Dentons, Theodore Goddard and Richards Butler in merger talks

Denton Hall, Richards Butler and Theodore Goddard are locked in tripartite merger talks in a bid to create the UK's fifth largest firm.

Although the talks are only a month old, the firms' management boards are already actively assessing the viability of the ambitious project.

“We're not ready to go to the partners, but its looking pretty good,” said a senior source at one of the firms.

Another source added: “I am very encouraged, although nobody underestimates the logistics of it all.”

If the merger goes ahead, the combined firm would be the fifth largest by size in the UK and its £160m turnover would be the seventh largest, well ahead of competitors like Herbert Smith and Norton Rose.

Worldwide, the firm would have 258 partners and 947 fee earners with offices in 17 different jurisdictions.

It would be particularly strong in Asia – Richards Butler's Hong Kong office is one of the top five practices in the former colony and Denton Hall has invested heavily in the region.

The firms do not have many European offices, but Denton Hall has been looking to emulate Linklaters by establishing closer links with the firms in its Denton Hall International network.

Domestically, all three firms share particularly strong media and entertainment practices and solid corporate practices, although Theodore Goddard, which acted on the £9.8bn Guinness-Grand Metropolitan merger in 1997, has recently enjoyed the highest profile in this area.

Richards Butler is also well known for its shipping and litigation practices. Denton Hall has a market-leading energy and projects practice and a highly rated litigation practice.

However good the fit, the logistical difficulties of putting together a tripartite merger would be considerable. But all three firms have posted record profits, leaving them with plenty of cash to invest in the project.

Denton Hall already has experience of trying to put together such a deal. In 1997 it unexpectedly pulled out of talks with Cameron Markby Hewitt and McKenna & Co.

However, earlier this year it told staff in a series of special briefing sessions it had its heart firmly set on establishing a global firm by merging.

Bill Shelford, senior partner at Cameron McKenna, said: “It would make a very strong grouping.”

None of the firms involved in the talks would comment on them.