The Legal Landscape of Law Firm Mergers in the UK

It’s been a fascinating year for us at Chambers. One that for many practices has been characterised by uncertainty, which has been reflected in plenty of firms’ balance sheets. The prevailing story is that the majority of firms are just about increasing their revenues but struggling to make much headway with their profits. And in some cases, like Ince and MJ Hudson, not able to remain a going concern at all.

With uncertainty, though, comes opportunities. And plenty of firms have used the challenging market conditions as a chance to – they hope – get ahead of the competition.

Perhaps there is no better example of this than the likely merger of Allen & Overy and Sherman & Sterling. This is generally regarded as the most intriguing law firm merger announcement in at least a decade, and the first involving the magic circle since 2000. Although they have stepped up their efforts of late, UK firms have traditionally found it difficult to make as strong an impact on the US market as the Americans have had over here.

When it comes to the British invasion, firms have historically gone down more like Oasis than The Beatles. The logic behind this deal is clear: Sherman gives A&O a boost in North America, providing it with market-leading practices in bankruptcy, projects, capital markets and others. The new firm will enjoy nine Band 1 department rankings in the US: six from the Sherman side and three from A&O. We’ve seen something similar before: Eversheds, BCLP, Hogan Lovells.

How successful will this one be? Time will tell.  

Perhaps the most interesting aspect of the deal isn’t so much that it’s happened and more whether it is part of a trend or an anomaly. We think that there is likely to be more consolidation and, indeed, several recent announcements under less international scrutiny, but just as fascinating to us including the recently announced but long-awaited merger of Morton Fraser and Macroberts. Other activity in Scotland includes Irwin Mitchell taking over Wright, Johnson & McKenzie. Amid an uncertain market, the latest Chambers rankings record exactly where each practice lands as the dust settles.