Top City and national firms are fast building market share in corporate in response to the current downturn in deal activity, according to data obtained exclusively by Legal Week.

Research by Mergermarket confirms that deal volumes are now rising at many large law firms, despite a continued fall in deal activity in the second quarter of 2008 – down globally from 3,260 in Q1 to 2,993 on announced deals in the last quarter.

The pattern is repeated in Europe where 1,295 deals were announced in Q2, against 1,407 in Q1 and 1,655 in Q2 2007.

Yet, despite falling in volumes, the latest quarterly M&A rankings published today (3 July), indicate that many large firms have substantially increased new instructions over the last three months.

The 'big four' magic circle firms all saw notable increases in new mandates comparing Q2 to Q1, despite the underlying fall in deal activity. Other large firms to see substantial increases in new mandates during Q2 include DLA Piper and White & Case.

The pattern is the strongest indication yet of widespread claims that top firms are aggressively pricing and pitching for business that would typically go to mid-tier law firms as they position themselves to cope with lean corporate markets.

A&O corporate partner Alan Paul said: "The magic circle has always worked on a large volume of deals but there have not been as many big transactions. The large transactions from 2006 and 2007 are missing but there is still a reasonable amount of activity."

DLA Piper corporate partner Bob Bishop said: "Magic circle firms are now concentrating on smaller deals and those members of the chasing pack without a convincing mid-market presence will feel the pinch from that."

Though grim reading for mid-tier law firms, the figures underline the relative resilience of global M&A, even allowing for the dearth in big-ticket bids and the collapse of large private equity deals.

Despite substantial falls from the levels of activity in the boom market of 2006, European and global M&A activity by volume remains substantially above levels seen in 2003 and 2004 and roughly in line with 2005.

As expected, the one region to buck the trend of falling deal values in Q2 was Asia-Pacific, which recorded a quarterly record value of $146bn (£73bn) in Q2 2008, despite a fall in deal volume.

Freshfields Bruckhaus Deringer corporate chief Mark Rawlinson (pictured above) said: "This is a reduced market. Generally M&A volumes in Europe are down but there are still quite a few smaller-sized deals."