Industry analysis

Industry analysis

Optimise your internal relationships

Alan Mercer, legal industry director at Introhive, outlines the many reasons internal relationship management is just as important as client relationship management to a firm’s overall commercial and strategic success

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You know that relationships are important. You spend a lot of time and resources making sure that you’ve got a handle on your relationships with clients,  prospects, and others outside your firm.

But how well are you managing your internal relationships?

External vs internal relationship management

When considering the topic of  relationships in a business context, we generally think about external relationships – for example relationships with clients, prospects and intermediaries.

However, this is only half the picture. At the core of any business is a collection of internal and external relationships. Optimising your internal relationships is just as important as nurturing the external ones. Success, in terms of a number of key metrics, can be directly linked to your firm’s ability to understand and leverage both of these very important assets.

In other words, the more connected you are, externally and internally, the more successful your firm will become.

Here we’ll explore exactly how important internal relationships really are, and describe four ways that firms can analyse and optimise them more effectively, for the benefit of both the firm and its clients.

Establish your internal network quickly for long-term success

New lateral hires need to establish an effective internal network, and achieving this early is critical to success.

A 2018 study from the Harvard Business Review (HBR) and partners showed that ‘pull’ techniques, as opposed to ‘push’ techniques, are more effective for new hires   building a network. This means proactively pulling people into your network and being more strategic when thinking about who you make most effort to connect with at your firm.

An article outlining the research quotes David Sylvester from consulting firm Booz Allen, saying: “Very targeted investments make a big, big difference to people becoming productive more quickly and enjoying their time in the firm.”

In other words, make strategic connections within the firm to establish the right network for yourself faster.

It’s been reported that increasing horizontal communication within an organisation helps people to achieve goals. It also decreases misunderstandings and miscommunications, solves problems faster, increases efficiency, and enhances mutual understanding among colleagues

One example of a scenario where the importance of this becomes extremely clear is the remarkably high failure rate when making mergers and acquisitions. It has been widely reported that a staggering 70-90% of mergers and acquisitions will fail. Why is this? One of the top reasons, as reported by Forbes, is the absence of a people ‘inventory’.

According to the article: “Most data about people in the organisation being acquired is a gut call based on meetings and interviews. These gut calls are always useful but never enough when it comes to fully understanding the valuable asset of people.”

On top of this, formal organisational charts often bear little resemblance to the web of people who actually execute work. In every firm, people will build their own informal ‘go-to’ teams. They rely on that one person who always knows ‘how we do things here’. They find somebody in the finance department that can reliably answer any budget question. These spontaneous, critically important connections are the lifeblood of organisations worldwide.

Internal relationship management would no doubt be a game-changer for M&A integration efforts, and it can also offer valuable insights during organisational design, making it easier to establish future structures that position employees where they can deliver the most impact.

Improve both vertical and horizontal communication

Ensuring information and knowledge are effectively shared, both vertically through the ranks and horizontally across a firm’s functions and specialisms, is a phenomenal advantage for any team. Maintaining alignment from the top of the organisation down as well as horizontally keeps everybody on the same page and enables their most productive and strategic work.

It’s been reported that increasing horizontal communication within an organisation helps people to achieve goals. It also decreases misunderstandings and miscommunications, solves problems faster, increases efficiency, and enhances mutual understanding among colleagues.

An example here is the value of inter-team alignment during growth. As firms grow, it can be hard to maintain alignment between service lines or geographically dispersed teams. Expanding a team from three to four people grows that team by only 33%, but it sees complexity increase by 400%. As a team grows, interactions can become less frequent and discussions less detailed.

Teams that work closely together, leveraging one another’s expertise and sharing insights, become more capable of exceeding client expectations – and not only become team players but better rainmakers

Some best practice can help to ease this misalignment, such as prioritising regular meetings, effective onboarding, and using collaborative tools. When implemented, these practices decrease the likelihood of isolated teams and can create stronger, more cohesive, aligned and collaborative work environments.

In order to maintain, or ideally increase, productivity and growth across the firm, today’s business leaders increasingly need to prioritise internal relationship management to guide the development of their high-performance teams.

Collaborate internally, to drive value externally

More effective internal collaboration also increases the value you’re able to deliver in terms of additional service lines and improved client experience.

When teams collaborate and have access to the same customer data, they develop a better understanding of  client relationships, and can then service those clients more effectively. Teams that work closely together, leveraging one another’s expertise and sharing insights, become more capable of exceeding client expectations – and not only become team players but better rainmakers.

For example, Heidi Gardner, Distinguished Fellow at Harvard Law School’s Center on the Legal Profession, has conducted research that found when professionals collaborate across lines of service, they earn higher margins, as client loyalty increases and they’re able to charge higher rates for the work delivered. Her research has found that the more you collaborate and involve specialists across your firm, the more strategic advice you can offer clients – and the more revenue you’ll manage to generate as a result.

To illustrate this, an article has described a comparison of the performance of  two lawyers who graduated from the same law school, practiced for the same number of years, and billed the same number of hours.

The difference was that one involved six partners in the work they generated, while the second involved 30. The result? The second generated four times more revenue for the firm.

If winning and retaining more profitable work for your firm is of interest, then a closer look at how you can optimise your firm’s internal relationships should be a priority.

Fostering a diverse and inclusive workforce

Investing in diversity and inclusion (DEI), and fostering a culture of collaboration where people from diverse backgrounds are connecting with one another, can have profound impacts on a firm’s success. Building a diverse internal network of colleagues, teams and individuals benefits all, by introducing diverse perspectives founded in different beliefs, backgrounds, culture and education. This provides a wider vision and broader possibilities to navigate business challenges.

And diversity drives high-performing business development teams. In November 2021, Forrester published a study on how diversity drives sales success. According to the research, companies with stronger DEI practices also produced better sales outcomes. Through an online survey of 500 US respondents in B2B sales leadership roles, Forrester discovered that leading DEI teams saw the following results, compared to those that lagged in DEI:

• 3% higher growth forecasts

• 28% higher conversion rates

• 12% higher revenue attainment

• 6% higher client satisfaction scores.

The power of internal relationship management is unmistakable. When firms invest in fostering a culture of collaboration, the results can be transformative  in advancing some of their most important business goals, from partner retention rate, to share of client wallet, diversity and inclusion and client satisfaction.

About Introhive


Introhive is a relationship intelligence platform that transforms your messy data into real insights and opportunities, delivered directly to your professionals  when and where they need them. Introhive enables firms to use their greatest asset (relationships) to drive revenue and adapt for the future. Learn more about how Introhive can help your firm to understand and develop external and internal relationships, grow revenue and improve retention by booking a free demo.

For further information, visit: www.introhive.com