The merger talks between Davies Arnold Cooper (DAC) and Berrymans Lace Mawer have been called off because, claim experts, the two firms are culturally incompatible.
Industry insiders say the merger would have made good business sense.
But the deal has floundered following press coverage in The Lawyer which sent partners scurrying to boardrooms with a list of concerns.
Paul Taylor, national senior partner of Berrymans, says: “In current circumstances both firms are involved with other work, and both firms think it is something we should not continue with.”
But insiders say Berrymans staff were concerned about merger talks after they were reported in the press. This prompted Taylor to send an email to staff saying no merger would take place.
However, Berrymans is still pushing ahead with plans to merge with London-based Badhams Thompson (The Lawyer, 26 July), and Newcastle firm Linsley & Mortimer (The Lawyer, 21 June).
Taylor says: “Discussions are continuing with Linsley & Mortimer and Badhams Thompson.
“A number of our clients read the articles in The Lawyer and have welcomed these mergers.”
Berrymans' merger plans with Badhams follow a recent spate of legal panel cuts from major insurance companies in the UK.
And discussions with Linsley & Mortimer are part of an attempt by Berrymans to expand into the North East, according to Taylor.
But the DAC deal proved too difficult to pull off. Taylor says: “DAC would be a much bigger merger. It would not tie in with these merger talks.
“With a Berrymans and DAC merger we can see that there would be a lot to solve.”
Taylor refuses to discuss the details of the issues.
But Alan Hodgart, European director of legal consultancy firm Hildebrandt International, says: “The logic is good for a merger between Berrymans and DAC.
“They would benefit from gaining volume work, economies of scale, and could charge lower prices after a merger.
“I think in theory, the insurance law market will see a lot of mergers like these.
“But the Berrymans and DAC merger probably fell through because of cultural aspects.
“DAC is very competitive, strong in identity and innovative. But Berrymans is more traditional.
“The business case is strong, but the cultures are different. That is often why mergers break down.
“The Clifford Chance and Rogers & Wells merger is pretty much the first that was based on business issues rather than cultures.”