to overstress the aspects of technology, but on the other hand you do not want integration to represent a black hole of funding. There has to be a balance."

Another managing partner said: "As regards integration of infrastructure, it is always an issue and you do not want to get bogged down with it, especially if you have relatively small offices overseas, it is just not worth the hassle. It will not stop you doing it, but it has to be taken into account. The most important issue is local culture and how you support staff over-seas. No one will teach you that and you have to learn as you go along, often learning from your mistakes."

The Legal Week Insight survey found that lawyers believe that globalisation is primarily about 'securing or enhancing market position'. They believe that the most important quality required for success is 'the capability to plan and execute a single international strategy' and that the best way to become a global law firm is by establishing an international network of offices.

They warn that the biggest difference between a national and international merger are cultural factors. When it comes to comparing geographies they feel the most important factor when merging with a US firm is 'partner structure' whereas with European firms it is 'cultural differences'.

As David Childs, chief operating officer at Clifford Chance, says: "A merger/acquisition or alliance only works well where there is a good corporate fit; where both firms have a similar view on life. If you do not have that it can be very difficult. I think the results of the survey – with the emphasis on culture – confirm that reality."