Andersen lawyers enter KLegal merger talks

KLegal and Andersen Legal - the lawyer arms of big five accountants KPMG and Andersen - commenced merger talks this week in parallel with their parent firms, stalling speculation that Andersen Legal is on the verge of breaking up.

KPMG has begun formal talks to takeover the scandal-ravaged remains of post-Enron Andersen outside of the US.

Tony Williams, managing partner of Andersen Legal and senior partner of its London arm Garretts, said: 'We are exploring in detail the implications of linking our firms.

'We can see the benefits that a combination will bring, including the development of greater critical mass in the market, and the ability to make a significant step forward in the market that will bring opportunities to both practices.'

Nick Holt, KPMG's managing partner, said: 'Both firms have made a very clear commitment to developing a quality legal practice that is commercial in focus and able to act for clients at the highest level.'

A Garretts spokesman said there would be little duplication of offices or staff.

He added that he believed the French member firm was in favour of the deal.

Garretts has 48 partners and around 200 other fee-earners in London, Birmingham, Manchester and Reading.

Annual fee income last year was 38 million.

KLegal - which has just merged with Scottish firm McGrigor Donald - has 71 partners between the two firms and 350 fee-earners in London, Glasgow, Edinburgh and Belfast.

Combined fee income last year was more than 50 million.

The week witnessed reports of impending departure from Andersen Legal of Spanish member Garrigues and German member Luther.

Garrigues was unavailable for comment, although the firm is reported to be rescinding its Andersen contracts.

A spokesman for Garrets said: 'The fact that it has been reserving its position in public and private is unsurprising, but any KLegal/Andersen Legal merger will be open to Garrigues participation.'

But Luther seemed to remain loyal to Andersen.

Chief executive Wolfgang von Meibom said: 'This [merger with KLegal] is a concept which would establish in Germany one of the biggest legal players in the market, and an international network of outstanding quality.

I am in favour of good concepts.'

Meanwhile, Andersen Legal's Scottish member, Dundas & Wilson, seemed undecided about the KLegal deal.

A spokeswoman said the firm was delighted that negotiations may preserve Andersen businesses outside the US.

She added: 'We will review the terms of the proposed deal, and our priorities will be to see if the transaction may benefit our clients and our people.'

Jeremy Fleming