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With partners from Clyde & Co and BLM recently voting through their £700m merger, observers have offered conflicting views on what the tie-up means for the market.

Legal Business broke the news on 18 March that a partnership vote was imminent, and Clyde confirmed on 28 March that the vote had passed, with the combination to go live in July 2022.

In terms of the key stats, the merged firm, which will still be known as Clyde & Co, will comfortably break £700m in combined revenues, have an overall headcount of 5,000, and boast offices in more than 60 cities worldwide. As for fee-earners, post-merger, the firm will have around 2,600 lawyers and close to 500 equity partners.

A statement made it clear that the tie-up is an insurance play, which is no surprise. Clyde & Co has historically been strong in advisory and contentious insurance work, and BLM has a market-leading niche casualty insurance practice. The statement read: ‘The majority of [BLM’s] lawyers will join [Clyde & Co’s] casualty insurance practice, with other sizable groups joining the professional liability, healthcare and business advisory teams.’

James Cooper, partner and chair of the firm’s global insurance practice group, said: ‘We have long sought to increase the scale of our UK casualty insurance practice though a merger so we can provide the full scope of services, technology, data analytics and innovation that clients in this dynamic part of the market require. Once we started speaking to BLM, we quickly realised that we shared the same approach to client service, had a complementary client roster and similar ambitions in this space.

‘This combination will also boost our regional UK presence and strengthen our healthcare and professional liability offerings too.’ On the office front, the tie-up adds new outposts in Birmingham, Liverpool and Southampton to Clyde & Co’s UK coverage.

The move did not shock insurance partners at rival firms, with the tie-up having featured in market chatter for close to a year. Generally, the merger has been well-received, and viewed as symptomatic of a consolidating insurance market that has refined legal services to a binary between high-end advisory work and high-volume claims work. Typically, Clyde has embodied the former while BLM’s casualty practice fits into the latter.

A recent example, in January 2021 Kennedys opened in Leeds via the takeover of Langleys’ insurance team. The move gave Kennedys coverage in high-volume aspects of insurance, such as motor liability matters and a practice that provides pre-litigated claims handling services to insurers and self-retained corporations.

Richard Leedham, a litigation partner at Mishcon de Reya with extensive experience in the insurance market, told Legal Business: ‘We see consolidation on the defence side all the time, this is just the latest iteration of what firms such as Clyde and Kennedys have been doing. The merger doesn’t surprise me at all – it is likely driven by rates, economies of scale and keeping prices down for their insurer clients.’

Zulon Begum, a partnership law partner and specialist in law firm mergers at CM Murray, added: ‘Coming out of Covid, we are getting lots of enquiries from firms looking to merge or seek external investment. I predict there is going to be lots of activity this year in terms of mergers and IPOs.

‘It’s always the mid-market that you fear for, being buffeted from both sides by the big firms and boutiques. Then you have the likes of the Big Four accountancy firms, which can leverage their multidisciplinary experience and take work from the mid-market – they’re not going to compete with the likes of Slaughter and May and Linklaters, they’re going after the mid-market firms that don’t have the same brand power.’

However, a litigation partner at a leading insurance firm suggested the consolidation trend is phasing out: ‘I don’t sense there is a huge client push for further consolidation. Procurement has a heavy influence of course, but their sole objective is not necessarily to reduce panel sizes. They still need access to the right legal expertise and too few panel firms leaves them with conflict issues and, in the end, having to appoint more firms off panel.’

The merger is Clyde & Co’s biggest in terms of revenue and headcount since it merged with Barlow Lyde & Gilbert in 2011, which was the largest-ever merger of two UK law firms at the time. Since then, Clyde’s recent history has been peppered with tie-ups. In October 2015 it merged with Scottish residential property specialist Simpson & Marwick, adding 45 partners in the process. The following year, a combination was agreed in Sydney with Lee & Lyons, adding five partners and over 25 lawyers. In 2018, 15 partners and 65 other lawyers and staff were brought in via a merger with California firm Sedgwick, and in July last year, Clyde combined with Vancouver-based SHK Law Corporation, which brought six partners and 18 lawyers in total.

Tom.baker@legalease.co.uk

Clyde & Co and BLM are at an advanced stage of merger discussions, with both sets of partnerships due to vote on a tie-up before the end of March.

Legal Business understands that there is significant confidence that the deal will be green-lit.

According to the latest available LB100 data, the merger would create a £736m turnover firm with a combined headcount of over 2,500 lawyers and in excess of 450 equity partners.

It is understood that the merged entity will be known simply as ‘Clyde & Co’, a reflection of the respective sizes of the two firms. Clydes constitutes £640m of the combined revenue and 1,966 lawyers on its own. There are still details to be ironed out, particularly in relation to a combined leadership structure and what kind of roles BLM’s current managing and senior partners, Vivienne Williams and Matthew Harrington respectively, will be offered.

The combination has been in the offing since late 2019, when Clydes approached BLM and mooted a tie-up. It is a naturally attractive proposition for BLM, as one of many firms feeling the consolidation squeeze in the lower mid-market. In 2017, the firm slashed a considerable number of support staff as part of a wider restructuring effort.

Merger talks stalled as a result of the pandemic, before RollOnFriday broke the news in October 2021 that the two firms were in preliminary discussions.

There are obvious synergies between the two firms, with crossovers in areas such as insurance and professional indemnity. However, BLM will also bring Clydes access to established niche practices in casualty insurance and healthcare. Reflecting that strength, BLM has historically featured on NHS legal advice panels.

Neither firm is a stranger to mergers: In 2011 Clyde & Co combined with Barlow Lyde & Gilbert in a major deal, while BLM was born out of a merger between Berrymans and Lace Mawer. Prior to the Barlow tie-up, Clyde had scant regional UK coverage, but a BLM merger would extend its reach to new outposts in Birmingham, Liverpool and Southampton.

A Clydes spokesperson said: ‘We can confirm that Clyde & Co is in discussions about a merger with BLM. As the world’s leading insurance law firm, we are always looking to grow for the benefit of our clients. We have long sought to significantly increase the scale of our casualty insurance practice in the UK so that we can provide the full scope of services, technology, data analytics and innovation that clients in this dynamic part of the insurance market require.

‘We consider a merger such as this the best way to realise these ambitions. BLM is a firm we have long admired and we believe a merger can be formed on the basis of our complementary client rosters and our shared focus on quality.

‘As this merger is not yet finalised it would be inappropriate to comment further at this stage.’

A BLM spokesperson added: ‘Following detailed discussions and a period of due diligence, BLM and Clyde & Co partners will vote on a proposed merger of the two organisations. The Executive Board set strategic objectives around how best to grow the firm and secure our status as a market leading, innovative and full-service law firm across the UK, Ireland and internationally. We believe that a potential combination with Clyde & Co would provide us with the growth needed to develop our business.

‘The result of the vote will depend on whether, in the respective partner group’s view, combining the firms is in the best interests of our colleagues, clients and the wider businesses.

‘The strategic and commercial compatibility of the two firms is undeniable. We are both dominant in risk and insurance and our respective businesses complement each other. Whilst Clyde & Co is a global business, we both have an extremely strong presence in the insurance sector in the UK and Ireland. Clyde & Co also boasts a strong offering in business and advisory services.

‘More details will be provided as soon as the vote has taken place.’

tom.baker@legalease.co.uk

nathalie.tidman@legalease.co.uk