Bakers holds advanced merger talks with UAE's Habib Al Mulla

The firms are understood to have reached the advanced stages of discussions and have been arranging the licensing required before the combination can go ahead.

Three sources in the region said negotiations had taken place, but one person suggested Bakers’ decision to go ahead with the deal was uncertain following extensive due diligence on the 50-lawyer Abu Dhabi and Dubai outfit.

The local firm of roughly five partners is led by founder and executive chairman Habib Al Mulla, the first chairman of the Dubai Financial Services Authority, who is thought to be preparing to step back from his intensive management role.

Its CEO is former Clifford Chance global procurement head Rob Morris, who joined from the magic circle firm in 2011.

The firm, established in Dubai in 1984, has previously operated an association with Kennedys, which continued the local-law referral agreement despite opening its own office in Dubai in 2006 (15 May 2006). It is understood the formal relationship ended a number of years ago.

Bakers already has Middle East bases in Abu Dhabi, Bahrain, Cairo, Doha and Riyadh. The tie-up would add Dubai to the list, but it is understood a main driver behind the talks is the US firm’s wish to bolster its Abu Dhabi offering, in which it is said to see room for improvement.

A Bakers spokesperson declined to comment on the talks but said in a statement: “Like all leading law firms, we are continuously studying the market for strategic growth opportunities. At any given time, we may be in discussion with a number of individuals, practice groups or firms around the world. By firm policy, we do not comment on such discussions until they are positively concluded.”

Habib al Mulla declined to comment.