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NEW YORK-While pressures to cut brokerage costs and expand revenues are the driving forces behind Marsh & McLennan Cos. Inc.'s proposed acquisition of Johnson & Higgins, clients of the firms' benefit consulting units also will reap dividends from the new combination.

For clients of J&H's benefit consulting unit, A. Foster Higgins & Co. Inc., the benefits of the merger are obvious: They will have access to services provided by M&M's huge William M. Mercer Cos. Inc. consulting unit.

As the world's largest employee benefit consultant with 1996 revenues of $796 million, Mercer dwarfs Foster Higgins, the No. 7 consultant with revenues of $255 million.

At more than three times the size in terms of revenues and with about four times as many employees, Mercer offers both a depth and breadth of services that Foster Higgins cannot match.

For example, in several major business cities where Mercer is especially strong, including Chicago and Boston, Foster Higgins does not maintain offices.

At the same time, internationally, Foster Higgins is a relatively small player; outside the United States and Canada much of its business is conducted through correspondents rather than through integrated offices.

By contrast, more than 40% of Mercer revenues are generated outside the United States. It is, for example, one of the largest benefit consultants in the United Kingdom, Australia and New Zealand.

In addition, Mercer has a major compensation consulting unit, while Foster Higgins got out of that business years ago when it sold its Sibson & Co. Inc. compensation division to Sibson principals in late 1993.

In short, with the merger, Foster Higgins' clients will receive services from a "bigger, stronger firm," said Peter Hughes, a Foster Higgins principal in New York.

But the benefits of the merger are not just one-way. While Foster Higgins is roughly a third the size of Mercer, its consultants are considered first-rate.

"While Mercer has incredibly deep resources, Foster Higgins, pound for pound, has some of the top consultants in the country. They just don't have as many as the largest firms," said Donn Bleau, a principal with La Jolla, Calif.-based Global Resources Group, which has done executive recruiting for both Foster Higgins and Mercer.

In particular, health care consulting, as Mr. Bleau puts it, is Foster Higgins' creme de la creme, a strength clients confirm.

"They really do an excellent job," said Harry Spencer, manager of medical plans at Mobil Corp. in Fairfax, Va., which used Foster Higgins for assistance in direct contracting with providers.

"Even as a smaller company, Foster Higgins has been great," said Kathy Migita, director of health care benefits with Los Angeles County Employees Retirement Assn., which tapped Foster Higgins to find ways to control the system's retiree health care costs.

Aside from boosting Mercer's capabilities in health care consulting, acquiring Foster Higgins will aid Mercer in other ways.

For example, observers say acquiring Foster Higgins could give a boost to Mercer's capabilities in outsourcing, a benefit consulting area where Mercer has lagged behind its competitors. Foster Higgins recently opened what it claims is a state-of-the-art outsourcing center in Princeton, N.J., and also uses a center in Des Moines, Iowa.

With this transaction, "Mercer may have really helped themselves a great deal on outsourcing," said Mr. Bleau of Global Resources Group.

Mercer's top executives are very much aware of the benefits the company will reap by combining with Foster Higgins.

"They have really good people and outstanding clients. Everything about them is a class act," said Mercer President Peter Coster in New York.

Still, as in any major merger or acquisition, a big unknown is how well the two companies will fit. For example, how easily will Foster Higgins' consultants adjust to working for a substantially larger company, and how easily will Mercer integrate Foster Higgins?

Some observers ask whether or not clients might be turned off by receiving services from such a gargantuan firm. The combined companies would have total benefit consulting revenues well over $1 billion, making it significantly larger than Towers Perrin, the second-largest benefit consultant with 1996 consulting revenues of $618 million.

Rather than dealing with such a big company, some employers may turn to smaller consultants to receive more personalized service.

"This could be one consolidation that provides greater potential for niche firms that can provide customized, personalized services," said Dallas Salisbury, president of the Employee Benefit Research Institute in Washington.

But Foster Higgins clients say what is most important to them is retaining consultants that they now work with.

"When it comes to consulting, what matters the most is the consultant we use, not the overall firm," said Tom Hestwood, director of compensation and benefits for MCI Communications Corp. in Washington.

Clients also say they do not worry-at least not yet-that the recent wave of mergers and acquisitions among employee benefit consulting firms will reduce competition and ultimately raise costs. Earlier this year, Coopers & Lybrand L.L.P. acquired Kwasha Lipton L.L.C., while Mellon Bank is acquiring Buck Consultants Inc. In addition, Aon Group Inc. acquired Alexander & Alexander Services Inc.'s benefit consulting unit as part of its purchase of A&A.

"Right now, there is a fair degree of competition for consulting in health care. It is possible that continued consolidation could reduce competition, but I don't think we are there yet," MCI's Mr. Hestwood said.

Mercer and Foster Higgins executives said both firms are going full tilt and doubt there would be any layoffs of professional staff as a result of the merger. Offices, though, could be combined in some cities where Foster Higgins and Mercer both have offices as space becomes available, said Foster Higgins CEO Alan Page.