Law firms prioritising organic growth, finds MHA and Law Society research

The region's mid-sized law firms are likely to prioritise organic growth over mergers and acquisitions over the next 12-months.

That’s one of the findings from a report by the Law Society and accountancy and business advisory firm MHA which questioned mid-sized law firms across the UK about their outlook and strategic priorities.

The research found that 17.2 per cent of respondents are planning to pursue a merger or acquisition in the next year with 2.7 per cent considering selling their business.

However, most participants in the survey confirmed that they are not looking at any growth plans which include M&A in the near future. This aligns with the broader theme discovered in the research of pursuing organic growth over acquisitions and mergers.

MHA, the UK and Ireland member firm of Baker Tilly International, acts as advisors, auditors and reporting accountants to hundreds of legal firms in the UK

Karen Hain, partner in the professional practices team at MHA, said: “The low percentage of firms looking to grow through M&A is interesting, bearing in mind the legal market is still highly fragmented compared to other professions and because a merger provides a short-cut to growth.

“Anecdotally, we believe this may be due to firms not knowing where to start with a merger or how to identify targets, as well as a reluctance to dilute control. The accountancy profession provides a stark contrast where M&A activity is at an all-time high.”

The report, based on responses from 64 mid-sized law firms, found that firms have identified talent retention, succession planning, technological advancement, and geographic expansion as key areas of focus over the coming 12 months.

Karen added: “Organic growth has emerged as a central theme. Firms are focusing on expanding their internal talent pool and enhancing productivity through targeted investments in people and technology. This also includes looking at pricing of services provided.

“The firms that are exploring mergers and acquisitions to accelerate growth have identified specific service lines to prioritise over the next 12 months with a strong emphasis on tapping into niche markets, for example private client work is a common sector firms have highlighted in their plans.”

Recruitment and talent retention was also identified as a key priority for firms. The focus on talent aligns closely with succession strategies as firms aim to ensure that when partners or directors are ready to retire, there is a well-prepared team ready to step into leadership roles and continue the firm’s growth trajectory.

The research also found that technological advances are increasingly recognised as a strategic priority for mid-sized firms seeking to remain up to date with the latest technology to drive efficiency.

Many firms are concentrating on updating and investing in their current IT infrastructure to ensure all systems and hardware are upgraded and run on the latest technology. Another discussion theme is how AI can be used to improve efficiency, although most respondents are not yet using AI, with the current focus being on automation.

To ‘Strategic Sector Insights for the Legal Profession 2025: Mid-sized firms’ report is available on the Law Society website and on the MHA website.