Dibb Lupton Broomhead and Alsop Wilkinson are believed to be in merger talks to form the fifth largest law firm in the UK.

Talks between the two regional firms are understood to be at an advanced stage and proposals will soon be put before partners in each practice.

If a deal is struck, Dibbs will gain Alsops' two international offices in New York and Hong Kong. Dibbs, which recently forged an alliance with Chicago practice Hinshaw & Culbertson, is anxious to build up its overseas operations.

Both Dibbs and Alsops are strong in insolvency, while the latter has a respected management buy-out team.

Dibbs has a large office in Leeds, while Alsops has offices in Liverpool, furnishing the alliance with a cross-Pennines link between the North East and the North West.

Another important reason for a merger is that it will provide additional firepower to expand operations in the City of London, an area of major importance to both firms.

One management consultant commented: “By creating a larger practice, there will be scope to invest in the City where national regional firms are keen to gain a greater foothold.”

But some observers expressed surprise at the possibility of a link-up because of the difference in cultures.

Dibbs' aggressive management and marketing approach contrasts with the more “relaxed” atmosphere at Alsops. On the other hand, it is thought that a merger has been actively sought by Alsops, which is said to have been “sniffing around for a partner for some time”.

The managing partner of one top regional firm said: “Both have obviously realised they have to get bigger.”

Both firms are keeping extremely tight-lipped about merger negotiations. Alsops' chief executive Christopher Honeyman Brown and Dibbs' senior partner Robin Smith refused to comment.

If a merger does get the green light, it remains to be seen whether Alsops will stay in the Legal Resources Group, a loose alliance of five regional firms which pool back-up resources such as training.

Alsops, which ranks at number 27 in The Lawyer top 100 UK law firms, would be very much the junior partner in an alliance with Dibbs, which is currently ranked at number 10.

Alsops has 253 fee earners compared with Dibbs' 517.

Eversheds would still be the largest national firm, boasting 988 fee earners.

If a deal is finalised, it will come only months after Alsops appointed Honeyman Brown, a former partner at accountants Binder Hamlyn.

See page 2 for more analysis.