Merger talks between Newcastle firms Jacksons and Crutes have broken down at the last minute.
The two firms – which sources say have been in talks for three weeks – say the discussions broke down due to “operational concerns and potential client conflicts”.
An industry source says the talks had reached the stage where Jacksons and Crutes had signed letters of intent.
However, after Kennedys pulled out, Weightmans and Jacksons attempted to carry on, but talks collapsed due to irreconcilable cultural differences.
A source says both firms have also been actively seeking merger partners with, among others, Sinton & Co and Keogh Ritson.
The merged firm would have produced a 39-strong firm with offices in Middlesbrough, Stockton-on-Tees and Carlisle.
Bill Goyder, managing partner at Jacksons, says: “We have had a very cordial discussion with Crutes and I am pleased to say we have parted amicably, deciding not to merge at this juncture.”