A year of failed and suspended stock market listings has hit the fortunes of equity capital markets (ECM) teams across the City, senior corporate finance lawyers said this week.

A far higher than average number of unfinished initial public offerings (IPOs) has dampened fee income, damaged the marketability of ECM practices and raised concerns about maintaining staff levels.

However, there are indications that the mergers and acquisitions market may be turning a corner, as Thomson Reuters reported a pickup in activity. Its latest figures suggested that the third quarter of 2010 was the best period for M&A deals in the last two years.

Julian Stanier, a corporate finance partner at City firm Norton Rose, said that, of 10 ‘large’ IPOs that the firm was working on globally at the start of the year, only two have completed: the £755m Jupiter Fund Management London Stock Exchange listing, one of the largest this year, and Polish power company Tauron’s Warsaw Stock Exchange listing.

‘In terms of the year to date, there is one word to describe equity capital markets – volatile,’ he said. ‘We have seen some of the largest IPOs in a number of years coming to market, but we haven’t seen the volume that was anticipated.’

Stanier said that a combination of: the sovereign debt crises; a general election; a hung parliament; fears of a double-dip recession; impending government spending cuts; and the over-valuation of some IPOs by private equity owners had made it more difficult to get IPOs across the line.

He said that capital markets teams across all firms typically offer clients a discount if deals do not go through, and that firms cannot use unsuccessful deals to market themselves. ‘One positive is that AIM is starting to show signs of life,’ he said.

One senior corporate finance partner in a top-10 firm said that ECM practice heads will be ‘concerned about maintaining team headcount’ if the market remains unstable. It is understood that banks are using their strong position to reduce the fees they will pay their lawyers when a deal falls through.

Thomson Reuters said that the value of third-quarter M&A deals this year was $676.9bn (£426bn), a 21% rise on the previous quarter and the best period for worldwide M&A since 2008.