Navigating anti-trust and CMA scrutiny in law firm mergers

Law firm mergers are no longer simply about agreeing the finances, blending cultures, and settling on a new brand name. Increasingly, competition law and regulatory oversight are playing a decisive role in whether deals proceed smoothly, face delays, or even collapse altogether. The Competition and Markets Authority (CMA) has shown a growing willingness to scrutinise mergers in professional services, and law firms are not immune. For managing partners, or anyone involved in M&A planning, it is important to understand how to navigate this environment and prepare well in advance.

Why competition law matters in legal services

Many solicitors tend to assume that competition law is something for their clients rather than their own profession. But in fact, the legal services market has grown highly competitive and regionally concentrated. In some towns and cities across the UK, a merger between two mid-tier firms could significantly reduce client choice, particularly in areas like conveyancing, personal injury, or criminal defence. The CMA is obliged to consider whether such consolidation could result in higher prices, reduced service quality, or fewer options for consumers and businesses.

It is worth remembering that the CMA isn’t just interested in global giants or City magic circle firms. It has shown a readiness to look closely at local markets, where even relatively small deals can be material. So, a regional firm acquiring a long-standing rival in the same county can trigger just as much scrutiny as a headline-making City tie-up.

The CMA’s process and powers

The CMA operates under the Enterprise Act 2002, which gives it the authority to investigate mergers that create or enhance a 25% or more share of supply in a given market. Importantly, merger control in the UK is technically voluntary, and firms are not legally required to notify the CMA before completing a deal. However, that does not mean there’s no risk. If the CMA believes a merger could harm competition, it has the power to “call in” a transaction, even after completion. This can mean costly remedies, divestments, or even the unwinding of a merger.

For law firms, that uncertainty can be disastrous. No firm wants to go through the effort of combining systems, teams, and clients, only to be told months later that the deal cannot stand. This is why, in practice, many firms choose to engage proactively with the CMA before signing on the dotted line.

Preparing for CMA scrutiny

So, what does good preparation look like? Generally, there are three key strands:

Market analysis early on: Before heads of terms are agreed, firms should take a hard look at the competitive landscape and ask how much market share would the combined entity hold in each service line and region? For example, if two firms dominate family law services in Manchester or residential conveyancing in Birmingham, that’s likely to raise flags. Commissioning independent economic analysis can be a worthwhile investment at this stage, rather than leaving it to chance.
Documentation and transparency: The CMA will inevitably request a paper trail: internal documents discussing market strategy, pricing intentions, and the rationale for the deal. If those documents suggest that the merger is designed to eliminate competition or allow greater pricing power, you can expect scrutiny. Being mindful of how strategies are documented during meetings is therefore crucial.
Engagement and remedies: Engaging with the CMA doesn’t have to be adversarial. Often, firms that approach with openness fare better than those that try to keep the regulator at arm’s length. If competition concerns arise, remedies may be required. In some cases, that might mean agreeing not to consolidate certain service lines in a specific locality, or even divesting a portion of the business. While not ideal, it may be preferable to a full prohibition.

Practical challenges for law firms

Law firm mergers are particularly complex because of the cultural and operational dimensions, and adding a CMA process on top can stretch leadership. Smaller firms often lack in-house regulatory expertise, making it harder to manage the process. In addition, there’s also the client perception angle—announcing a merger only to have it stalled or challenged can undermine confidence.

One way firms are addressing this is by building competition compliance into their wider M&A strategy from the outset. Rather than treating CMA review as a bolt-on risk to be handled later, it should be part of the due diligence checklist alongside IT systems, pensions, and lease obligations. This proactive stance not only reduces risk but also reassures partners and staff that the merger won’t be derailed unexpectedly.

Looking ahead

As the UK legal market continues to consolidate, mergers will remain a prominent feature. The firms that thrive will be those that integrate competition law considerations into their strategic planning rather than treating them as an afterthought.

In the end, mergers are about growth and resilience. But growth that comes at the expense of fair competition will always attract scrutiny. By approaching the CMA as a partner to be managed rather than an obstacle to be avoided, law firms can position themselves to navigate the regulatory landscape smoothly and with confidence.

For those considering selling their law firm, engaging with professional advisors such as Law Mergers & Acquisitions early in the process can ensure the best outcome.

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