Far more merger talk than action among larger firms, survey finds

Done deal: not many negotiations are leading to agreement

Merger has been on the minds of three-quarters of large law firms during the past year, but inadequate preparation for the negotiations means few are seeing it through, new research has claimed.

The poll of 71 of the top 200 law firms by legal consultancy Inpractice UK found that 74% have approached or been approached by another firm with a view to a potential merger or acquisition of the business or a team in the last 12 months.

However, only a small proportion of these discussions actually led to a completed deal.

Inpractice UK director Allan Carton claimed that “a huge amount of time is being invested but often wasted due to lack of effective preparation by senior management in legal practices across the country”.

“Changes in regulation” was cited as a driver of merger activity during 2011 by 61% of respondents, followed by bank pressure (36%) and the increasing demands of clients (32%).

Mr Carton said “there is a growing realisation, particularly amongst the mid-tier firms, that bigger can be better”. He added: “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’ [of alternative business structures]. Instead they are facing it head on and demonstrating greater commercial awareness.

“The same cannot be said for all the smaller firms, where there is a dilemma with many partners struggling to see a future when they could be more pro-active in getting organised. Attractive options are available to most practices. It is just a case of unearthing them.”

Mergers have been completed this week as firms’ new financial years begin. Weightmans completed its merger with north-west firm Mace & Jones, following on from its acquisition last month of Vizards Wyeth’s insurance practice, taking Weightmans over the 1,000 staff mark. In London, the employment, litigation, private client and commercial and residential property teams of Dawsons have joined Penningtons.


    Readers Comments

  • What always worries me about struggling small firm mergers is that they often seem to create a bigger struggling firm.

    I wish there was an easy way of persuading small law firms that they need to buy in expertise in finance, marketing, IT and general management–then they wouldn’t be a struggling firm.

    Buying it in is cheaper than struggling on at a low profit

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