In the legal world, it’s no secret that law firms have long sought consolidation as a strategic move to fend off competition, bulk up quickly, or take shortcuts into lucrative regions or overseas markets.
This year, 2024, has delivered its fair share of headline-grabbing mergers. None has been bigger than the monumental union of Allen & Overy and Shearman & Sterling. More recently, Herbert Smith Freehills’ long-speculated US entry finally materialised through its tie-up with Kramer Levin, closing a 20-year chapter of “will they, won’t they?” speculation.
However, while there has been the usual rhythm of smaller consolidations—particularly among aggregator firms—and some opportunistic bolt-ons by larger players, the much-predicted wave of mergers in the UK midmarket (roughly The Lawyer’s Top 35–100 in this context) has yet to materialise. For firms in this space, facing rising operational costs, client demands for streamlined solutions, and fierce competition from both global giants and nimble boutiques, consolidation might seem like the obvious answer. Yet, despite growing incentives to merge—such as scaling up, diversifying service offerings, and strengthening market positioning—many mid-sized firms are still holding back.
Looking ahead to 2025, all eyes are on whether the broader realignment amongst the mid-tier will take shape. With that in mind, ‘Are you considering a merger?’ seems to have become one of the number one questions firms expect to be asked by legal journalists.
The drivers of consolidation are well-trodden ground. Mid-sized firms have always sought ways to grow quickly, offset challenges, and remain competitive. In a crowded market where the number of players vying for a slice of the pie continues to outpace the pie’s growth, the case for merging is growing ever stronger.
The pressures are mounting for UK law firms, particularly those aspiring to climb the ranks. US firms have made significant inroads into the London market, challenging the dominance of the traditional magic and silver circle and creating downward pressure that blocks many ambitious UK firms from breaking into the next tier. At the same time, organic growth has been increasingly challenging, which naturally pushes firms to increasingly explore inorganic options like lateral hires or acquisitions. For example, for the upper mid-market firms, finding solutions for delivering cross-border mandates – particularly if it involves the US – is a consistent problem.
The other drivers for consolidation are nothing new: mid-sized firms will always look for shortcuts to growth opportunities and the ability to offset challenges – particularly as they look to remain competitive with larger players. The number of incentives for firms considering a merger are only increasing at pace with the market. Whether its mid-market firms striving to get ahead of the innovation curve by diversifying its service offering to clients, or a firm in financial distress looking for a rescue deal, there’s an expectation in the market that most firms are considering their options. Though, as Caroline Staves, partner at CM Murray LLP, said in a recent piece for Law.com, “if a firm’s rationale for a merger is financial distress or lack of succession planning, options will be limited. Partners must recognise that compromise is essential.”.
Amidst these challenges, mid-tier firms must grapple with differentiation. Being “a bit of everything to everyone” is rarely enough to sustain consistent growth in a congested market. Many firms are expanding beyond their traditional turf to emerging legal hubs like Bristol or Leeds, challenging the traditional powerhouses of those cities – but even this approach has limits. Strategic acquisitions—whether to enhance capabilities, secure footholds in new markets, or achieve scale—remain an attractive route to scale up quickly.
Of course, merging isn’t without its risks. Many deals collapse over familiar hurdles, such as client conflicts or remuneration structures. And even when they do go ahead, a poorly executed merger can be disastrous. Culture fit is a critical factor, but it doesn’t always receive the same focus as financial or operational due diligence. A bad merger can damage reputations, disrupt client relationships, and alienate key talent—consequences that take years to repair.
If you’re considering a merger, leaving communications until the end is a mistake. Thoughtful, proactive messaging can make all the difference between a smooth transition and a PR nightmare. Here are two key points to consider:
- Use the press to signal that your firm is “in play” and position yourself as an attractive merger partner. While leadership teams negotiate the terms, remember that in an LLP structure, the ultimate decision often rests with a partner vote. Partners’ perceptions will be heavily influenced by external market views, which are shaped by media narratives.
- What is the merger supposed to achieve? Craft a clear and achievable messaging strategy from the outset. This isn’t just about impressing the market—it’s also about reassuring your people. Integration begins with alignment, and clarity of purpose will be critical in shaping a unified firm culture. Mergers are ultimately judged by history, and shaking off the “failed merger” tag is far harder if the narrative is muddled from the start.
For firms considering their next move, 2025 may well be the year the midmarket takes centre stage in the consolidation story. But success won’t just depend on strategy and timing—it will hinge on execution, communication, and a shared commitment to building something stronger together.