Law firm mergers trend ‘to accelerate’

A high proportion of small and medium-sized firms have completed mergers in the first half of 2011, new research by the Law Consultancy Network suggests.

The third set of six-monthly statistics compiled by consultant Andrew Otterburn showed that one in three of the 31 firms surveyed had either merged with another firm or taken over a department in another firm in the last six months. This compared with 20% six months ago and 13% this time last year.

Nearly 30% of firms indicated that they expected to merge during the coming year, while 32% said there was ‘little likelihood’ of doing so.

The survey indicated a difference in attitude towards mergers according to the size of firm, with 41% of firms with more than 10 partners indicating that they were likely to merge, compared with just 14% of firms with fewer than 10 partners.

The research also showed a 68% increase in the number of approaches made to or by firms with a view to a possible merger between January and June 2011, compared with figures for the previous six months.

Otterburn said: ‘Following the increased numbers of conversations about mergers, they are now coming to fruition.

‘This trend is likely to accelerate and we may well find that by this time next year many of the most attractive opportunities will have gone.’

Otterburn advised firms to look carefully at other practices in their locality and try to identify any that might fit, to help create the critical mass and financial structure that will enable them to compete in the long term.

However Nigel Haddon, chair of the Law Society’s Law Management Section executive committee, warned that firms should only look to merge to build competitive advantage, not simply because they felt they had to ‘do something’.

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