- Mergers continue strong recovery from ten year-low in 2021
- Increased demand to invest in AI and other legal tech could spur further increase in mergers
There has been little slowdown in the pace of UK law firm mergers, with another 121 mergers in the past year (yearend December 31)*, shows our new research.
This follows the 122 mergers completed in 2022, which represented a 23% increase on the 99 mergers in 2021. 2021’s total was the lowest level recorded in the last decade.
Notable mergers include Radcliffe Lebrasseur with Weightmans (October 2023), Mischon de Reya with Taylor Vinters (January 2023). Recent cross border mergers include Magic Circle law firm Allen & Overy with US law firm Shearman and Sterling in May 2024.
The rising number of law firm mergers is being driven in part by consolidator firms acquiring other practices. These firms, which are usually backed by private equity funds, are looking to make serial acquisitions of firms that allow them to keep adding fee earning lawyers onto a cost base that they keep firmly under control.
Private equity-backed mergers in 2024 include Fletchers Group (owned by Sun European Partners), which acquired Serious Injury Law in February 2024. Solaris Law (owned by Elliott Management) acquired national law firm Shoosmiths’ business to business recoveries division in January 2024.
Ian Johnson, Partner, says: “Law firms mergers have had another strong year as bigger firms and PE backed platform businesses continue to look for acquisitions to boost their growth.”
“2021 saw a significant lull in activity among consolidator firms, with uncertainty over how law firms would be impacted by the economic fallout from the pandemic. That meant a lot of good-quality acquisition targets were left on the table, many of which have been subsequently bought.”
A desire by some larger firms to invest in AI tools and other legal tech may drive additional mergers in 2024, while the scale of investment required for firms choosing to explore cutting edge AI may lead to some smaller firms wanting to join bigger group so that they can afford that capital expenditure.
Adds Ian Johnson: “As the requirement for AI in the legal profession grows, some firms may well decide that being part of a larger firm is the only way to make investments on the scale needed. That’s likely to keep the number of mergers high.”
“Whilst AI is likely to be a feature of law firm mergers going forward, firms should take the necessary due diligence outlined by the SRA to ensure they mitigate the risks associated with AI. This will ensure firms adopt the technology sustainably.”
Another strong year for law firm mergers with 121 deals
* Source: Solicitors Regulation Authority
