Tripartite mergers are not the easy option

The top five City firms may not be losing any sleep over the proposed merger between Denton Hall, Theodore Goddard and Richards Butler. After all, it may never happen and even if it does, it will take some considerable time to settle and see the fruits of its labours. However, there is no doubt that if it is successful and the firms gel into one major entity, it could create an interesting alternative to the City's big five law firms.

It is indeed an ambitious project, albeit it a rather risky one for Denton Hall, particularly as it has already failed once before in this department. After all, putting together a merger of this size is no small project logistically. And there is little point in doing so if the firms do not have a distinctive strategy for the future which significantly moves them on from their current positions. As one management consultant points out, a bigger version of the same is dangerous.

However, as the market for legal services constantly re-invents itself, firms in the second tier need to be ready for the challenges ahead. The big five have the advantage of critical mass, as well as being able to provide top level specialists and recruit the best in the profession. They are also very focused, especially on the global picture. It is more difficult for firms in the second tier to stand out, or to compete in the major league.

These three all have particular expertise in a variety of areas and would appear to neatly dovetail in a number of areas from media and entertainment, to energy, projects, telecommuncations and shipping to name just a few. Other key areas such as banking and corporate could be built up over time and it would be easier to do this in a firm which is following a clear strategy.

The merger would create a strong global presence, giving the firm offices in some 17 locations. It would certainly put it in a better position to do a deal at a later stage with a US firm.

It will will also open up a gap in the second tier and the response of other firms in this grouping will be interesting to monitor. However, the difficulties cannot be underestimated, nor the dangers which lie ahead for the three firms involved.