Deal Week is so used to bullish economic forecasts from lawyers that when activity levels fall to 'reasonable' or are 'on the road to recovery' it normally means something is wrong.

But such has been the recent drought of M&A in the Birmingham market in recent times that even corporate heads of national firms are admitting that times are far from busy.

April's £352m buy-out of Rosemound Developments by Australian property giant Macquarie Goodman Group, on which Wragge & Co and Jones Day advised, has been one of the few sizeable M&A mandates coming out of the Midlands over the last year – a minnow of a deal compared with London's mid-market churn.

The lack of confidence among the top firms' transactional teams in the region can be seen in the low level of senior partner-level recruitment. In fact, some have even done the opposite and moved senior names down to London. Last year Hammonds transferred its former Birmingham corporate head, David Hull.

Eversheds is putting almost all of its growth efforts into London and hopes to increase its turnover there to £110m by 2009, while Pinsent Masons is also vigorously pursuing expansion in the capital.

Much of this is nothing new. Alarm bells had sounded in the Midlands years ago when private equity houses including 3i, Bridgepoint and Royal Bank Private Equity gradually withdrew operations from the city. Ernst & Young also moved its corporate finance team out of the Midlands.

But insiders now say that, although the volume of transactional work is still largely intact, the quality of the instructions has taken a significant nosedive.

In some ways, this has opened up a sector of the Birmingham legal market. Smaller national firms such as Shoosmiths, HBJ Gateley Wareing and Mills & Reeve have seized on decisions by the likes of Wragges and Eversheds to focus on larger transactions and have filled their boots with the kind of low-value deals that were previously unavailable to them.

Not all of this is in corporate. The local property market has in many ways never been better, while many of the national firms have inconspicuously managed to secure increasingly significant volumes of public sector work. Such has been the success of these areas that the dearth of regional corporate work has been covered up in the nationals' figures.

For larger corporate teams, the new game seems to be to attempt to service Birmingham with work won from the capital. According to Eversheds corporate head Peter Halpin, this can be cheaper for the client and, for the ones based in the Midlands, provides a more local service.

But this strategy is still dependent on the historic goal of boosting transactional credibility and client-winning skills within the London operations.

Of course, the largest national firms cannot be accused of failing to address this necessity. It is just that the need to do so has never been more important than it is now.