The emergence of multinational alternative business structures is forcing top law firms to make merger plans, an industry expert said today.
Tina Williams (pictured), chair of City firm Fox Williams and a specialist in international mergers, said more high-end firms are considering coming together to ward off competition from new rivals.
In particular she said there is a new threat from the major accountancy firms, three of which now have ABS licences to offer reserved legal services.
‘Many [law] firms have depended on a steady supply of work which will come to a very abrupt end,’ she said.
‘[Accountancy firms] will direct work to their own practices. To be competitive law firms will need to grow to have the resources and in-depth expertise.’
Williams spoke as a new survey of 102 of the UK’s top 200 firms, jointly conducted by Fox Williams and legal PR firm Byfield, showed the vast majority (95%) believe the next two years will see ‘significant’ consolidation among bigger firms.
Among respondents who had not merged their firm in recent years, 45% said they would consider a merger in the next two years.
But there was general scepticism about the outcomes of recent mergers, with just 43% of merged firm respondents saying that the majority of recent mergers had been a success.
Growth was identified as a key factor behind the merger interest, and Williams told a press conference to publicise the survey.
But she explained that much of the impetus for mergers is now coming from corporate clients, particularly those who want firms to operate in several jurisdictions.
‘Clients require more for less – traditionally they employed panels of firms but they have reduced dramatically,’ she said. ‘They have bigger buying power and expect and require economies of scale from that. If you’re a law firm servicing that you have to be a certain size.’
James Carter, managing partner of recently merged international firm Charles Russell Speechlys, said firms of different sizes will be driven to merge by different motivations.
‘For firms in the top 200 down to the 50 or 60 bracket they are driven by financial considerations and the pressures surroundings clients and fees,’ he said.
‘There is then a band of law firms between 25 and 60 where there may be more domestic mergers and at the top we will see more international mergers driven by international clients.’