Lovells is set to shut down its Chicago office by the end of October following a strategic and financial review of its business.

The office, which has seven partners and 15 fee earners, has been under review since before the firm's merger talks with Hogan & Hartson began.

Lovells opened in Chicago in 1995, targeting the insurance and reinsurance market with a heavy focus on arbitration. However, in recent years that practice has has seen a drop-off in work levels, while the office has also struggled with a number of major conflicts.

The decision must be ratified by the partnership before the firm can carry out the closure. The vote is currently with partners, with a result expected within the next fortnight.

Lovells managing partner David Harris said: "[Reinsurance arbitration] is an area which has seen changes in work patterns and the office has been affected by a number of significant conflict situations. Despite the best efforts of partners in Chicago and elsewhere, this has had an impact on the office's overall performance in recent years and the position is not expected to change."

He added: "This is a Lovells decision, taken following consultation with the Chicago partners who support it. Hogan & Hartson is aware of and understands the reasons behind it."

Lovells is currently in talks with the office's 47 staff to discuss the possibility of relocations. It is not yet known how many jobs will be saved.