A report by City law firm Fox Williams and communications advisers Byfield Consultancy found that only a quarter (26%) of the top 200 firms are looking to merge in the next two years.

The survey indicates that the majority (83%) of firms now view increased investment in technology as having the best prospect of increasing a firm’s profits, followed by recruiting a team (71%). Conversely 86% of respondents identified merging as having the greatest risk of reducing profitability when compared with other growth strategies.

The latest research,’ From Recruitment to Robots: growth strategies for law firms’, heralds a significant change from the 2015 report ‘The Dating Game’, which showed 96% of respondents in the top 200 UK law firms forecasted substantial consolidation in the UK legal market in the next two years.

Fox Williams says the latest findings mirror activity in the sector this year, with a large number of reported merger talks failing to produce a merger. The findings also cast doubt on the trend for UK firms to expand overseas, with only 8% of respondents agreeing that increasing their international footprint by joining a network had the best chances of increasing profits.

Almost two thirds (63%) of managing partners surveyed felt that a failed merger had the highest risk of damaging their firm’s reputation, well ahead of a failed investment in IT or an unsuccessful team move which ranked second and third.

Tina Williams, chair and head of professional practices at Fox Williams, said: ‘Our new research confirms that law firms are looking beyond mergers to realise their ambitions, which reflects the difficulty firms often have in finding a suitable merger partner. Of the alternative growth strategies, investment in technology is seen to have both the greatest potential to increase law firm profitability, but is also regarded as the biggest threat to the profession as we currently know it.’