Nearly 60% of small and medium-sized law firms are looking to grow through merger and acquisition, but they risk giving themselves bigger headaches, new research seen exclusively by the Gazette has claimed.

The survey of 188 practices by the 360 Legal Group found that 59% have chosen scaling up their practices as their strategic response to current market conditions.

However, Viv Williams (pictured), 360’s managing director, said many firms were ‘merging for merging’s sake because they’ve been told that getting bigger is the right solution’.

He added: ‘If you haven’t got well-run practices, you just end up with a bigger practice that’s not very well run.’

Only 36% said they updated their strategic plan annually, and Williams said firms need to plan how they are going to grow, starting with professional management. The introduction of legal disciplinary practices could allow them to bring in high-quality non-lawyer managers as partners, he suggested.

The cleverer firms are those which look closely at profitability and reshape their practices to drop low-margin areas and focus on the high-margin ones. Williams said many firms handling fixed-fee conveyancing or personal injury work have no idea whether they make money on each file, and before the credit crunch were surviving on the interest they earned on client accounts.

Most positively, only 15% of firms said they were quite likely to reduce staffing levels over the next year.