Member Article

Eyes opened to legal mergers potential

Legal finance experts at Deloitte believe there is growing interest in mergers in the legal sector – particularly amongst mid-market firms – as financial realities and difficult trading conditions begin to bite.

And the firm says the recent success of the Bond Dickinson merger, along with stronger financial performances from recently-merged firms, has brought the idea to the top of the agenda for many firms looking for a solution to current difficulties and looking to achieve revenue and PEP growth.

Deloitte’s North East and Yorkshire tax team, as well as the firm’s Transaction Services specialists, acted as advisers on the Bond Dickinson merger, which became formal in May and was one of the largest deals of its type seen in the UK, creating a 1200-strong law firm with 700 lawyers and 142 partners.

Clare Boardman, restructuring services partner and legal sector specialist at Deloitte in the North East, said the deal has acted as a prompt to many firms to consider their own futures.

“Our latest legal survey showed that the best growth in fee incomes was achieved by firms with 11-25 fee-earners, and that was largely driven by mergers in the past 12 months,” she added.

“Competition is currently very high in a market where supply continues to outstrip demand. Firms must maintain a healthy client base and differentiate their services from the competition. Mergers are one vehicle to achieving this and, with the high-profile Bond Dickinson merger on everyone’s lips, you can see why it is proving to be a popular option.”

However, Boardman warned firms not to dive in without seeking specialist advice. “What sounds like a good idea on the golf course may not be such a sound approach in the cold light of day.

“We know from our extensive restructuring work in the legal sector that law firms are financially exceedingly complex and ultimately people businesses, so a cultural fit, as well as a financial fit are essential. Furthermore, in stressed scenarios, businesses need to make quick, sound decisions at executive level – they need to be proactive, engage with the SRA, work in a collegiate manner and seek out the best solution for all stakeholders.”

This was posted in Bdaily's Members' News section by Deloitte LLP .