Ashurst Morris Crisp is in advanced merger discussions with US firm Latham & Watkins as it strives to bridge the gap in its international expansion strategy.
Sources close to both firms claim that Ashursts and Lathams have been in talks over the past three months, with one insider saying that discussions are: "Pretty far down the line."
A source says: "One element of these talks would be defence. Lathams saw the Clifford Chance and Rogers & Wells merger and saw that you could obtain the skills and breadth of practice in each country without the expense."
He adds: "Lathams has been knocking on doors in London since the Clifford Chance merger was announced."
Ashursts currently has a New York office, but it does not offer US advice (The Lawyer, 8 November).
When it first moved into the city Ian Nisse, managing partner at Ashursts, said the move had "nothing to do with a merger".
However, a merger would silence City critics, who at the time were unconvinced by Ashursts' tentative move in the US, saying it was merely a representative office.
In June last year Ashursts engaged legal consultants Hildebrandt International to help it find a US partner.
The merger would boost Ashursts' corporate finance practice as Californian-based Lathams, which also has an office in New York, is widely recognised for its high-quality corporate finance and capital markets expertise.
One source says Lathams is making an increased play for bond work overseas and has been actively courting investment banks, including historical US clients Goldman Sachs and Deutsche Bank, to use it in Europe.
In 1998 Ashursts was in merger discussions with Clifford Chance, also in an attempt to bolster its corporate finance capability.
Joe Blum, managing partner at Lathams, says: "We never comment on any matter involving merger rumours or laterals."
He adds: "We are always looking at ways to expand our international practice."