Law firm mergers continue to decline as ‘defensive’ consolidation becomes less prevalent in an improved economy.
In 2014 there were 174 mergers between UK law firms, according to data compiled by finance provider LDF, down from 196 the previous year. This represents a 30% fall since 2011, when there were 247.
The trend is supported by the SRA’s most recent official figures, which show that there were 176 mergers in the year to the end of February 2015. Meanwhile, the total number of regulated firms has remained steady in the first half of 2015, at between 10,300 and 10,400, following a gentle decline from 10,875 in June 2013.
Separately, a survey conducted for the Gazette shows that small firms are turning their strategic focus away from potential merger and toward profitability.
The latest poll by the Law Consultancy Network shows that in the first half of 2015, mergers remained a low priority. Just 60% of respondent firms had the prospect of amalgamation on their agenda, the second lowest proportion of any half-year period in the last five years.
Regulation and compliance have also declined in importance. In addition to boosting profitability, other top four priorities were: developing a clear business and marketing plan; management structures and leadership; and improving cash flow.
The Gazette survey was undertaken on behalf of the Law Consultancy Network by Andrew Otterburn, who is vice-chair of the Law Society’s Management Section.
Peter Alderson, managing director at LDF, said: ’Cutting costs via a merger was viewed by many firms as a quick way of restoring profitability during the recession. As economic conditions improve, however, we are seeing more firms much more focused on growth.’
He added: ’Many UK regional firms, in particular, are merging in order to bulk up and compete with top-tier London firms for work.’
Despite the fall in M&A, 2014 did see high-profile legal mergers involving: private client specialists Speechly Bircham and Charles Russell; Scottish firm Dundas & Wilson and global top-10 firm CMS Cameron McKenna (pictured); top-50 UK firms Wragge & Co and Lawrence Graham; and top-100 firms Blake Lapthorn and Morgan Cole.