June 2026 Legal Market Roundup: Consolidation Gathers Pace as Firms Reassess Their Future

June has reinforced a trend that has been building across the legal sector for several years: the gap between the largest firms and the rest of the market is continuing to widen.

Private equity investment, acquisitions and alternative business models remain key drivers of change, while many smaller and mid-sized firms are facing increasing pressure from rising costs, recruitment challenges and the need to invest in technology. As a result, more firms are taking a strategic look at where they can compete effectively,  and where they may be better served by stepping away.

Personal injury firms continue to leave the market

Perhaps the most significant development this month came from new research into the personal injury sector, which found that more than 100 firms have exited the market over the past year.

According to IRN Legal Reports, there are now 3,412 firms undertaking personal injury work, down from 3,528 in 2025, while the number of firms offering clinical negligence services has also declined. Over the past five years, the sector has shrunk by around 10%, reflecting an increasingly challenging environment for smaller practices.

The contrast between the largest firms and the rest of the market is striking. Despite claim volumes continuing to fall, many of the leading claimant firms have reported rising revenues and profits, helped by acquisitions, investment in technology and a growing focus on higher-value work.

Businesses such as Fletchers and Express Solicitors have continued to expand through acquisitions and strategic recruitment, while many smaller firms have sold their personal injury caseloads or exited the sector entirely.

The report suggests this trend is unlikely to reverse. Larger firms are investing heavily in digital infrastructure and artificial intelligence to improve efficiency and reduce costs, making it increasingly difficult for smaller competitors to keep pace. Boutique firms with genuine specialist expertise may continue to thrive, but many SME practices are expected to come under increasing pressure.

For Recovery First, this is a particularly relevant development. A growing number of firms are choosing to make planned exits from personal injury rather than waiting for profitability or funding pressures to force their hand. A structured transfer of work in progress enables firms to preserve value, protect clients and refocus on areas where they can compete more effectively.

The SRA Signals Closer Oversight of Mergers and Acquisitions

One of the most significant developments this month came from the Solicitors Regulation Authority (SRA), which indicated that it wants firms to notify the regulator in advance of mergers and acquisitions.

The proposal reflects growing concern that structural changes within firms can have significant implications for client protection, governance and financial stability. Rather than learning about transactions after they have completed, the SRA wants earlier visibility so that potential risks can be identified before they affect clients or the wider market.

For firms considering acquisitions or rapid expansion, this is another reminder that growth must be carefully planned and properly documented. Due diligence now extends beyond financial performance to include culture, compliance systems, client care and operational integration.

Alternative business models continue to gain momentum

June also saw further evidence that traditional partnership structures are no longer the only route to success.

Legal Futures reported that Lawhive has effectively joined the UK’s largest fee-share firms following rapid expansion, underlining the growing popularity of consultant-led models.

At the same time, Setfords made headlines by deciding to remain family-owned rather than pursuing private equity investment. The decision demonstrates that while external capital is becoming more common across the legal sector, firms are taking different approaches to succession and long-term ownership depending on their strategic priorities.

Together, these developments reflect a profession that is becoming increasingly diverse in how legal services are delivered and how firms are structured.

Private equity and investment remain active

Private equity continues to shape the market, but firms are becoming more selective in how they use external investment.

Recent activity across regional markets and specialist practices shows that investors remain attracted to scalable legal businesses with strong operational platforms and clear growth opportunities.

Meanwhile, AIM-listed professional services group DSW Capital launched a dedicated legal brand following the successful integration of a previous acquisition, highlighting the continued convergence of legal services with accountancy, consultancy and wider professional advisory businesses.

These developments illustrate that competition is no longer limited to traditional law firms. Increasingly, firms are competing with multidisciplinary organisations capable of offering clients a broader range of services under one roof.

Rising regulatory costs remain a concern

The profession also continued to debate the SRA’s proposed budget increases and the cumulative impact of rising regulatory costs.

Higher practising certificate fees, anti-money laundering obligations, insurance premiums and technology investment are placing additional pressure on firms already operating in competitive markets.

For practices with lower margins or significant fixed overheads, these costs can accelerate strategic decisions around restructuring or exiting certain areas of work.

Mazur’s legacy continues

Although the Court of Appeal overturned the original Mazur decision earlier this year, the case continues to influence operational thinking across the profession.

Many litigation firms have used the opportunity to review supervision arrangements, clarify responsibility for reserved legal activities and strengthen internal governance.

The appeal provided welcome certainty, confirming that supervised delegation remains permissible, but it also served as a reminder that firms must be able to demonstrate effective supervision and robust management structures.

A market driven by strategy rather than sentiment

Looking across the month’s headlines, one message stands out: firms are becoming increasingly strategic in their decision-making.

Rather than trying to offer every service, many are focusing on their strongest practice areas while divesting work that no longer fits their long-term objectives. Others are pursuing acquisitions to build scale or diversify into complementary services.

Growth is no longer simply about increasing turnover. It is about building a sustainable business with the right mix of expertise, technology and operational resilience.

Where Recovery First fits

The developments seen throughout June reinforce the importance of having a clear exit strategy as well as a growth strategy.

For some firms, the best commercial decision is not to continue investing in a practice area that has become increasingly difficult to sustain. Instead, a planned withdrawal can allow leadership teams to focus on their core strengths while preserving the value of existing work.

Recovery First supports firms through these transitions by providing a structured, compliant route for transferring work in progress. Whether a firm is exiting personal injury, restructuring a department or planning for succession, a managed transfer process helps protect clients, maximise value and reduce unnecessary regulatory and operational risk.

As consolidation continues and competitive pressures increase, knowing when to step back can be just as important as knowing when to grow.