Decline in UK law firm merger activity 

UK law firms are now merging for growth instead of financial necessity, according to research evidencing a decline in the number of mergers last year.

Law firm merger activity in the UK declined by 11 per cent last year. Compared with 196 the previous year, 2014 saw 174 law firm mergers completed. Firms that went down the aisle in 2014 included private client specialists Speechly Bircham and Charles Russell, Scottish firm Dundas & Wilson, global top 10 firm CMS Cameron McKenna, top 50 firms Wragge & Co and Lawrence Graham and top 100 firms Blake Lapthorn and Morgan Cole.

Financial pressures

According to finance provider LDF, which produced the research, many firms joined forces during the recession to offset financial pressures, pooling resources and expertise and allowing for significant economies of scale. Investment in property, support staff, IT and marketing can be shared, quickly cutting expenditure. LDF says that the economic recovery means that M&A is now increasingly being used by law firms as part of their growth strategies. Many mergers are now being used as a means to expand service offerings, explore new markets and extend geographical reach.

Expansion

Peter Alderson, managing director at LDF, said: ‘Law firms that feel they are viewed as subscale are very keen to expand. With recovering fees, partners are getting more ambitious, looking to serve bigger clients in a wider range of sectors and geographies. The quickest way of achieving that ambition is to merge with a firm that already understands that market and has an existing pipeline of work.’

Source: Global Legal Post – Decline in UK law firm merger activity

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