Little slowdown in UK law firm mergers
By Law News
UK law firm mergers have maintained a robust pace, with 121 mergers recorded in the past year, according to research by Hazlewoods, Chartered Accountants and Business Advisers specialising in the legal profession.
This follows 122 mergers in 2022, reflecting a sustained recovery from the ten-year low of 99 mergers in 2021.
Drivers Behind the Trend
The increasing number of mergers is partly due to consolidator firms, often backed by private equity (PE), seeking to acquire other practices. These firms aim to grow by adding fee-earning lawyers while controlling costs. Notable PE-backed mergers in 2024 include Fletchers Group (owned by Sun European Partners) acquiring Serious Injury Law and Solaris Law (owned by Elliott Management) purchasing Shoosmiths’ business to business recoveries division.
Ian Johnson, Partner at Hazlewoods, explains, "Law firm mergers have had another strong year, driven by consolidator firms and PE-backed platform businesses seeking acquisitions to boost growth." He also notes that the uncertainty following the pandemic in 2021 left many high-quality acquisition targets on the table, which have since been capitalised on.
The Role of Technology and AI
The surge in mergers may also be influenced by the growing demand for AI and legal tech investments. Larger firms, eager to remain competitive, are investing in these tools, which require significant capital. Smaller firms may seek mergers with larger entities to afford these investments.
Johnson adds, "As the need for AI in the legal sector increases, many smaller firms may decide that merging with larger firms is the only viable way to fund the necessary investments." This trend is expected to drive further consolidation in the market throughout 2024.
Notable Recent Mergers
Among the significant mergers this year are Radcliffe LeBrasseur’s merger with Weightmans in October 2023 and Mishcon de Reya joining forces with Taylor Vinters in January 2023. A major cross-border merger in May 2024 saw Magic Circle firm Allen & Overy merge with US law firm Shearman & Sterling.
With the legal profession increasingly embracing technology and consolidation strategies, the pace of mergers shows little sign of slowing down. Hazlewoods predicts that this trend will continue as the industry navigates challenges and opportunities brought on by technological advancement.