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Mergers could become the norm for lawyers in private practice

Posted by: Laurence Simons 05/12/12

When you're young, being single is fun. You can do what you like - if you want to eat spaghetti hoops for dinner all week or spend your weekend working on abstract sculpture inspired by Northern Ireland's 1982 World Cup campaign there's nobody to stop you.

But as you get older it becomes frightening and lonely; everyone else you know is settling down, spending more time at home, leaving you isolated and facing the prospect of a life spent hunched over TV dinners for one. So the next time you go out you catch someone's eye, and think - maybe they'll do.

A similar process has been taking place with law firms recently, according to a joint report from Winmark and Deloitte, which found that mergers have become a considerably more important part of the legal market over the last 12 months.

It surveyed more than 40 professional services providers, primarily law firms, and found that 71 per cent of these entities have been in merger or acquisition talks in this period.

In 2011, 81 per cent of companies involved in mergers planned to join with smaller firms. However, 2012 has seen law businesses, like small children seeking comfort in the dark, snuggle up together for comfort.

Some 24 per cent of respondents were seeking to join up with companies of a similar size, while another 24 per cent were planning to take up opportunities at bigger firms.

Jeremy Black, partner at Deloitte's professional services practice, said: "Previously, most firms favoured amalgamating with a smaller peer, retaining management control and their name."

"However, in a market where supply continues to outstrip demand, consolidation is both essential, imminent and is forcing some firms to reconsider their approach."

He added that allowing people with different lawyer jobs to mix and share their expertise can "deepen specialist knowledge" within a business as well as ensuring it has a broad base of prospective clients across whichever sector it works in.

Furthermore, mergers are increasingly being used to help businesses put on their sunglasses, pack their patent leather suitcases and expand into international markets in a bid to seek out growth areas while the eurozone and the US remain in the doldrums.

While the risks in emerging economies are naturally bigger, they also offer greater returns in the current climate.

With 41 per cent of firms in the legal sector considering the eurozone crisis the biggest challenge facing the profession, it looks as if international mergers will continue to be popular with legal firms for some time to come.