Corporate finance law is experiencing both a boom and a crisis.

The global rise of mergers and acquisitions, with plenty of £100 million-plus deals being done and smaller ones proliferating all over Europe, means some law firms' corporate finance departments have more work than they can handle in a routine boom-time 25-hour day.But for many firms, getting a satisfying bite of this bread and butter work is not straightforward.

A growing polarisation of the legal services market means that for major deals -- more than the £50 million mark -- clients will only instruct the magic circle firms of Linklaters, Freshfields, Slaughter and May, Allen & Overy and Clifford Chance, and one or two others which are perceived to offer a superior service.Because of the key role of corporate finance work in the future of a business, companies are reluctant to skimp on legal advice.

This means quality is given priority over economy.

This leaves those firms not in the magic circle in a difficult position.Giles Ruben of legal management consultants Hildebrant International says: 'It's dangerous for firms to say they can compete with the magic circle and do the work for 25% less.

If you go to a magic circle firm, you know that it will have a decent client management system and that the partner handling the deal will have the authority to make things happen all over the world.

Clients recognise that only some firms can work at this level.'For international client management, you need to put together a seamless team, incorporating partners from a number of disciplines.

Some firms have demonstrated repeatedly that they can provide that service.

Others are more individual in the way they work and don't have such strong teams.

Often clients find they're making demands on their lawyers which the lawyers can't deliver.'Simmons & Simmons, whose corporate finance practice is operating just outside the magic circle, suffered a blow two years ago with several departures, including that of corporate finance head William Charnley to the London office of US firm McDermott Will & Emery.

Despite their current small size, US firms are now a strong competitive force in the City, riding to success on the back of US merchant banks.Simmons was forced to take a fresh look at its corporate finance strategy.

Stuart Evans, the current head of corporate finance, says: 'We gave individual partners the responsibility for targeting a limited number of investment banks, and made them accountable for getting the work.

We used our contacts with the bankers themselves -- it's important to have a good relationship with the in-house team, but relationships with the people who actually do the work are more important.

They're on the coal face and they don't want to be told which lawyers to hire.'Mr Evans says banks do a lot of work for which they do not charge when they are researching potential deals.

In turn, the firm has shown that it is prepared to do some work for the banks on competition and tax issues which arise without charging for a limited period, on the understanding that should the deal go through, Simmons would be instructed.

'It is very competitive work -- there are a lot of fish all swimming in the s ame pond,' says Mr Evans.

'But there's a default structure which means that if a bank uses us, they get our A-team.

If they used one of the top-five firms, they may not get that.'Another second-tier City firm with major international ambitions is known to play on its claim to value corporate finance clients more than magic circle firms do.

Central to its success is its 'key account programme' which it offers to big corporate fish.

This includes the firm promising not to act for a company with which the client is competing -- a commitment that it says the magic circle firms cannot make because they already act for so many financial institutions.Mr Ruben comments: 'Firms also increasingly need to show that they can deliver and co-ordinate an international service, even if it's through "best friends" agreements with foreign firms rather than through actual foreign offices.' He also stresses the importance for firms which are not aiming to compete with the magic circle to offer something distinctive to clients.

'Many firms are unable to differentiate themselves from other players in a very competitive market,' he says.A spokesman for Clifford Chance agrees that the major investment banks continued to favour the magic circle firms.

However, on a global scale, the firm is finding that the corporate finance market is extremely competitive, he adds.Olswang took a bold step in differentiating itself from the scrum this month when it moved beyond legal advice and launched a corporate finance boutique called LongAcre.

Such boutiques have been springing up all over the City since the mid-1980s, when the big US banks began to move into London, forcing staff cuts at the UK independents.

But Olswang is the first law firm to set one up.Although the firm and the company will be managed and regulated separately, there is obvious potential for cross-referral of work.

However, Simon Olswang, the chairman of Olswang and member of the LongAcre board, says LongAcre was set up to make money in its own right from a perceived gap in the market place.Mr Olswang explains: 'Our clients were telling us that they weren't finding good corporate finance advice available below the level of the big investment banks.'The clients to which Mr Olswang refers are the technology, media and communications clients in which both the law firm and the finance boutique specialise.

The emergence of LongAcre will consolidate Olswang's image in the market as a firm offering top-level services to clients in a niche sector.SJ Berwin is also considering setting up a corporate finance boutique.

Two years ago, it formed an alliance with Frankfurt firm Knopf Tulloc, though it was unable to proceed to full merger because the German partner is a multi-disciplinary practice.

Knopf Tulloc already offers corporate finance advice alongside its non-legal audit and tax practices.

SJ Berwin's head of marketing, Mark King, says: 'In Germany, many law firms have tended to get involved in putting together deals as well as the legal side.

The German market has expectations of lawyers.

There is a precedent for law firms offering non-legal corporate finance services successfully.'SJ Berwin, which specialises in the private equity side of corporate finance, is planning further expansion into Europe in order to offer an international service.

The firm opened a Madrid office last year and is set to open others in major European jurisdictions.

Mr King says: 'We're using our corporate finance practice to lead our European expansion.

We're particularly expanding into the German market, which is becoming very big for media flotations.

The fundamental changes to German corporate tax law which the country's Chancellor announced last week will massively transform the potential of that market.'Firms outside the magic circle can take heart from the fact that many clients want high-quality personal service.

John Beatty, a partner at non-legal corporate finance boutique MGB Corporate Finance who instructs many City firms outside the magic circle, says: 'I'm looking to instruct a partner who's going to handle the work himself.

I don't want a partner pitching for a piece of work, being selected and then delegating it to his juniors.

Small transactions still require a lot of experience.'