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UK law firm mergers jump by 65 per cent

'The rising trend for mergers shows no signs of slowing down,' says top-25 accountancy firm  

4 August 2014

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By Manju Manglani, Editor (@ManjuManglani)

The number of mergers between law firms in the UK increased by nearly two thirds in the past year, according to data from the Solicitors Regulation Authority.

In 2013, 385 mergers were recorded, up from 234 in 2012. Prior to that, 220 mergers took place in 2011, 168 in 2010 and 146 in 2009.

Accountancy firm Wilkins Kennedy says that this data shows that the legal sector's push towards consolidation is growing.

"The drive for consolidation appears to be more, not less, pressing as we leave recession behind. Yes, it's often about immediate survival, but it's also about securing ongoing profitability and competitiveness," said partner Tommy White.

"These figures show that the rising trend for mergers shows no signs of slowing down, as financial pressures, increased competition, and to a perhaps lesser extent regulatory issues, are still having a major impact."

"M&A, corporate finance and property work for lawyers, particularly in the south of the country are all recovering but are generally still below the heady days of pre-2007. In addition, the long term, secular decline in litigation work continues - despite a helping hand from recession linked disputes.

"Whilst some firms need to find a white knight quickly in order to stave off potential financial collapse, others are turning to mergers to deliver that boost in profitability that a merger will achieve from cost savings. Economies of scale from a merger - especially where the merged firms can better utilise staffing levels - can be substantial."

White added that there has also been a trend of mergers, particularly international ones, strategically aimed at gaining access to new sectors and services or achieving greater global exposure.

Examples include King & Wood Mallesons' October 2013 combination with SJ Berwin and Norton Rose's June 2013 combination with Fulbright & Jaworski.

"It wouldn't be surprising to see national and international mergers gaining even more traction going forward," concluded White.

 

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