Lovells is in merger talks with Spanish-based Castro Sueiro & Varela Abogados and discussions with the firm are reaching a critical stage.
A source close to Lovells says the talks with the Spanish banking and derivatives practice are now at a “sensitive stage”.
It is understood that Lovells had met with another Spanish firm, Despacho Melchor de las Heras Albiñana & Suárez de Lezo, more than five months ago to discuss a merger.
Then Melchor wanted to retain its independence, although sources close to Lovells say that it may be interested in coming back to the table.
However, Melchor partner Mariano Bautista says: “We're happy being independent.”
Castro is a niche player, with just three partners who all double as its joint managing partners.
Lovells and Castro refused to comment.