The long-awaited consolidation of the legal market accelerated in 2013, which was a record year for large UK law firm mergers, with 28 deals announced involving at least one top 100 UK firm or firms that when merged will be likely to join the top 100 in 2014.
This follows a similarly record year in 2012, when there were 26 announced mergers involving at least one top 100 UK law firm.
Recent research by Jomati Consulting, which claims that 2014 promises further high levels of consolidation, points to a number of strategic patterns in evidence over the past year, including the emergence of a group of major national players in the personal injury and insurance sectors, with highly acquisitive Slater & Gordon and DWF the most closely watched.DWF’s 2012/13 turnover was up by 84% to £188m on the back of 5 mergers in 18 months, while last year Slater & Gordon acquired the personal injury division of Pannone in a deal worth £33m, following on the heels of acquisitions including Manchester-based Fentons, which added 280 staff to the rapidly growing Australian-listed firm’s UK presence.
However, the need to build national coverage has been a factor in play in some of the larger mergers of 2013, including CMS Cameron McKenna’s end-of-year merger with Dundas & Wilson in the rapidly consolidating Scottish market, as Cameron McKenna also looks to boost its energy and infrastructure practice.
Firms are also more than ever looking to gain critical mass and ‘bench strength’ across key practice areas, which was in evidence in Wragge & Co’s December tie-up with Lawrence Graham and Penningtons acquisition of Manches in October, although this was also a rescue deal after Manches went into administration.
Tactical international acquisitions have remained a significant trend, including Hogan Lovells merger with South Africa’s Routledge Modise, Norton Rose Fulbright’s takeover of Canada’s Armstrong Mitchell, with the Sino-Australian-UK combination of SJ Berwin and King & Wood Mallesons the only major global merger of 2013.
Tony Williams, Jomati principal and former managing partner of Clifford Chance, says: ‘In 2012 we could clearly see that the long-awaited consolidation of the UK legal market had begun and it has continued throughout 2013. This market changing process is now playing out in dynamic fashion and we do not expect it to end anytime soon.
‘The outlook for major UK/US mergers remains challenging partly due to the profitability disparity between US and UK firms. However, there is still a strong level of interest if the right merger candidate can be found. In any case, 2014 will see further consolidation of law firms right across the UK 100 and beyond. We should all prepare for a busy year.’
david.stevenson@legalease.co.uk
