UK law firm marriage glut
The research, conducted by London-based Jomati Consultants, found that at least a quarter of all law firms in the UK Top 100 merged with another law firm last year. In comparison, there were 21 law firm mergers in 2011 involving firms in the Top 100.
Jomati also expects merger activity to increase this year, as many of the drivers leading to 2012’s consolidations are still active and likely to strengthen throughout the next 12 months.
Search for growth
The UK figures follow an earlier survey by US-based consultancy Altman Weil – which has a strategic alliance with Jomati –revealing merger activity on that side of the Atlantic in 2012 had kept pace with 2011 levels.
In the UK, Jomati cites several factors sparking the mergers including: a search for growth driving law firms to enter new markets, especially given the low growth expectations in the UK and Eurozone; pressure on fees in national markets driving mergers to achieve scale; and increasing challenges of meeting panel requirements on capability and geographic reach set by larger clients.
Regulatory changes, including the impact of alternative business structures in England, are also mentioned as a merger catalyst.
Jomati head consultant Tony Williams, the former managing partner of global law firm Clifford Chance, commented: ‘2012 was an extraordinary year for mergers, both in the number of deals and the diversity of transactions that took place. It appears that consolidation is taking place right across the legal market and across multiple regions at the same time.
‘We expect this trend to continue in 2013 because the strategic logic behind such deals is only growing stronger. Indeed, there may well be two or three rounds of merger activity as firms first strengthen their domestic capability and then deepen their international offering.’