Monday 10 June 2013 by Eduardo Reyes

Top-100 law firms face a squeeze in client legal spending over the next 12 months, because almost all corporate clients who have not yet reviewed instructions and spend plan to do so.

The result will be massive consolidation among the magic circle's chasing pack, according to annual benchmarking research covering in-house legal departments and large commercial law firms by executive network business Winmark.

According to the latest report, published last week, 48% of corporate clients said they had already completed a review of law firm relationships and spend. Nearly all of the rest - 44% - plan to do so in 2013-14.

The resultant squeeze on legal spend is forcing commercial firms to consider merging, and to bet on international work to achieve growth.

Below the magic circle over 90% of the UK's top-50 law firms have been involved in merger talks in the past year, while half expect to be involved in a merger in the coming year.

Asked where the greatest growth opportunities for their firm lie, 32% of managing partners in large firms listed 'international work'. In 2012 international work was cited by just 21%.

Few managing partners believe new clients will deliver growth, with just 8% relying on this strategy compared with 15% in 2012.

The report says: 'Managing partners fores ee sluggish growth or stagnation in the coming year.' Barriers to addressing the sector's challenges, the authors note, include shortcomings in management information, technology and culture.

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