Top firms involved in merger talks

Almost three-quarters of UK law firms have entered into talks about mergers in the past year, according to research. The survey of the country’s top-200 law firms by turnover found that 74.2% have made an approach to, or been approached by, another firm with a view to an acquisition.

The research, which was carried out by legal consultancy Inpractice UK, suggests law firms have been making plans well in advance of Alternative Business Structure (ABS) coming into force in October.

But so far there have been few complete mergers or acquisitions – and Inpractice founder Allan Carton said firms must to act quickly to survive in an evolving marketplace.

‘The legal service landscape is changing,’ he added.

‘Being a successful law firm will increasingly be about creating “business agility” where the ability to shift track and adopt new ideas quickly will enable the fittest to survive.

‘Law firms are now more open to change – that’s a positive.

‘Top firms aren’t burying their heads in the sand trying to ignore the impending “Big Bang”. Instead they are facing it head-on and demonstrating greater commercial awareness.’

Carton said ABSs will mean some small and medium-sized legal firms are likely to join forces, although many partners are facing a dilemma where they are struggling to see how can survive in the future.

If a merger is being looked into, partners must set realistic financial expectations in order to avoid scuppering any potential deal, he said.

May 5th, 2011