The board at Lovell White Durrant is understood to have rejected proposals made by its banking and finance sub-committee to enter into merger talks with Wilde Sapte.
Neither Lovells nor Wilde Sapte's senior management would confirm the decision, so the reasons for the rejection remain unclear. But Lovells remains in the market for banking lawyers.
John Penson, head of Lovells' banking practice, would not comment on any links the firm may have had with Wilde Sapte.
However, he said that in the last few years his department had moved away from a niche-ridden practice to a much more respectable one. "But it is not as large as I would like it to be. To compete fully we need a few more partners," Penson said.
"If we saw good banking partners in London we would make them an offer," he added.
An insider said that a Wilde Sapte-Lovells tie-up would have been a "sensible combination", but there had been few signs in the market that Lovells was a "dynamic organisation".
Lovells has the international presence that Wilde Sapte has been seeking since the collapse of talks with Arthur Andersen last year.