The number of mergers in the UK legal market has fallen sharply over the past year, as firms delay consolidation in the hope of attracting private equity (PE) investment.
According to figures shared exclusively with City AM from accountancy firm Lubbock Fine, 91 mergers between UK law firms were recorded in 2024 — a 25% drop from the 122 seen in 2023. The slowdown comes as senior partners increasingly hold out for buyout interest from private equity groups, with many eyeing valuations driven by long-standing client books and recurring revenue.
Mark Turner, partner at Lubbock Fine, told City AM that “private equity interest in law firms is increasing, particularly those with a solid retained client base.” While still in the early stages, that interest is already changing deal dynamics. Notable recent activity includes Inflexion’s 2023 acquisition and de-listing of DWF, and Lawfront’s takeover of Trethowans with backing from Blixt.
But some warn the wait for buyout offers may be misguided. Smaller firms, especially outside London, are facing mounting financial pressure, which could force their hand. In 2024, 498 law firms ceased practising in the UK, according to the Solicitors Regulation Authority (SRA) — many due to financial distress or compliance breaches, including mishandling client money.
Turner also highlighted the impact of recent tax changes, particularly the hike in employer national insurance contributions, which could further erode profit margins. “Tax hikes will dent the profit margins of law firms unable to pass costs onto clients. A loss of income may further affect them as clients tighten their belts,” he said. “If a firm continues losing money after cost-cutting, a merger may be the only way to stay afloat.”
Despite the challenges, larger legal groups continue to expand. Knights plc, a listed consolidator, has acquired more than 20 firms since 2018 and has signalled continued appetite for deals in regional markets.
Industry observers suggest that 2025 may see a bifurcation in the legal M&A landscape — with viable, scalable firms commanding strong interest from private equity, while others are pushed toward distressed sales or closure.
