Lawrence Graham (LG) has sublet 20,000 sq ft of surplus office space in its City offices to Bond Dickinson.

The newly merged Bond Dickinson, the combination of Bond Pearce and Dickinson Dees, will move into the More London Riverside base at the end of July.

The deal will be welcomed by LG after the firm last year attributed a 26% drop in 2011-12 partner profits to high property costs incurred by its excess space in the London base.

LG moved into the building in 2007, and currently occupies six of the ten floors in the building, which is owned by an offshore private investment fund. The firm last year called off merger talks with Field Fisher Waterhouse, after a tie-up was mooted which would have seen Field Fisher move into the excess space.

For Bond Dickinson, the new office represents an 80% increase on the capacity currently held by Bond Pearce and Dickinson Dees in London. Dickinson Dees occupies 3,500 sq ft at Gate House in Farringdon, while Bond Pearce has roughly 7,500 sq ft at New London House by Fenchurch Street.

The leases at both buildings ended in March; however, both firms signed three-month extensions to enable them to strike a deal with LG. The new agreement at More London has a three-year break clause.

LG managing partner Hugh Maule said: "We have made good progress in reducing our costs as we head into the new financial year. This deal goes a long way to meeting our objective of sub-letting all of our surplus space and we hope to conclude this process in the very near future. In the meantime we would like to welcome Bond Dickinson to 4 More London."

The firm said it hopes to tie up a deal for the rest of its surplus office space shortly.

The merger between Bond Pearce and Dickinson Dees, which goes live next Wednesday (1 May), will propel the combined firm into the UK top 40. The combined firm will have more than 1,200 staff across eight UK offices in Aberdeen, Bristol, Leeds, London, Newcastle, Plymouth, Southampton and Tees Valley.