UK law firms agree merger

Cameron Markby Hewitt and McKenna & Co are to merge to form what is claimed to be the eighth-largest law firm in Britain and Europe.

The combined firm, to be known as Cameron McKenna, will open for business on 1 May 1997. While it will aim to take on the other leading firms on a broad front, it will have particular strengths in banking and insolvency, insurance, construction, energy and healthcare.

Cameron Markby Hewitt senior partner Bill Shelford is due to become senior partner of the new firm.

Yesterday's move, which comes as the second tier of City law firms is under increasing pressure, had been expected for some time, with some speculating that a third firm, Denton Hall, might also join the new organisation. One observer predicted that the two practices might yet seek another partner, possibly from the United States, in an attempt to challenge the truly international players in the top five.

Adrian Burn, of accountants Binder Hamlyn, which advises many law firms, described the merger as "a wise move" that was likely to be followed by other link-ups. Earlier this year, Dibb Lupton Broomhead, the aggressive regional-based firm that was previously the country's 10th-biggest, took in Alsop Wilkinson to become the seventh-largest firm.

While the top five firms, headed by Clifford Chance, are increasingly competing internationally with the biggest US firms, about 40 firms earning fees of between about pounds 20m and pounds 90m a year are facing increasing competition from each other, from operations that have lower overheads through being based outside London, from US practices and from the large accountancy firms, which are increasingly eyeing the lucrative legal market as a counter to audit and other compliance-type work.

This year, Arthur Andersen announced that its legal operation earned about pounds 15m. Figures published by Legal Business show Cameron Markby Hewitt and McKenna & Co were the 14th and 15th largest firms, with fee income of about pounds 50m each.