Allen & Overy is understood to be in merger talks with leading Paris banking firm De Pardieu Brocas Maffei & Associes in a bid to catch up with its City rivals in France.
A source close to the negotiations said A&O's ten-lawyer Paris office would merge with nine-partner De Pardieu in September if the City firm was happy with De Pardieu's finances.
If the deal does go ahead it will be the first time a City firm has merged with a Paris practice.
It will also bring to an end A&O's seven-year association with leading Paris firm Gide Loyrette Nouel and could scupper its link with Benelux firm Loeff Claeys Verbeke. De Pardieu is allied to Frankfurt firm Punder Volhard Weber & Axster and Loeffs is in merger talks with another German firm.
A&O has a long-held ambition to establish a strong French banking practice, but it has been frustrated by a rocky relationship with Gide.
As The Lawyer revealed in May, relations between the two firms have soured over A&O's insistence that it be allowed to recruit French-qualified banking lawyers.
At the time, A&O spokesman James Broomfield said both firms would benefit from strengthening its Paris banking practice.
However, The Lawyer understands that A&O has become increasingly frustrated with Gide. A source said it had an “outdated” management structure.
Xavier de Roux, senior partner of Gide, said the firm was prepared to continue its link with Allen & Overy for the time being, but would cut its ties as soon as anything substantive was announced.
Ironically, his firm has just appointed non-lawyer Pascal Richon to the new position of managing director of the firm in a bid to modernise its management.
A&O denied it was talking to De Pardieu and the French firm refused to comment.