Top 20 London firm Pinsent Masons has confirmed it is in cross-border merger talks with Edinburgh-based McGrigors.
If successful, the merger would create a business with a turnover of more than £300m, headquartered in London and with six offices across Asia.
In the next week, talks are expected to be held with partners and staff about the proposals.
A spokesman for Pinsent Masons said: ‘Both firms complement each other well, being leaders in the field of construction, energy and infrastructure. A potential tie-up would greatly benefit the clients of both firms, providing a wealth of market-leading expertise across a number of sectors and practice areas.
‘It would also provide a strong platform upon which to grow internationally, with a continued focus in Europe, the Gulf and Asia Pacific.’
The combined firms would be a top 75 global firm, with 350 partners, 1,250 lawyers and 14 offices.
National firms Cobbetts and DWF have also begun preliminary merger talks, although no further information is being released.
Last year saw early signs of increased merger activity between larger firms, with Beachcroft and DAC and BLG and Clyde & Co forming alliances.
Analysts have predicted a wave of mergers for some time, as firms look to protect themselves against threats from new entrants, a flat UK market, fee pressure and difficult credit conditions.
Earlier this month, law firm consultant Andrew Otterburn told the Gazette he had his ‘busiest summer ever’ in 2011 helping firms to re-engineer their businesses in anticipation of potentially huge changes in the market.
‘Firms are having to look much more seriously at their future strategy,’ Otterburn said, but cautioned ‘there is a fairly limited timescale and there are only so many decent firms out there'.