Deacon Graham & James is set to merge with Dunhill Madden Butler only weeks after its talks with accountancy giant Deloitte & Touche collapsed.
It is understood that the two Australian firms have been in secret talks for several months and are set to make an announcement in early July.
Both practices have had a troubled 12 months. In October, Dunhill Madden’s Sydney practice broke away to become PricewaterhouseCoopers’ legal arm.
Shortly afterwards, the bulk of Deacons’ Canberra office defected to top five practice Minter Ellison, although Deacons still has a presence in the region.
One senior Australian lawyer says: “It is a merger for survival purposes. The second and third tier firms are being squeezed so they all need to do something to survive.
“[Dunhill Madden and Deacons] have suffered major setbacks in Sydney and Canberra respectively which were probably the jewels in their crowns.”
Should the merger go ahead, the combined firm would have 140 partners. In Australia it would have offices in Brisbane, Canberra, Melbourne, Perth and Sydney.
With 97 partners, Deacons is the bigger of the two firms. It also has a significant Asian arm with offices across the region, including operations in Bangkok, Hong Kong, Singapore, Beijing and Ho Chi Minh City.
The firm recently ended its 10-year link with US firm Graham & James, fuelling speculation that it was looking for a merger partner.
But Australian lawyers are not surprised that the talks between Deloittes and Deacons collapsed, claiming the two professions are still culturally different.
One senior lawyer says: “There are a lot of partners in all firms who are implacably against merging with accountants, regardless of what is on the table.”
But he adds that the combined firm will still need a global link. “With the Graham & James connection gone, it will want to have an international connection,” he says.
Last month, Deacons national executive chairman Don Boyd said the firm was talking to several firms but refused to comment further (The Lawyer, 29 May).
Deacon and Dunhill Madden Butler were not available for comment.