Merger mania is back.

With last year's surge in the number of firms around the country growing through merger, the message seems to be that big is better.

However, unlike the heady days of the mid-1980s, when firms came together with sometimes unwise haste, the 1990s merger is far more circumspect.

The list of high-profile mergers over the last few months includes: Nicholson Graham & Jones and Brecher & Co; Withers and Mackenzie Mills; Radcliffes and Crossman Block; Finers and Shindler & Co; Leeds firm Irwin Mitchell and Teeman Levine.

In just the last few weeks, Hobson Audley and Hopkins & Wood, Eversheds and Waltons & Morse, Mace & Jones and north-west firm Grundy Kershaw, and Ward Hadaway and Newcastle firm Wheldon Houlsby, have all tied the knot.

Manchester firms Donn & Co and Philip Conn & Co merged and then de-merged 29 days later (see p.20).Mergers come in two main forms.

There are those firms with similar practices which merge to achieve greater strength in depth, and those which merge to fill gaps in their practices.

The merger in March of City firms Hobson Audley and Hopkins & Wood into a 14-partner firm was an example of the former.

One motivation, says Gerald Hobson, Hobson Audley's senior partner, was the savings the merger could bring through shared premises and resources.

By contrast, the February merger of Mace & Jones of Liverpool and Grundy Kershaw to form a 19-partner firm was a case of plugging holes.

Mace & Jones was able to expand its presence in Manchester through Grundy Kershaw and Grundy Kershaw can now offer its existing good client base a wider range of services.

Lawrence Downey, managing partner of the new firm, stresses that the merger was a positive one: 'This was not done out of financial necessity.' Post-recession mergers in the 1990s differ from t hose of the 1980s in that while all merging firms would have you believe they are doing so from a position of strength and because the two firms make a good fit, this is not always the case.'There are a lot of firms looking to merge for financial reasons, particularly those with a commercial law base,' says Leslie Newell, chief executive of Manchester's Elliott & Co, which is currently engaged in merger talks with national firm Dibb Lupton Broomhead.

'But you have to be careful.

Putting two weak firms together does not necessarily make one strong firm.

I've seen a lot of mergers that aren't very sensible.' Mr Newell also warns against the appeal of short-term economies on resources.

'They aren't going to last forever,' he says.Michael Johns, managing partner at Nicholson Graham & Jones, agrees: 'There are defensive mergers happening.

Cost pressures over the last five years have driven down profit margins.

When that happens, you have to do something about it.'Firms are having to face up to client demand.

Increasingly, clients take their lawyers' technical ability for granted and require a broad range of services.

If firms are to cover at least six or eight practice areas with sufficient strength, then they have to reach a certain size.

This explains why it is mostly medium-sized firms that are merging.

Neither large enough to compete with top City firms nor small enough to rely on a niche, they are the ones most under threat.

City firm Withers and Mackenzie Mills merged to form a 37-partner firm.

The business development director of Withers, Philip Hall, argues that it is specifically those firms that simply mirror the larger commercial firms without being able to offer the same in-depth strength as them that are most in danger.'There will be a shaking-out process leaving a middle band of firms which can distinguish themselves,' Mr Hall predicts.

He foresees that firms like his own will offer clients a set of complementary specialisations rather than a complete service.Many people predict a future in which the biggest P international firms and large national firms P and niche firms will remain, with just a few medium-sized firms in between.

Some even fear for the niche firms.

Mr Johns points out that if a niche is profitable the larger firms will seek to fill it.Others are more optimistic.

The director of business development at City firm Denton Hall, John Griffiths-Jones, believes that niche firms' ability to offer expert advice at competitive prices P because of their lower cost base P should ensure their survival.Mr Griffiths-Jones compares the rationalisation of the legal market with the rest of the economy.

The driving force is greater competition; the influx to London of 'S firms and the starting up of legal practices by accountants mean competition will increase further.

Mergers are an inevitable part of the legal market's restructuring, he concludes.

'Law firms have to face up to the realities of being businesses.'Hobson Audley's Mr Hobson is facing up to these realities.

There are, he says, simply too many solicitors.

'We've got away with it for a long time.

But there is now competition, which lawyers find inconvenient.'Mergers are now a fact of life and they seem here to stay.

A survey last October by accountants Smith & Williamson found that almost half of medium-sized practices (with 11 to 49 partners) were actively considering merging and that 78% of all respondents expected merger activity to increase.As Mr Hobson ruefully comments: 'Big may not be better, but it's more profitable.'