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The primary function of law firms is to provide legal services to clients. However, beyond this they are businesses with strategic goals, all to achieve the ultimate goal of increasing the profits for partners (in the case of limited liability partnerships) or shareholders (in the case of private limited companies and publicly listed companies).
To generate the most money for their partners or shareholders, a firm must have a strategy. A law firm generally has three components; the practice areas it offers, the sectors it specialises in and the jurisdictions it operates within. It can be very expensive for firms to expand one of these components. A cost-effective solution to this can be mergers.
There is still a lot of demand for legal advice, fuelled largely by external factors such as trade wars, AI and geopolitical tensions. Legal demand surged 3.9% in quarter 3 of 2025, one of the strongest quarters since the Global Financial Crisis. However, this boom has largely benefited smaller firms where fees are significantly lower. Ultimately, companies need more outside counsel for the same legal budget, meaning they are going to cheaper firms.
However, in some cases, a company will need highly-specialised legal advice or their matter may be so large that it will require a large team to ensure timely delivery. Therefore, in some cases a company may be forced to instruct a larger, more expensive firm. This is why the market is still absorbing rate increases; clients are still paying.
Firms need to ensure they can take on the demand, but competitively, and an easy way to do so is increasing the number of fee earners, which can be achieved by a merger. Additionally, with extra resources comes extra knowledge and experience, therefore allowing a law firm to expand its practice areas. For example, Womble Bond Dickinson’s merger with Lewis Roca strengthened their IP practice as the merger brought in additional IP partners.
The largest merger for head count was the Dacheng And Dentons merger in 2015, creating a law firm of more than 6,500 lawyers. However, in 2023, the firms split due to new national security restrictions imposed by the Chinese government.
Merger failure is not unusual, but the consequences can vary significantly depending on a firm’s circumstances. In 2024, Hogan Lovells and Shearman & Sterling abandoned merger discussions after concluding that a combination was not in either firm’s best interests at that time. A more dramatic example emerged in October 2026, when merger talks between Weil, Gotshal & Manges and Willkie Farr & Gallagher collapsed. Weil had been exploring a merger amid a wave of senior partner departures and uncertainty over its leadership succession, making the proposed deal a potential route to restoring stability and competitiveness. Following the breakdown in negotiations, Weil’s management committee recommended an orderly wind-down of the firm, demonstrating how the failure to secure a merger can have far-reaching consequences when a firm is already facing significant strategic challenges.
A firm may try to expand organically to meet demands such as legal specialisms, resource, technology and geographical reach. However, if they cannot reach the scale fast enough, they may opt to merge with another firm to remain competitive, which can be a cost-effective solution as it saves on investments.
It also allows firms to merge resources, knowledge and capabilities whilst also spreading the cost. AI and technology is currently one of the largest expenditures for a firm; technology spending has grown by 9.7% in the last year and knowledge management costs have risen by 10.5%. Combining knowledge not only allows a firm to produce better resources, it allows them to make larger investments and to spread the cost. This is particularly relevant as clients are demanding efficient AI resources to drive down costs.
Furthermore, larger, more diversified firms can specialise in more practice areas and market to more clients, generating more income and making the firm more financially robust. However, bigger is not necessarily better. Boutique law firms can be highly profitable because they focus on specialist areas of law and develop strong reputations in particular markets. Their smaller size can also allow them to operate with lower overheads and offer more personalised services.
Nevertheless, smaller firms may face limitations when competing for large, complex or international instructions, particularly where clients require expertise across multiple practice areas and jurisdictions. For these firms, a merger can provide an opportunity to increase their capabilities and compete for a wider range of work.
Geographical factors fuelled the merger between Chicago-based Winston & Strawn and UK based Taylor Wessing (alongside the Dutch and Belgian entities). The remaining European entities still operate under the Taylor Wessing name post-merge, but have a referral arrangement with the newly merged firm, Winston Taylor. The new firm has 1,400 lawyers across the United States, the United Kingdom, Europe, Latin America, and the Middle East.
Geographical reach was also the key factor for the A&O (magic circle firm) and Shearman & Sterling (US firm) in 2024. A&O Shearman stated that the merger “create[ed] the first fully integrated global elite law firm with unparalleled geographic reach and global scale, with depth and quality of experience everywhere.”
There was an 18% rise in law firm mergers from 2024 to 2025, showing appetite. However, to date, this year’s story is slightly different, with the number of mergers down 5% in the first three quarters compared to the same period of 2025. Currently in 2026, there have been 58 mergers. So unless there is a final quarter boom similar to last year, there is potential that 2026 will not fulfil the 91 mergers announced in 2025.
However, this trend maps the general M&A trend. The global M&A deal value is expected to exceed $4 tn in 2026, up by about 13% year-on-year, even though deal volumes are declining. The gap is being bridged by high-value deals, which can be seen in the legal market too.
Whilst the volume of mergers is currently down in the legal sector, the value of these mergers is not. On 1 July, the merger between Hogan Lovells and Cadwalader became the largest law firm merger in history, creating a firm with an estimated combined revenues of nearly $3.6 billion. Post-merger, this revenue is likely to grow significantly as the firm now has a greater geographic, sector and practice strength.
The Hogan Lovells and Cadwalader deal was originally announced in December 2025, showing the time that is required from intent to merge to completion. Most mergers completed in 2026 were announced back in 2025, showing a potential decline in appetite for law firm mergers. Economic gaps between firms are growing, driven by differences in lawyers’ rates – which can make finding a firm that is a compatible merger partner more difficult.
Most recently, Taylor Wessing (the remaining 11 European jurisdiction) is reportedly in its own merger talks with Stephenson Harwood despite Stephenson Harwood’s revenue dipping 2% to £303m in 2025/26 and profits falling by 12% to £105m from 2024’s £120m. The firms plan to hold a partnership vote by the end of 2026, with a full merger targeted for 1 May 2027.
The SRA has raised concerns with multiple acquisitions in a relatively short period of time. They stated that it can “create challenges in respect of business integration, organisational culture, and maintaining standards of service to increased client numbers.”
However, in some cases, mergers can be lifelines for firms, as seen by the recent collapse of Weil, which demonstrates the uncertainty that can arise when a proposed combination falls through, particularly for firms seeking a strategic way forward.
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