What the SRA is Proposing
Latest figures show that over the 12 months to the end of February 2026, 532 Recognised Sole Practitioners, Recognised Bodies, and Licensed Bodies (also known as Alternative Business Structures) have closed. Closure figures have been updated to include all reasons for closure, such as ceased practising, mergers, splits, and change of status. 19% (101) of those firm closures were down to mergers.
Mergers, acquisitions, and sales are legitimate strategies for growth and business resilience for law firms, and the reasons for a merger typically fall into several categories, such as acquiring expertise, achieving economies of scale, addressing retirement plans, and dealing with profitability or operational challenges.
Perhaps in response to the recent increase in merger activity and some of the high-profile cases of law firm collapses, the Solicitors Regulation Authority (SRA) has opened a consultation asking whether it should be given the power to require firms to notify it of a contemplated merger or acquisition. The proposal is that this information should be shared when a deal reaches the heads of term stage or equivalent.
Under the current process, firms are required to notify the SRA within 28 days if they are closing because of a merger or acquisition. If the merger results in new owners, then that must also be communicated to the SRA. However, the regulator currently has no requirement for firms to notify it ahead of a likely merger or acquisition, nor does it ask for information to form a risk assessment related to the transaction.
The move follows the SRA says was the “costly fallout from accumulator firms such as Axiom Ince and PM Law going out of business with client money missing.” It is believed that more information is needed before mergers are completed so the regulator can make earlier decisions about “possible risks down the line.”
It was stressed that, if implemented, this would be a notification and not an approval process.
The consultation, which closes on 17 August, also asks whether the SRA should apply fixed penalties to firms that do not comply with the new notification requirements.
Read the notification here: SRA wants heads-up from firms before mergers and acquisitions go through’
Navigating Law Firm Mergers – What to Consider
We have provided a guide for law firms and their owners on what to consider when evaluating an acquisition, merger, or sale. It covers:
- Initial Considerations Before You Start – A Checklist
- A Closer Look at What to Consider:
- Reasons to Acquire
- Personal Requirements
- Systems and Processes
- Plans and Targets
- Expected Outcome
- Overall Impact
- Your People
- Roles
- Technology
- Timing and Resource
- Locations
- Clients
- Contracts
- Online Presence
- Brading, Marketing & Advertising
- The Firm’s Website
- Integration
Download the full guide here: Navigating Law Firm Mergers – What to Consider.
Specialist Mergers and Acquisitions Services
Dealing with Mergers and Acquisitions (M&A) can be daunting and often is a challenging process. However, we have developed a set of services that are designed to alleviate this complexity. The combination of a regulated environment with insurance implications, personal requirements, and firm requirements provides for a complex mix of challenges that need careful consideration, planning, assessment, negotiation, due diligence, and delivery.
At The Regulation and Compliance Office (RACO), we are here to guide you through this and provide reassurance and support at every step. Our M&A service helps firms on both sides of the acquisition table, including those seeking a merger, with everything from establishing the right approach to the technical elements of regulatory compliance and delivering the ‘final deal’.
Having experience on your side can prove invaluable to achieving the end result and for an effective, successful acquisition or merger. Our team, with its extensive experience and expertise, is here to help build a strategy or work with a firm to achieve its desired goals.
Often, deciding whether a firm should be sold or a merger partner sought can be difficult due to a range of factors, not least due to the uncertainty this may create. Our services’ first and most crucial step is establishing the correct path to take, which may endorse or change current thinking.
Equally, if the decision has already been made and you seek guidance and support through the process, our services can easily be picked up from this point. Download our detailed service brochure: Mergers & Acquisitions Services for more information.
Contact Our Team
To ask any questions about the Regulation and Compliance Office and how we can support your Law Firm, please call us on 0203 985 8550, complete the online enquiry form below, or email us info@regulationandcomplianceoffice.co.uk
