Hiring and retaining talented lawyers and identifying the next generation of partners are the key priorities of law firms in 2016, according to a bi-annual market bellwether.

Merger activity continues to decline, meanwhile, in what is generally a buoyant commercial environment.

The survey, the latest in a series by the Law Consultancy Network, found that almost half of firms consider recruitment and retention to be one of their top three priorities this year. Succession planning ranked second and profitability third.

By contrast, merger activity remains sluggish, reflecting a steady decline since the 2011 peak when over 80% of firms said they had considered a merger in recent months. That figure fell below 60% in the second half of 2015, the second-lowest percentage since the survey began six years ago.  

The survey was undertaken by consultant Andrew Otterburn (pictured), who commented: 'The issues of attracting and retaining talent, and succession planning are closely linked and are currently a major issue for many firms. 

'It is not so much the retirement of existing partners that is the issue, although that can be complicated, especially the repayment of capital, but identifying their successors. These issues are also closely related to profitability and overall strategic planning.’